by Ron Micheli
We in Wyoming have to get used to the fact that there is going to be a wind energy industry from now on in the U.S. The only question remaining is will Wyoming be a partner in this industry or not? The question is simple and the answer obvious; Wyoming wants wind energy production.
The benefits to Wyoming are many, but the bottom line is this industry will further diversify our economy and help alleviate the boom and bust cycles of commodity based economies. It is by no means the entire answer, but it brings us one step closer.
Development of wind in Wyoming presents some unique challenges and opportunities. As we move forward, we should look at some of the lessons we have learned in the past.
I was a member of the House Revenue Committee when the Powder River coal industry was in its infancy. At the time, the debate to find a way to tax Wyoming’s modern coal production was very controversial. Everyone wanted to make sure Wyoming got its fair share of revenue and many clamored for tax rates that matched or exceeded the taxes of neighboring states.
We resisted that and took a more strategic approach. We examined tax rates in surrounding states with similar coal reserves. We also examined the costs to extract Wyoming coal and to get the coal to market. We then put in a tax structure to make sure Wyoming would get its fair share, but also encouraged the development of Wyoming’s coal. In addition, we put in place a regulatory scheme that protected Wyoming and provided certainty for coal companies to allow them to operate in Wyoming profitably.
The results have been clear. For decades, Wyoming’s coal industry has flourished – providing thousands of jobs and hundreds of millions of dollars for Wyoming. Meanwhile, states with similar coal reserves have seen less development. As a point of comparison, last year Wyoming produced 460 million tons of coal and Montana produced 40 million.
I worry the wind tax proposals by Governor Freudenthal does not adequately consider the larger issue of keeping Wyoming competitive with other states. As I have researched the issue and visited with landowners, wind energy representatives, and businessmen, I strongly believe that the timing of those taxes and the degree they burden the industry will drive wind energy away from Wyoming.
Market forces are in play and we cannot ignore them. If it is easier and cheaper for a company to develop a wind energy project in New Mexico, they will go there and Wyoming will lose out on the billions of dollars that will be invested in the development of transmission.
More importantly, it seems politicians forget that private industry is the nexus for steady economic growth and job creation. Wind development helps the Wyoming economy in far reaching ways. For example, the concrete for the foundations of the turbines can be poured by Wyoming workers. Wyoming electricians, engineers, electrical supply distributors, contractors, construction workers and maintenance workers will build and maintain the turbines. Those workers directly employed by the industry will spend their incomes at restaurants, grocery stores, sporting good stores, etc. in our communities improving the local economies and providing revenues directly to local governments.
There are other major issues we need to consider. Municipalities and counties need adequately compensated for the impacts of the industry on our infrastructure. We need to be particularly concerned with the impact on our wildlife, especially the sage grouse. Also, we need to be able to strike the right balance between landowners’ rights and the importance of transmission of energy to markets in other states.
These are all issues that we can deal with effectively as we move forward. The rush to snag revenue at the level Gov. Freudenthal proposes may not be in the long-term interests of our state. As the legislature continues to examine this issue, I encourage them to take a longer view, as we did with coal. Make sure Wyoming is adequately compensated and protected, but do it in a way that makes Wyoming attractive to new development and allows a vibrant new industry to gain a footing.
We should use state government to maintain an environment where it is easy to do business. This means keeping taxes low, spending down, and doing away with over-burdensome regulations. By doing those things, Wyoming can have steady economic growth with good jobs. We can either be a partner with the wind industry, or we can send them to other states.
I prefer they stay right here.
