Storm clouds build behind wind turbines north of Medicine Bow, even as sunlight pours into the photographer’s frame. (Brian Harrington/BHP Imaging)

The pursuit of a sensible public policy for wind power in Wyoming has become an unsettled, decade-long saga. Most other states in the region have already figured out how to appropriately regulate and tax wind resources, but it seems Wyoming inherently deals with a more complex set of circumstances.

We can trace this, in large part, to the perceived conflict between wind and the state’s primary breadwinner — the mineral industry. Coal, oil and natural gas together have combined as the basic economic engines and financiers of public services in Wyoming for generations. Anything interfering with that pecking order is naturally going to receive a lot of complicating attention.

The nationwide expansion of wind power has been seen as a threat to coal. Other market dynamics like the growth of natural gas use by electric utilities are at least as responsible for pressures in the coal industry, but the connection between growth in wind generation and the contraction of coal is foremost in many Wyoming minds.

Another factor that makes the wind debate different in Wyoming is the lack of economic and fiscal diversification compared to other states. The mineral industry accounts for about 70 percent of state and local government revenue. More diversified states with a growing wind generation industry do not contend with the notion that growth of one industry means contraction in another.

Wyoming’s fraught relationship with wind is reflected in the pattern of wind legislation going back to 2009. There have been dozens of bills proposed in the last decade — most have simply blown away, but some have reemerged in successive sessions and succeeded.

The first attempt to generate revenue from wind power — House Bill 275 – Wind turbines-royalty fee in 2009 — called for a 3 percent tax on the value of electricity generated from wind. The bill failed, partially because of the complex interface between the tax rate with the federal production tax credit.

In the same session, House Bill 215 – Tax exemption for renewable resources [Enrolled Act No. 70] repealed the sales and use tax exemption for wind power equipment and materials. This repeal was in part deemed necessary because counties needed revenue to pay for roads and other infrastructure during construction of wind farms. The characteristic two-year payment lag of ad valorem taxes prevented that revenue source from being practical for this purpose.

Finally, in 2009, a task force on wind was formed via a footnote in the budget bill. This task force was charged with looking at wind taxation policies and appropriate regulatory structures.

Wind legislation reached its high point in 2010 with regulatory standards and the first wind energy production tax. The new regulations required that wind farm developments be reviewed by the Industrial Siting Council.

The wind energy production tax was enacted after much debate. Initially drafted as $3 per megawatt hour with the proceeds going to the state General Fund, the tax was premised on a consultant’s finding that the superior quality of wind in Wyoming could sustain it. Quite simply put, since the Wyoming wind blows so dang much, it is economically possible to assess a generation tax.

Ultimately lawmakers lowered the rate to $1 per megawatt hour and apportioned 40 percent of the revenue to the General Fund and 60 percent to the counties containing the wind facility. The tax is effective upon the third year of facility operation.

A few bills dealing with wind tax revenue have been drafted since, but all have failed. The tax and revenue distribution system created in 2010 is the same one in force today.

The Legislature also in 2010 halted wind developers invoking eminent domain to place windmills and extended the work of the wind energy task force, asking them to focus on eminent domain, wind rights and ownership and entitlements of compensation to landowners.

Then, for about five years, wind received little legislative attention. With the state’s fiscal picture looking stable it wasn’t on top of many minds.

But with mineral prices falling in 2016 the Joint Revenue Committee was assigned the topic of finding a new revenue source for school construction. New coal lease income — the previous source of school building money – was drying up. Suddenly raising the wind tax started getting a lot more attention as an alternative.

Significantly, this was the first year we utilized actual committee research to determine what a fair and equitable wind tax rate would be. The research demonstrated that the effective megawatt hour taxes that the state received from electricity produced from coal and natural gas ranged between $3 and $5 per megawatt hour.

We got to those figures by looking at the revenue the state was receiving from coal and gas and how much of those fuels respectively were required to produce a megawatt hour of electricity. New wind tax proposals since have been based on equity with the rates for oil and gas generated electricity. That way the state is not picking favorites.

