RAWLINS — Dr. Rob Godby, an expert with the University of Wyoming Center for Energy Economics and Public Policy, told attendees at the annual Carbon County Economic Development meeting last Monday that a large wind production tax hike could hinder local production.
“If you make that tax too high,” said Godby, “some of that development will disappear.”
CCDC Executive Director Cindy Wallace was informed through a recent Interim Revenue Committee meeting that Sen. Cale Case, R-Lander, may propose during the upcoming Legislative Session a $4 increase to the state’s current Wind Production Tax of $1 per kilowatt hour (kWh).
In addition, says Wallace, Sen. Case’s proposal may include abbreviating the current incorporation of the tax, which starts three years following initial finalization of a project, to right when a given wind farm is built.
All is not lost, however.
According to Godby, the state of Wyoming -- at 1,489 Mega Watts (MW) -- is currently ranked 16th in the United States and third out of the 11 states in the western grid (the US has three grids for energy production) in wind capacity.
A few reasons as to why the Cowboy State doesn’t rank higher, Godby further noted, is because other states have more transmission capacity; they -- particularly with less resources -- have advancing technologies which capture more wind, and that “Wyoming is relatively far from the biggest market -- California.”
Nevertheless, if the state were to only gradually raise the Wind Production Tax, as opposed to increasing it in one substantial sum, it could see an increase in benefits. If in fact the state incentivizes energy companies by exploiting wind as a good resource as well as making available more infrastructure investments, an uptick could be seen in the tax base.
Here's how this may work.
The first thing to do would be to increase transmission capacity and distance from markets.
Then provide more tax credits and exemptions. According to Godby, “sales tax for energy production in Wyoming hasn’t been exempt since 2011.
Finally, they would need to increase technological advances.
According to a 2016 study Godby presented, potential impacts of new projects are financially staggering. If all goes accordingly, total economic activity in Wyoming would equate to $7.1 billion, 51,178 job-years of employment and $3 billion in labor income.
In addition, projected tax revenues (2016) at the current Wind Production Tax rate equates to $1.9 billion over the next 20 years.
Currently in the works in Wyoming are 10 wind farm projects, which would produce a total of 7,511 MW if all completed. In Carbon County alone, there are five projects either in the planning, the permitting or the construction phases, which, if all built, would account for more than 75 percent of the state’s MW production.
Again, if all are built, says Godby, “We’re about to have a big wind boom.”
Another potential hindrance to production includes the misconception that wind production is competing with other Wyoming energy industries, such as coal production. The notion, however, according Godby, isn’t necessarily true, in that states like Iowa and Texas help power the other two grids in the United States -- which are also powered by Wyoming coal.
Meanwhile, said Godby, Wyoming wind is reserved for the western grid, an area where Wyoming coal doesn’t completely cover.
Although Godby did acknowledge some potential problems attached with more wind production -- these includes migratory animals, “viewscapes” and the prevalence of more industrial sites, among others -- he did reemphasize the notion that the state could lose more than it gains if they’re not truly educated on the matter.
“As long as Wyoming keeps talking about raising its wind tax, it creates more uncertainty,” said Godby. “Don’t underestimate the likelihood that everything will stay the same if you raise taxes.”