Wyoming needs to stop stalling wind power

What’s at stake with the Republican push to tax renewable energy companies

 

In 1986, President Ronald Reagan observed that under his predecessor, Jimmy Carter, “Government's view of the economy could be summed up in a few short phrases: ‘If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.’” 

Reagan’s quip about the government’s interfering tendency under a Democratic president drew laughter from those attending a White House Conference on Small Business just over 30 years ago.  But in Wyoming, a handful of Republican lawmakers have pushed a three-fold increase or more in the tax rate on wind-energy production, and that is no laughing matter. 

Pronghorns graze on the prairie at Duke Energy's Campbell Hill Windpower Project near Casper, Wyoming.
Duke Energy

Wyoming is the only state in the nation that imposes a $1 per megawatt-hour tax specifically on power generation from wind. For a state where the Republican-dominated Legislature routinely invokes Reagan’s legacy, this proposal –– recently considered and fortunately rejected by Wyoming’s Joint Revenue Interim Committee –– contradicts his low-tax approach.

Here’s what’s at stake: For the last nine years, the Power Company of Wyoming has been planning what it calls the Chokecherry and Sierra Madre Wind Energy Project. Its 1,000 turbines would spin on private, state and federal land near the towns of Rawlins and Sinclair, in Carbon County. Construction was slated to start this year on the $5 billion project, which, if built, would become the largest wind farm in North America, generating up to 3,000 megawatts of clean energy. That is enough to power approximately 1 million homes and reduce CO2 emissions by 7 to 11 million tons per year. Just as Texas and several other states have seen cheaper per kilowatt-hour power for consumers as energy markets have been deregulated and additional capacity from renewables like wind and solar have come online, expanded energy-production from Wyoming wind would help consumers and the economy.

When entrepreneurs decide to invest billions of dollars and almost a decade’s worth of planning to develop new technologies, build significant infrastructure, and create thousands of new and well-paying jobs, they do so believing that a state’s tax and regulatory policy will be predictable enough to allow them to earn sufficient returns on their capital investment. But as Bill Miller, CEO of the Power Company of Wyoming, told the Los Angeles Times: “Just about every legislator we’ve met with asks us, ‘You tell us how much we can tax you before we put you out of business.’ ” In a state hurting from a decline in revenue from fossil fuels, is that how elected officials should help to spur economic growth and encourage the development of cleaner energy? 

The Bible records the observation that “the wind blows wherever it pleases. You hear its sound, but you cannot tell where it comes from or where it is going.” In Wyoming, it appears that a few state lawmakers have decided that the sound of wind signals only an opportunity for generating new tax revenue.

Wyoming has already collected nearly $15 million in the four years since the Cowboy State first started taxing energy production from wind. Over its first 30 years, the Chokecherry and Sierra Madre wind project is projected to generate more than $1 billion in tax revenue and royalties at the federal, state and local level. Fortunately, after nearly six hours of testimony from ranchers, local government officials, utilities, and industry representatives, the Joint Revenue Interim Committee voted to scuttle the proposal to raise Wyoming’s wind tax.  We can only hope that the idea is left off the table when the Legislature convenes next year.

It makes sense for the state and federal government to impose severance taxes when oil, gas, precious metals and other minerals are permanently taken from the land. But taxing energy production from renewables such as wind and solar as if they, too, were not renewable, makes no sense. Nor does it make sense to single out a specific form of energy production that has the capacity to meet consumer demand and help reduce carbon emissions. It’s almost as if wind power were a vice meriting the kind of “sin taxes” imposed on alcohol and cigarettes. 

It’s bad enough that Wyoming is the first and only state in the nation to impose a punitive tax on wind-energy production. This tax needs to be repealed, and at the very least, state lawmakers should resist any move to add more tax burdens to an industry that we all need to prosper. 

Ryan Call is a contributor to Writers on the Range, the opinion service of High Country News. He is a Republican, an attorney in Denver, and central-region director with the R Street Institute, a conservative, free-market think tank headquartered in Washington, D.C. 

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