Heated debate ensued. Predictable opposition to a rate hike came from the wind industry. Land owners, fearing that a higher state tax would increase the difficulty of negotiating land leases with operators, were also opposed as were environmentalists and the Wyoming Business Council. As the interim between the 2016 and 2017 sessions came to a close every wind tax bill died in committee.

Even though no committee legislation was forthcoming in 2017, Rep. Scott Clem (R-Gillette) filed a bill calling for a $5 per megawatt hour tax. It failed in the committee on a split vote. A similar bill calling for a $4 dollar tax was drafted in 2018, but also failed.

Interest in equitable wind taxation expanded significantly this session. Three individual bills were filed calling for a tax of $4, $5 and another that would have phased in a tax starting at $0.50 and rising to $5 in the fifth year of operation of a wind facility. Surprisingly, House leadership did not refer any of these bills for committee action much to the frustration of sponsors and cosponsors.

There’s no telling what’s next for wind taxation. However, it is clear when looking at the number of sponsors and cosponsors of wind tax bills, more and more legislators are willing to consider wind as a significant revenue generator for the state. Polls, too, suggest a growing public appetite for wind taxes in Wyoming’s fiscal structure. And the continued decline of coal revenue will virtually ensure that there will be future discussions of wind as a meaningful revenue contributor.

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Aside from the equity argument described above, those who favor a wind tax point to the fact that the energy sprawl associated with wind turbines upon the Wyoming landscape will have far reaching impacts within other economic sectors. These impacts should therefore be mitigated. Moreover, wind turbines are growing in size and thereby will have increased impacts on the aesthetic character of the state. Another argument that more and more citizens point to is that nearly all generation taxes are paid by non-Wyoming residents who prefer power from renewable sources.

Opponents in future discussions will suggest that any additional taxes on wind power will stifle growth and development of future wind projects. Another argument is that renewable energy sources such as wind should be encouraged and therefore not taxed in the interest of long-term environmental benefits.

The most recent development surrounding the future of wind taxes involves a grassroots plan, led in part by Sen. Cale Case (R-Lander) and former Carbon County Rep. Jeb Steward of Encampment. They will seek a ballot initiative calling for additional wind taxes.

The fact that meaningful debate on this subject was curbed by legislative leadership during the present session will likely lead to an increased interest among members of the public. Time, alone, will tell whether this approach will be successful.

Correction: This story was emended Feb. 26 to correct the spelling of former Rep. Jeb Steward’s name. — Ed.

Michael Madden

Michael Madden served 12 years in the Wyoming House as a Republican representative from Buffalo, including seven years as chairman of the House Revenue Committee. He is an economist and holds a doctorate...

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  1. does someone have to own something to utilize the resource? My grandfather on Robber’s Roost in the way-back had a windmill for water for his cattle, saved excess in truck batteries to use later in the house for his personal electric use. My Aunt told us he later figured out how to sell excess back to the rural electric association….

  2. Maybe instead of a higher wind production tax, WY should incentivize wind producers with an R&D tax credit to develop technology for storing and transporting wind energy rather than via huge Transmission Line corridors, from WY. to Utah, Las Vegas and So. CA. Seems like an antiquated piece of technology and it comes at the expense of everything and everyone that lies in it’s path. The Camp fire in CA., the largest fire in CA. history was caused by a lack of maintenance oversight and a transmission line equipment failure, The corridors ruin the wilderness and wildlife experiences of people wanting to recreate, enjoy and spend lot’s of money hunting and fishing in the West. It is well documented that EMFs are a human health hazard and the fact that they are taking private property by way of eminent domain to run these Transmission line corridors just adds insult to injury.

  3. Wyoming wind energy already pays its fair share in taxes—it contributes to property, sales and wind production tax revenues. This benefits multiple counties throughout Wyoming as well as overall state revenue, with contributions numbering in the millions of dollars every year. Although Wyoming has one of the country’s strongest wind resources, it’s surrounded by neighboring states like Colorado, South Dakota and Nebraska that also feature strong winds. That means in order to attract new projects—and the jobs and revenue they bring—Wyoming needs to maintain a tax environment that’s competitive with its neighbors. Wind developers want to harness Wyoming’s wind, and the best way to ensure that is to keep the state’s production tax at its current level. Raising it will only drive new projects across state lines while increasing the cost of electricity.

