Monday, February 15, 2010

House panel softens wind tax

Revenue Committee cuts tax rate

The House Revenue Committee Monday morning backed a bill that will impose a tax on power generated by wind turbines, but not before softening its impact by amending it to delay implementation and to reduce the tax rate substantially.

House Bill 101 Electricity generated from wind-taxation would levy an excise tax "upon the privilege of producing electricity from wind resources" in Wyoming. Gov. Dave Freudenthal called for legislators to support the tax in his State of the State speech last week.

The ESPC supports the idea, and told the committee that the state must tax renewable energy sources in order to sustain its tax base now and into the future.

Advocates for county governments said the tax is needed to produce the revenues necessary to maintain the roads and other basic services the wind-energy companies need. Still, Joe Evans of the Wyoming County Commissioners Association said, "We don't know what the correct rate of taxation should be."

Natrona County Commission Chairman Rob Hendry said Natrona County needs revenues to maintain roads, then quickly announced that as a contractor, he hopes to do business with the companies building wind farms.

Industry advocates lobbed rocks at the idea. A representative of Wasatch Wind, a wind power developer with offices in Canada and Utah, described the proposed rate of taxation of $3 per megawatt hour as "onerous."

Matt Grant, Rocky Mountain Power's lobbyist, said that the taxes will be passed on to customers. Since minerals producers are the company's largest customers in Wyoming, he said, "This tax will be paid by the minerals industry."

House Revenue Committee Chairman Rodney Pete Anderson, R-HD10, (pictured above) proposed an amendment to delay the implementation to 2012, rather than 2011 as the bill originally required. He also proposed reducing the rate of taxation to $1 per megawatt hour. Both those amendments passed.

The bill's fiscal note indicated the tax would generate about $14.8 million in both fiscal 2012 and 2013. But that estimate was based on the $3 rate. It's unclear how much the $1 rate will generate. Anderson said his amendment will postpone imposing the tax for the first three years a generator is in service.

An amendment to send all the revenues from the tax to the counties where wind power is generated was defeated. The bill proposes splitting the revenues, with 60% going to the state and 40% going to the counties where the power is produced.

Grant and other industry lobbyists like Dan Sullivan and Larry Wolfe argued for more thorough study. Wolfe opposed the tax. Sullivan suggested that state probably will develop a power generation tax “of some kind.” Wolfe said the tax would be the first power generation tax in the West, a point later disputed by Chairman Anderson.

Wolfe also said one of his wind-power clients, Duke Energy, has signed such tight contracts with Rocky Mountain Power to buy its electricity that it will not be able to pass-through tax increases as Rocky Mountain can.

When the committee considered the amendment to cut the tax rate from $3 per megawatt hour to $1, Rep Sue Wallis, R-HD52, Recluse, proposed cutting the rate to just 5 cents per megawatt hour. Her amendment failed, garnering support only from Rep. Mark Semlek, R-HD1, Moorcroft, and Rep. Amy Edmonds, R-HD12, Cheyenne.

The bill ultimately won approval from the committee on a 6-3 vote with Edmonds, Semlek and Wallis voting no.

Here's the committee vote as listed by the LSO:

Ayes: Representative(s) Anderson, R., Esquibel, K., Goggles, Madden, Miller and Petersen

Nayes: Representative(s) Edmonds, Semlek and Wallis

2/15/2010 H Placed on General File

An eye on Blue Sky

Discussion of the wind generation tax ranged fairly widely, with the committee focusing attention on Rocky Mountain Power’s Blue Sky Renewable Energy Program.

Rep. David Miller, R-HD55, Riverton, asked if any of the company’s wind-generated power is sole in Wyoming or if Wyoming customers are charged for it.

“No we are not,” RMP lobbyist Grant answered. He noted that once electricity enters the grid it is impossible to tell where or how any of the electrons were generated. The company simply gives customers the privilege to buy green power.

“How much of your green power is sold that way?” Chairman Anderson asked. “All of it or more than all of it?”

The company website notes that its customers can participate in the Blue Sky program “and help bring new renewable energy facilities on-line.” Once customers enroll in the program, RMP says it buys renewable energy credits from newly developed renewable energy facilities.

“Buying one 100-kwh block of Blue Sky each month for a year is as good for the environment as planting nearly 63 trees or not driving a car for 1,482 miles!”

The RMP web site lists this explanation of the calculation of environmental benefits:

"Rocky Mountain Power purchases the exclusive right to claim all of the environmental benefits from the generation of electricity produced by renewable energy power plants in the exact amount of Blue Sky purchases. The environmental benefits figures are based on the average non-base load generation emissions from the Western Energy Coordinating Council (WECC) region, as updated December 2008, and on data and calculations provided by the U .S. Environmental Protection Agency."