United States: Wyoming woes - Proposals to increase wind tax

The prospects of further wind development in Wyoming, a rural state rich in wind resources, could dim if state lawmakers approve proposals to increase levies on the industry as a way to offset plunging revenue from the oil and gas industries.

Wyoming lawmakers propose wind tax to cover future turbine decommissioning
Wyoming lawmakers propose wind tax to cover future turbine decommissioning

A legislative task force has suggested a range of new burdens on wind development, including higher tax rates and cash up front to cover future decommissioning of turbines.

The depressed economy is behind the effort, says Craig Cox, executive director of the Interwest Renewable Energy Council, a regional renewable energy trade association. He says: "In a down economy, they are looking for new ways to offset revenue that they are losing from the decrease in fossil fuel prices, taxes and extraction fees."

The task force seems to have been especially eager to levy new decommissioning fees on wind development. It suggests collecting payments upon installation of new wind turbines to cover the cost of removing derelict machines that are at the end of their life spans. Oil and gas companies in the state have sometimes failed to dispose of equipment appropriately. "Wyoming has seen multiple boom-bust cycles with oil and gas," says Cox. "They have been burned by operators that just abandon equipment - oil rigs, gas wells. They are viewing everything through the prism of oil and gas, so they seem to talk constantly of imposing decommissioning bonds on developers."

But decommissioning fees for wind are unjustified, says Cox, because wind operators rarely, if ever, walk away from modern turbines, which are more valuable - even at the end of their lifespan - than aging oil rigs.

In fact, he says, it makes economic sense for wind farm owners to properly dispense with turbines that have reached the end of their lives so they can be replaced with new ones. A good wind site continues to be a potential power source, whereas depleted oil and gas sites do not.

From on high

Pressure to tap revenue from the wind industry is not limited to a handful of lawmakers. "Frankly, it comes from the top, too," says Cox. "Governor (Dave) Freudenthal has taken a pretty dour attitude towards wind, saying wind has to pull its weight, wind energy has to contribute - and the like. That attitude seems to be filtering down to other stakeholders, such as county commissioners, legislators and regulators. And now everyone seems to be pretty down on wind. I think we need to tell our story better."

Trying to do just that is Cheryl Riley, executive director the Wyoming Power Producers Coalition, which represents independent power producers. She says that Wyoming is already an expensive place to develop wind plants because sales and property taxes are high. Ultimately, though, taxing wind could prove a difficult legal challenge because state law prohibits singling out a specific industry for taxation. The courts could rule that similar levies would also have to be placed on the oil, gas and other energy industries. That, she says, would be a difficult sell for state lawmakers, who would likely face strong opposition from the powerful oil and gas lobbies.

Cox says that signals from the state legislature suggest that the hostility to wind may be ebbing: "I do hear that the task force, when they met recently, had a better and more nuanced approach towards wind than when they met in previous sessions, where they took the approach to just tax everything they could get their hands on."

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