    -Tom Darin, Senior Director, Western State Affairs, American Wind Energy Association

  4. I implore anyone considering supporting a tax increase on Wyoming’s wind-generated electricity to first consider the studies conducted exclusively on wind energy development, taxation, and the renewable energy market and know all the facts. After years of closely considering all issues, we in Carbon County and other counties know that keeping taxes at the current level for wind plants is fair and gives us the best opportunity for securing new economic diversity and billions of dollars in new investment in Wyoming.

    Two studies conducted by the University of Wyoming support this. One study from 2016 showed that Wyoming “stands to lose significant economic activity and state revenue” worth more than what may be gained by increasing taxes on wind power, because of the risk that our wind electricity will be too expensive compared to renewable electricity available from other states, so then won’t be built. If the five studied wind projects can be built, the UW study projects $7.1 billion in new economic activity, $2 billion in new tax revenue for schools and governments, thousands of jobs, and many other benefits delivered to Wyoming.

    Another UW study presented at our annual meeting in December 2018 shows Wyoming wind plants are already at a cost disadvantage when compared to other Western states, considering the current taxes paid by Wyoming wind in the form of property taxes, sales taxes, and electricity taxes, which other states do not impose. UW’s Dr. Robert Godby told another magazine, “Current wind contracts are estimated at $16/MWh-$20/MWh… Quintuple that (electricity) tax, though, and you’re going to “gobble up from 25 percent to over 30 percent of the potential gross revenues any developer could get.”

    Finally, Wyoming prides itself on being business friendly. Is doubling, tripling or quintupling any tax on any industry business friendly? Many legislators pledged no new taxes. Utilities have stated they are watching the wind tax proposals carefully and are fully aware that any of the proposals on the table would likely increase cost of electricity to their customers. Are you willing to tax yourself and increase your electric bill?

    Cindy Wallace
    Carbon County Economic Development – Rawlins

  5. This analysis is parallel to the parable of the Blind Men and the Elephant. I’ll go with the Blind Wyoming Legislator and the Wind Turbine to make the point that presently only ONE other state has an actual on-the-ground -into-the Bank tax on Wind Energy production , that being the wind powerhouse of Minnesota. That tax is < $ 1.25 per Mw , and none of the other states better known for wind farms and ramping up a robust wind energy portfolio have a tax on actual wind energy… Texas, Iowa, California ( going back several decades ! ) , Oklahoma, Illinois, Kansas , oregon, Washington. Those states produce 90 percent of wind energy. Only Minnesota taxes the electricity at the meter. If enacted, any of Wyoming's proposed production tax on windpower would be the highest tax in the state with the least number of turning turbines . That is no way to attract new business in the realm of alternative energy . Meanwhile, foosil fuels are withering on the vine. Shoot yourself in the other foot, Wyoming legislator. Madden should check back to economists and politicos in his old home state of Iowa for a more encompassing perspective on taxing windpower. Or not taxing actual power production. It's not like States can't get some broader revenue from property taxes and other more conventional revenue streams derived from windplants, but Wyoming never seems to learn and remains it's own worst enemy . What have all the tax breaks given to railroads dones for us ? Reducing coal severance taxes was hugely counterproductive coming and going no matter which direction the tonnage charts were sloping. Continuing to subsidize fossil fuels is starving an already anorexic State coffer. Wyoming has allowed industry to have its way with State taxes, and now we hear the piper leading the funeral procession for fossil fuels with nothing to replace the inevitable loss of mineral tax largesse. We can't tax the 19th century.

    Mike Madden is among the the Blind Men and the Wind Turbine, right there in the grope with Cale Case , Eli, Jeb, and others. A ballot initiative for wind taxes ??? —how stupid. Asking all the wrong questions. Repeating past mistakes expecting a different outcome, which is a firm definition of insanity.

    Nobody owns the wind.