Wyoming’s Wind Industry Dodged New Taxes in 2024 Legislative Session, but Faces Pushes to Increase What it Pays the State

By almost any measure, Kara Choquette’s hometown of Kearney, Nebraska, is windy, particularly where it meets Interstate 80. But a drive 450 miles west, and over 4,000 feet higher, leads to an even windier place: Carbon County, Wyoming. 

In 2009, Choquette leaned into that wind, moving west and taking a job as communications director with the Power Company of Wyoming, which had designs to build a large wind farm in Carbon County. Two years later, elected officials in Wyoming looking for a way to capitalize on burgeoning energy industries altered the wind industry’s cost of doing business in the state. The legislature reimposed once exempted sales and use taxes on renewable energy equipment at the state’s standard rate of four percent, and implemented a novel tax: After the first three years of operation, wind companies would pay state coffers one dollar per megawatt hour of electricity they generated.

Reinstituting sales and use taxes provided some revenue for localities up front, and keeping the generation tax relatively low was the legislature’s way of saying “let’s keep Wyoming competitive” for producers in an emerging clean energy economy, Choquette said. But the generation tax, despite its three-year grace period, is a burden unique to the wind industry, she said, and Wyoming is the only western state to levy one.

The generation tax has come under heavy scrutiny, including during this year’s legislative session, when Wyoming lawmakers hoped to increase the amount wind energy companies would have to pay the state, but couldn’t land a blow. 

Two of the bills, House Bill 109 and Senate Bill 116, would have repealed the industry’s three-year generation tax exemption, but they died before they reached the floor. Another, Senate Bill 85 introduced by Sen. Cale Case, who represents Lander and the greater Fremont County and has long supported increasing taxes on wind companies, would have exempted consumers from sales taxes on energy purchases, but only if a separate 3.5 percent tax on gross earnings from electrical generation passed the House. Case’s bill received enough votes in the Senate for introduction and was referred to the chamber’s Revenue Committee, where it received no votes. A corresponding House bill had already failed introduction.

These bills were “a tax increase that would risk harming the economic viability of projects that happen in Wyoming,” said Choquette. Despite being in its nascent stages—in 2022, there were nine companies in Wyoming with active wind farms averaging about 113 megawatts of capacity, according to a University of Wyoming study—the wind industry is already a robust contributor to state coffers. But if it becomes too costly to build there, she argued, new developers would be discouraged from coming to Wyoming. 

Case doesn’t agree. Wind companies already “don’t pay very much” to the state, he said, and the industry as a whole could withstand an increase in taxation. Because wind farms change viewsheds, sometimes interfere with migratory patterns of birds and wildlife and can export most of the energy they generate to neighboring states, “Wyoming doesn’t benefit a lot in proportion to their activity.”

Choquette and Case are prominent avatars for two sides of an issue that cuts deeply in Wyoming, a state whose track record as a net energy exporter (historically by producing planet-warming fossil fuels) is almost as long as its laissez faire approach to economic regulation. Integrating the wind industry into Wyoming’s energy fabric has been thorny, and at times fanned fears about the footing of fossil fuel companies and prompted hope that renewable energy could help diversify Wyoming’s economy. Tax organizations, industry insiders and local communities that host wind farms all say the current taxation arrangement benefits all parties and will help the industry grow. Some proponents of higher taxes counter that wind companies can pay more while others disavow climate change and the need for clean energy at all. 

Both sides are adamant they’re right, but the industry’s supporters worry that the continual back and forth has created a patina of uncertainty that clouds the industry’s prospects and better serves what some say are detractors’ true purpose: stymying the proliferation of wind energy in Wyoming.

From Extraction to Generation

Questions about how to tax Wyoming’s largest source of renewable energy have been swirling for nearly 15 years. Since 2010, there have been over a dozen attempts to change how the state taxes wind companies. None have succeeded.

Case is particularly adamant Wyoming increase its generation tax because of the implicit relationship between fossil fuels and renewable energy in the context of federal spending to combat climate change. “One industry is on the wane, and one industry is on the rise,” he said. Wyoming needs “to figure out a tax structure that realizes that and keeps our state healthy.”

Wind companies receive federal subsidies, like the Renewable Electricity Production Tax Credit, he said, which gives companies up to $27.50 credit for every megawatt hour of energy they produce in a project’s first 10 years. (Fossil fuel companies have received federal subsidies for decades.) Wyoming’s generation tax effectively decreases the federal tax credit by a dollar, a decrease so small that companies can afford to pay more in taxes to Wyoming, according to Case.

“The industry that’s on the rise has been telling us that if we had any taxes whatsoever, they wouldn’t come to Wyoming,” Case said.

