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Wind tax issue vexing developers in Wyoming

Wind tax issue vexing developers in Wyoming

Wyoming has great wind, vast open spaces and a healthy appetite for farm income and non-farm jobs. Sounds perfect for new wind power facilities. But while other states are devising incentives to attract wind power projects, Wyoming’s political leaders are throwing obstacles in the path of beneficial wind development in the state.

The latest example is a wind electricity “excise” tax, proposed by Gov. Dave Freudenthal (D) and now being considered by the legislature. In recent committee action, the tax was reduced from a jaw-dropping $3 per megawatt-hour of wind electricity produced to $1 per megawatt-hour. (The tax does not apply to any other form of electricity generation.) Implementation of this wind electricity tax could begin as soon as next year.

Wyoming’s would be only the nation's second state tax on wind energy generation, and it comes just as the sales tax on renewable energy equipment will be reinstated in 2011, requiring Wyoming wind developers to pay up to 6% sales tax on every piece of their multimillion-dollar turbines. Wind power projects already pay property taxes as well.

Neighboring Colorado is going in the opposite direction. Under a bill recently approved by the Colorado House, investor-owned power utilities operating in Colorado would have to generate at least 30 percent of their electricity from renewable sources by 2020. This is considered an incentive for the industry because it would increase demand.

But the Wyoming Governor is not in an incentives-giving mood for wind energy, even as tax breaks are being proposed for other potential new businesses. According to a recent AP story, Gov. Freudenthal said, “(Wind) can help keep people in agriculture. It can help people have jobs, and hopefully it can lead to some manufacturing facilities in the state. Having said all that, they are not entitled to a free ride. This is the first opportunity that this state has had in my lifetime to actually diversify its tax base.”

“It is very disturbing to hear that one of the great states for energy resources wants to further tax the industry and discourage the development of new jobs in their state,” said AWEA CEO Denise Bode.

Last fall, the legislature’s wind energy task force recommended studying the complicated issue of wind taxation during the 2010 legislative interim session, so that a thoughtful, well-reasoned approach could be reviewed by all stakeholders without the time pressure of a hectic, 20-day legislative session. Wind advocates are trying to persuade legislators to listen to their task force colleagues so that a comprehensive and fair approach to taxation – which would benefit the state, the counties and municipalities – as well as the certain impacts to Wyoming ratepayers can be properly analyzed and considered during the interim.

Meanwhile, the wind electricity tax bill still is being reviewed in the Wyoming House and soon may be advanced to the Senate. Will Wyoming become the only state to triple-tax clean, renewable electricity production? Potential investors, renewable energy advocates, and eager economic development directors in other progressive states are surely watching to find out.

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