Legal Updates

Wyoming Legislature Rejects Attempts to Penalize Wind Energy Industry

In a state that has been described as having “world class wind,” a boast hard to ignore during a winter that featured days upon days of wind gusts reaching 80 mph at times, wind energy has struggled to find a secure toehold due to the vice-like grip traditional extractive mineral industries have on the energy sector in Wyoming.  That may be changing, however.

This year, bills were proposed in both the Wyoming House and Senate that sought to limit the ability of wind producers to market their product within the State.  Luckily (or not, depending on your point of view), each bill failed in committee before being introduced on the floor of either house.  House Bill 127 sought to increase the tax on wind energy from $1.00/megawatt hour to $5.00/megawatt hour.  This bill was defeated by a 7-2 vote by the House Revenue Committee on January 23, 2017.  In the Senate, Senate File 71 proposed that utility companies that use wind or solar power would incur a penalty of $10.00/kilowatt hour starting in 2019.  After widespread public opposition to this bill reached the desks of the Senate, it died in committee.  So, while Wyoming is the only state in the U.S. to tax wind1, and while wind producers still face a more difficult permitting process before the Industrial Siting Council than their traditional extractive mineral counterparts, the State legislature prevented two significant roadblocks to future development from being erected.

Currently in the works is the largest wind farm in the country, the Sierra Madre-Chokecherry Wind Farm, located in Carbon County, just south of Rawlins.  When complete, the farm will have roughly 1,000 turbines, estimated to produce 3,000 megawatts of electricity per year.  Had House Bill 127 gone into effect, Power Company of Wyoming, LLC (wholly owned by The Anschutz Corporation), the company that owns the farm, could have paid up to an additional $48 million per year in State taxes (based on estimated production of 12,000 GW hours per year upon full build-out).  With the cost of production of a kilowatt hour of wind power reaching parity with the cost of production from traditional fossil fuels, before factoring in tax incentives and subsidies, it makes little sense to penalize one industry so heavily in a state that is currently hurting for tax revenue.

It should be noted that coal is making a bit of a comeback in Wyoming, as producers emerge from bankruptcy and in the immediate aftermath of easing of various environmental regulations.  Furthermore, the national rig count for oil and gas wells has gone up in recent months, a trend that could extend to Wyoming fields.  In light of this comeback, combined with the legislature’s decision not to penalize wind producers, it seems that it may be a good time to be an energy company of any kind in Wyoming.

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