Right now, Wyoming is heavily dependent on “severance” taxes, a fee coal, oil and natural gas companies pay at up to 6 percent of the market price of the minerals they extract from the earth. In 2022, the state collected over $1 billion in severance taxes, money that came from almost 600 producers and accounted for about 10 percent of the state’s entire annual tax revenue, the Wyoming Department of Revenue reports. The wind generation tax, by contrast, generated about $4.3 million from far fewer companies.

Those companies should also pay more for disturbing the state’s serene viewsheds to export energy elsewhere, Case said. “In the rush to talk about the environmental consequences of global warming, people have not thought adequately about the environmental consequences to Wyoming’s landscapes, migration corridors, animal resources, you name it. They haven’t.” 

Case, who lives at the foothills of the Wind River Range, says he likes “to sit on a ridge and look at a Wyoming that was somewhat like what my forefathers saw, or the Native Americans saw—or at least you can imagine it that way.” He fears that with wind farms on the rise and turbines only liable to grow “even bigger” in the coming decades, that will no longer be possible.

According to Choquette, wind companies already go through a “really rigorous” process to meet “documented laws and obligations” that require them to complete local, state and federal environmental impact surveys and assessments. A company must also produce plans for how it would restore land to its former condition once a wind farm has reached the end of its lifespan, and provide financial guarantees “sufficient to assure complete decommissioning and site reclamation of the facility,” according to the Department of Environmental Quality’s industrial siting rules.

And, in a market where every producer can qualify for federal tax credits regardless of where they choose to build, what really matters to a company’s bottom line “is the difference in the state tax policies as well as your costs,” she said. 

Wyoming’s overdependence on severance taxes may be the one point those engaged in this debate can agree on. Relying on extractive industries for such a large portion of its tax revenue has left Wyoming in a “boom and bust cycle,” for decades, said Ashley Harpstreith, executive director of the Wyoming Taxpayers Association. Such a dependence doesn’t make fiscal sense, she said, so “anything we can do that helps broaden the tax base we’re okay with and so are our members.”

Harpstreith was watching the spate of wind taxation bills in the 2024 session closely, and described some them as an attempt to impose a severance tax on renewable energy. If either House Bill 109 or Senate Bill 116 had been introduced, the ones that would have removed the industry’s three-year generation tax exemption, Harpstreith said her organization would have opposed them. Current tax law is working: it “allows projects to get up and going and then it incentivizes others to come here,” she said. “We need to provide a stable place for them to grow.”

Harpstreith doesn’t view renewable energy as a “magic bullet” capable of producing the equivalent of another severance tax, but to her there’s no reason why wind companies shouldn’t “be a contributor to the state’s economy, coffers and revenues and make more vibrant communities and provide a stable revenue source.” 

Renewable energy has fewer moving parts along its supply chain and, “in my opinion, applying a mineral tax mindset to a non-mineral resource is not appropriate,” Choquette said. Since the grace period for the current generation tax benefits wind companies in the short term and local governments in the long run, she would rather see the current tax landscape in Wyoming hold than undergo more facelifts.

Wind companies pay a variety of taxes. “Think of the generation tax as the frosting on the cake,” said Choquette. “What we bring as an industry is the property taxes that are ongoing, and very significant,” which she says companies pay before turbines are generating energy and profits. Those, along with sales taxes and use taxes—“another big chunk of cake”—fund schools, conservation efforts and local districts’ budgets, she said.

A 2022 study from the University of Wyoming’s School of Energy Resources, found that the median wind project, at 500 MW, can contribute over $7M annually in sales, generation and property taxes, revenue streams that would dry up if companies no longer felt compelled to build in Wyoming. According to that same study’s calculations, a project the size of the Power Company of Wyoming’s could generate over $50 million in annual revenue from those taxes.

If Case were to succeed in rallying enough lawmakers to his cause and change how wind energy companies are taxed, Choquette fears it would result in local communities losing billions in future revenue. Wind farms require massive up front capital before ever earning a profit, she said, and raising the generation tax could discourage development to the point where developers seek a more hospitable environment elsewhere.

“Maybe we could use a breather,” Case said of the possibility his proposed policies could slow down wind development in Wyoming. “These are permanent things on the landscape—it’s irreversible.” If development were forced to slow down, he said it could help lawmakers better assess the industry’s present and future environmental, recreation and migration impacts.

Not everyone taking up Case’s cause appears to be motivated by the same desire to better manage industry impact. Several of Case’s colleagues in the legislature who introduced or supported bills that would raise taxes on wind companies are part of Wyoming’s Freedom Caucus, a far right group of lawmakers who have fiercely defended the state’s fossil fuel industry and expressed doubt over the scientific consensus around climate change. Case is aware of this but insists he is not one of the “fossil fuel freaks.”

