Reprinted from ClimateWire with permission from Environment & Energy Publishing, LLC. 202/628-6500

By Debra Kahn, ClimateWire

Wyoming Gov. Dave Freudenthal (D) is determined to levy a production tax on wind power to level the playing field against mineral resources.

Speaking recently at the Commonwealth Club in San Francisco, Freudenthal explained why he felt that wind power should be subject to the same taxation as extractive industries that make up 60 percent of Wyoming’s tax revenue and 40 percent of all U.S. coal.

“Wind guys make the argument that ‘We’re so special, we don’t need to be taxed,’ but we need to be more practical and honest,” he said. “If it’s an energy source for which there is so much demand, they can bear the same burden as the rest of us. They get so much support from the federal government, I don’t know that the taxpayers of Wyoming need to subsidize them.”

“If they can’t contribute to schools, roads, etc., it’s not an industry that I want,” he added. “We’re talking about 3 to 4 percent, not some huge tax.” Wind power producers currently pay property tax and sales tax; their sales tax exemption ended at the beginning of this month. Oil, natural gas and coal pay 4 percent in severance taxes, and counties and municipalities can choose to add up to 2 percent more.

Freudenthal is working on a bill that would tax wind production and will submit it through the state Legislature by Feb. 12, spokesman Jonathan Green said.

Wyoming had the fourth-highest growth in wind installations in the third quarter of 2009, with 170 megawatts added for a total of 986 megawatts, according to the American Wind Energy Association. That’s dwarfed, however, by the state’s wind potential. It has 50 percent of the best-quality wind in the United States, totaling 235,000 gigawatt-hours per year, according to federal studies — as well as a big share of the nation’s oil, coal and natural gas production.

Wind industry says ‘no consultation’

Industry representatives were wary. “We are puzzled as to why Wyoming would want to impose a tax on a promising new business and drive investment away to other windy and eager states,” said AWEA spokeswoman Christine Real de Azua. No other states have a statewide production tax on wind, she said, but at least one town, in Minnesota, exchanged a property tax for a local generation tax. “The key element is they worked with the wind industry, whereas here there’s no consultation,” she said.

Jeff Hymas, a spokesman for PacifiCorp subsidiary Rocky Mountain Power, which owns eight wind power facilities in Wyoming, said only that he was concerned about a tax’s effect on ratepayers. “Until we see proposed legislation, it’s too early to say what the company’s position will be,” he said. “Our primary concern is the effect any potential changes would have on our customers.”

Freudenthal added that most wind companies don’t make their equipment in the United States, so towns don’t get many new jobs. The petroleum industry has the potential to generate more green jobs through carbon capture and sequestration, he said.

“The guy who has the Ready-Mix company gets to pour the big slab to support it, there’s a guy who does a little dirt work, might get a little uptick at the hardware store. Frankly, wind energy just doesn’t bring anyone,” he said. “The more commonplace thing is having people working at the oil patch controlling emissions.”

Concerns about jobs and open space

Wyoming residents are also protective of their open space, he said.

“Now that the novelty’s wearing off, maybe we don’t like these wind turbines,” he said. “We’re used to being able to go out and see for miles, but if we’re going to develop a wind resource, we’re going to have to live with some power lines. No one wants to live with power lines.”

Brad Mohrmann, Sierra Club Wyoming’s assistant regional representative, said Freudenthal’s motivation likely stems from the oil and gas industry’s prominence. “The oil, gas and coal industry runs Wyoming,” he said. “I think they see it as a threat, and since that industry runs this state and the wind industry is a newcomer to the game, oil, gas and coal have their say.”

“Any gains in the wind industry could potentially take away revenue streams from extractive industries,” he said. “I think the fear is that we need to get something large in return for wind, because it could take away other revenue sources.”

The Republican-dominated state Legislature is by no means sure to pass Freudenthal-backed bills, however. It killed his attempt last November to pass a similar bill. “They generally haven’t been in favor of taxing wind heavily like Gov. Freudenthal has,” Mohrmann said.

Details of Gov. Freudenthal’s Wind Power Legislation (from Casper Star-Tribune)

  • Retool the Wyoming Industrial Information and Siting Act to include wind farms of 30 turbines or more. Developers of such projects would be required to provide bonding or other financial assurances to ensure decommissioning and reclamation.
  • Provide minimum state standards, such as buffer zones between wind turbines and other existing facilities. Counties would be allowed to provide their standards that go beyond the state’s minimum requirements.
  • Impose a $3 per megawatt hour excise tax on wind energy produced in Wyoming, which compares to about a 5 percent severance tax on minerals. This includes a provision to send 40 percent of the revenues to local governments and 60 percent to the state General Fund.
  • Suspend the power of condemnation, or eminent domain, for one year “where it might be used to gain access to private lands to construct wind energy collector lines.” The purpose is to give the Legislature a year to study the issue before adopting a permanent solution.

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