PCW, officials looking to make trip to Buffalo on wind tax
By Chad Abshire
RAWLINS — Local officials are preparing for a trip to Buffalo later this month in an effort to stop potential additional taxes on wind generation in Wyoming.
The Legislature’s Joint Revenue Committee meets Sept. 22-23 at the Hampton Inn in Buffalo to discuss ideas touted during a May meeting that could halt, or outright kill, a pair of wind energy projects in Carbon County — Power Company of Wyoming’s Chokecherry and Sierra Madre Wind Energy Project and Viridis Eolia Corp.’s Little Medicine Bow Wind Energy Project.
Either of those getting axed could spell disaster for the area and the state, Carbon County Economic Development Corporation Executive Director Cindy Wallace said.
With at least six members of the EDC making the trip, Wallace said other folks and members of the public were welcome to come as well.
“We want to see the room full,” she said. “Anyone who doesn’t want this wind tax can show up.”
Wallace said she opposes the tax idea on the simple basis that it “doesn’t make sense.”
With Wyoming as the only state that already imposes a tax on wind generation, Wallace said a recent trip to a wind energy trade show was met with a bevy of comments on Wyoming — “Oh, aren’t you the state puts the tax on the wind?”
The state already taxes $1 per megawatt hour of wind produced here. One bill the Revenue Committee suggested the Legislative Services Office look in to in May was bumping that to an unspecified amount, with some reports stating that figure could reach $12 per megawatt hour. The second bill the LSO was directed to look at was requiring wind companies to provide a portion of the federal Production Tax Credits they receive.
Last month, Revenue Committee chair Rep. Michael Madden, R-Buffalo, told the Daily Times that just because Wyoming was the only state with such a tax, that didn’t make it wrong.
“Wyoming does not pick favorites,” Madden said in an Aug. 18 phone interview. “Just because we are the only ones that do it, I guess you could say we are the only ones doing it right.”
Uncertainty provides difficulty
Any bump in price leads to uncertainty, PCW Director of Communications Kara Choquette said, and uncertainty is not something a business wants.
“That is one of the toughest things for a business to face in any industry,” Choquette said. “That’s very difficult to deal with.”
PCW’s eight-year-plus quest to construct what is slated to become the largest wind project in North America — right in Carbon County’s back yard — would install 1,000 turbines south of Rawlins producing 3,000 megawatts of energy.
But when PCW is competing with similar companies that don’t have to deal with additional taxes and, in fact, might be receiving abatements and credits, it’s more than just hard work to make up the difference, Choquette said.
“It makes it impossible to compete with other projects in other states,” she said. “That’s the real issue for us in the market we’re serving.”
She said the Chokecherry and Sierra Madre project would be similar to Sinclair Oil Refinery.
“Just like Sinclair is refining its gas and fuel projects, some are sent to other places,” she said. “You have to have a path to get that product to market. That path is a cost.”
The cost of business
Delivering wind up to 730 miles away isn’t cheap, Choquette said.
PCW figures show the wind project paying $106.4 million in property taxes over eight construction years and $271.1 million over 20 operation years; as well as $232.4 million to sales and use taxes over eight years of construction and $170.6 million over 20 operation years under the current $1 tax. Combined, those total to $780.5 million.
Anything else and the project becomes unprofitable. And a business attempts to be profitable, Wallace said.
“This could hinder or completely destroy either project if they tax it too much,” Wallace said. “You have to be able to sell your product. If you’re wanting to sell it to other places, and if another place can sell it cheaper, where do they go? You’re a business. You have to make a profit.”
Choquette said PCW was “trying to create a make in Wyoming product, which will deliver a lot of benefit to Carbon County and Wyoming.”
And it would be quite a benefit given the current economic hardship facing Wyoming.
Of the $232.4 million in sales and use tax, 53 percent — around $123 million — will stay in Carbon County. The remainder heads to the state’s general fund ($106.9 million) and other wind generating counties in the state, like Albany, Natrona and Sweetwater.
Carbon County and Rawlins currently both stand to gain more than $49 million from the $232.4 million, with every other town getting a share. Each town in the county is set to get more than $1 million except Dixon and Riverside, which are estimated to receive $515,000 and $276,000, respectively. The big winner outside Rawlins is Saratoga, estimated to receive $8.9 million.
“No one industry can make up for what coal has done for Wyoming,” Choquette said. “It’s multiple businesses working together.”
Viridis documents show that its wind farm would generate more than $500 million in tax revenues, with around half of that staying in Carbon County, with additional royalties, over $100 million, paid to the Bureau of Land Management and state coffers.
“This is telling an industry that we’ll tax you more to come in,” Wallace said. “The state says it wants to diversify the economy — this will help do that, maybe more so in Carbon County — but with other wind projects are going around the state, this tax could prevent those.”
Wallace said Viridis and Chokecherry would combine to create 181 jobs, not counting indirect jobs. She said, having spoken with Viridis representatives, if the tax goes through, “it’s going to affect them and they might not even come.”
Viridis seeks to construct 300 turbines for a 1,870 megawatt wind project on private and state land, Wallace said.
Getting the information out there
Choquette said the Chokecherry project will be built based on the market. She said no buyer was yet in place for the energy the project will produce and said it was difficult to discuss that with potential buyers given the uncertainty of additional tax.
Choquette also said PCW officials had met with each of the 14 members on the Revenue Committee, saying the company “wanted to have the opportunity to meet with (them) and talk about us, our project, what we’ve been working on and our business.”
Saying the committee members had been “gracious” with their time, Choquette said there was a lot of information to share and that PCW wanted to do it beforehand so as to not bog down the meeting agenda and explain it clearly.
“When they asked questions about the industry, we sought to research and provide answers,” she said. Questions included what sort of wind development has been going on and how many projects have happened.
Interim City Manager Scott Hannum, Mayor Robert Grauberger and Councilman DeBari Martinez also intend on making the trip to Buffalo.
Of the meeting’s importance, Hannum said ,“I don’t think anyone realizes how big this is.”
“This is something stable for a 20-year life,” Hannum said of the Chokecherry project. “You can’t put the value on how important that is. We’re living and dying by the sales and use tax roller coaster. This would be a stable source or revenue not dependent on oil or gas. That’s unprecedented for this community. We haven’t had that.”
But if the tax were to go through and PCW were to pull out, Hannum said it wouldn’t be a death knell for Carbon County.
“Will it hurt? Yeah. But is it a missed opportunity for the state? I think so,” he said.