“I’m not a global warming denier,” he said. “I just believe it’s worth it to pay for the impacts” of wind development.

Benefits to a Small Population

Communities in Wyoming, the nation’s most sparsely-populated state, would be hard pressed to operate on a mixture of property and sales taxes alone. The state has no income tax.

“Wyoming loves to tax everyone but its citizens,” said Harpstreith. Lately, those citizens have noticed the “massive” revenue from wind sales and property taxes leading “a lot of the counties that are reaping those benefits” to “really appreciate the renewable space,” she said.

Carbon County, which is home to 450 wind turbines, is a prime example. In 1978, Terry Wickeum, now the Mayor of Rawlins, Carbon County’s largest community, moved to the area to make money in the energy industry—coal, oil and gas. “Things were booming,” he said. But today, those sectors have declined in the region, and coal has disappeared. “When I first started, we had 2,700 coal miners in Carbon County. Today, we do not even have a person at the gate.”

When the wind industry began making its initial overtures to local government officials decades ago, Wickeum said he and his peers studied whether or not they could help the county replace some of its lost tax revenue.

As a county commissioner, Weickum was part of the process that eventually resulted in the current generation tax, but neither county residents nor wind companies were happy with how the state was dealing with the industry. The power companies did not approve of the generation tax, he said, and citizens were skeptical of the new industry. Nonetheless, the companies decided to do business in the state, and now that they’re there, Weickum said the tax revenue they contribute has proved invaluable, a perspective other local officials have voiced as they welcome renewable energy projects.

“It’s a huge infusion of money,” he said. Without it, the county and its communities “wouldn’t have new police cars or fire trucks,” and during the pandemic, it helped keep Carbon County revenue positive. “People don’t yell at me anymore,” he said, “they thank me.”

The industry is not perfect. Weickum does not find the turbines particularly appealing to look at, and he had not considered the problems windmills could cause hunters, for instance. But “there isn’t anything that doesn’t have somewhat of a negative impact,” he said, and on the whole, “people up here are finally getting used to it.”

If current tax laws were to hold, the Power Company of Wyoming estimates that once its wind farm is operational it would pay $42.5 million in annual taxes to Wyoming for 20 years, with more than a quarter of that going to Carbon County. Its generation tax amount alone—$4.2 million—would nearly match the combined 2022 generation tax contributions to the state’s general fund from every other Wyoming wind farm.

“Sure, the tax revenues sound impressive,” Case said. But “there’s a scale problem here.” Wind companies, he argued, are making some of the largest capital investments in the state today, and the generation tax offsets a small portion of the tax break companies receive from the federal government.

Weickum finds Case’s arguments disingenuous. The two have sparred in Cheyenne, Wyoming’s capital city, over wind tax reform 19 times, Weickum said, and there is no love lost between them. In Lander, “there’s no possibility of having wind energy,” Weickum said. “How dare him tell us we can’t make a living?” Case’s stance, according to Weickum, is rooted in a prejudice against the wind industry. “If it was a push to do the right thing, that’d be one thing,” he said. But Case’s goal is “absolutely to destroy alternate energy sources.”

Case called that idea “ludicrous,” reiterating that lawmakers have moved too quickly to embrace the industry in Wyoming without considering its environmental impacts. 

Weickum maintains that local governments have already done that.

“If you come down Interstate 80 and turn south going to Saratoga, you look to the left and there’s beautiful Elk Mountains,” he said. Carbon County worked with the Bureau Of Land Management to set aside that viewshed as an area off limits to wind development. Turbines are “too tall, they can’t be there,” he said.

Wind farms have their drawbacks, but he finds them no less visually obtrusive than Carbon County’s fracking wells.“Every single thing is a give and take,” he said.

Weickum is a Republican “to the bone” and he supports oil, coal and gas, but he also believes Carbon County must “use what we have” to make a living. Today, that means welcoming wind companies. 

Growing Support for Clean Energy

As the wind industry has started to become more prevalent in Wyoming, local sentiment towards its presence in communities may be shifting. 

Rachel Hamby, a policy director for the Center For Western Priorities, sees a groundswell of support for wind as one of the reasons bills aiming to hamper the industry have failed to pass. “When I look at this, what it says to me is that there is a sizable number of legislators in Wyoming who recognize that Wyoming voters are increasingly concerned about climate change and interested in seeing Wyoming participate in and contribute to the energy transition,” she said.

She pointed to data from a recent poll conducted by Colorado College, which found evidence of a growing appetite among Wyomingites for the shift to clean energy. A majority of respondents in the state said they viewed climate change as a “serious problem,” preferred that the state increased renewable energy production while conserving natural landscapes and opposed removing restrictions that would increase mining and fossil fuel production.

She cautioned that “the scales are not fully tipped” in favor of renewable energy, “but there’s an increasing number of Wyoming voters who want to see clean energy development and understand that’s the economy of the future.”

More people in Wyoming may be coming around to wind, but the industry is still the state’s most divisive form of energy. That was one of the takeaways from a statewide random sample survey completed in 2023 by Jessica Western, a University of Wyoming research associate. She and a team of researchers arrived at those conclusions by surveying roughly 1,000 Wyomingites about their views on energy policy and economics. They got about 400 responses and found that, while 51 percent of people viewed wind energy as “favorable,” 30 percent opposed the industry—double the number opposing coal and the highest mark for any form of energy. 

“Oil, coal, natural gas, to some extent. It’s part of Wyoming’s DNA. It’s part of their culture, their identity,” Western said. 

Eliminating planet-warming greenhouse gases from the energy sector, effectively telling industries that have contributed billions to local economies to close up shop, creates a “cognitive disconnect,” she said, “a psychological process Wyoming has to go through to adjust to new types of energy and process what that means for their livelihoods and communities.”

As part of the study, Western, who studies conflict resolution and has a Ph.D. in natural resource management and policy, also surveyed 22 Wyoming energy experts, asking each to rank responses from the general survey according to how much they agreed with the opinions they expressed. 

Using those answers, she found three distinct perspectives on Wyoming’s energy future. Among them: Wyoming should welcome all types of energy generation—including renewables—as that will diversify local economies and still help preserve the state’s environment.

“It’s not so much about the form of energy. It’s about jobs. It’s about communities.” 

In general, if the transition to clean energy was framed as being “about the markets, then people are far more interested in trying new methodologies and innovations,” she said.

“We need to attract companies,” said one of the surveyed energy experts. “We’re competing not just on a state level, we’re competing on a world level for these companies to want to come in, they want to locate where there’s tax incentives, where there’s a levelized playing field where they know the rules to play in the sandbox.”

Wyoming energy insiders and residents also felt that lawmakers could play an important role in easing the growing pains of a market shift that was out of their control. “Most of the statements reflected a desire for the Legislature to ‘think out of the box’ and not give preference to coal, oil and gas over renewable energy resources,” Western wrote in the report. During interviews with energy experts, Western said a majority felt lawmakers did not always appear well-informed about energy policy, and the group expressed a desire for Wyoming to support fossil fuel industries “and everything else—wind, solar, hydrogen, nuclear.”

If lawmakers didn’t take a broad based approach, they might risk being out of step with their constituents, for whom, according to Western, “it’s not so much about the form of energy. It’s about jobs. It’s about communities.” 

Beyond Wyoming’s Borders

The fact that the wind industry appears to have enough support across Wyoming—from its citizens, a plurality of regulators and several county commissioners—to withstand potentially punitive tax changes should not necessarily come as a surprise. Wyoming has long been a business friendly state, eager to welcome companies that promise to harness its abundant natural resources to sell for a profit out of state. 

That was the calculus for the Power Company of Wyoming, said Choquette, who is also a member of Wyoming’s Energy Authority board of directors. As renewable energy becomes more affordable and economically competitive, “the competitive dynamics in the energy space have changed and are changing for Wyoming,” she said. 

Wyoming has long produced more energy than it can use. For most of the state’s history, this meant it mined, drilled and (recently) fracked out more fossil fuels than its residents needed to keep the lights on and their gas tanks full. The state’s abundant wind resource is no different.

The Power Company of Wyoming’s wind farm is expected to consist of 600 turbines spread out over almost 1,500 acres of land. Its capacity will be so large—3,550 megawatts once it is up and running, enough energy to power over 1 million homes, according to the company—that it could credibly claim to be the largest power plant in the state, regardless of fuel type. But all that electricity is headed to the Desert Southwest, an area that includes Las Vegas as well as portions of California and Arizona, along a new transmission line being constructed by TransWest Express, which shares a parent company with the Power Company of Wyoming. 

For Case, this is case and point why the companies should pay more taxes. “Wyoming doesn’t benefit a lot from their activity” if all their energy is exported, he said. He pointed to a rate increase Rocky Mountain Power proposed, and did not win, last fall as evidence of the cost to consumers for bringing renewable energy to the grid that Wyoming doesn’t even use. 

“I absolutely reject the way Rocky Mountain Power couched that rate increase,” Case said, referring to the utility’s explanation that rate increases were driven in part by rising fuel costs. He believes that because renewables are intermittent and make up an increasing share of new electrical generation added to the grid, Rocky Mountain Power has become more dependent on more expensive “spot purchases” of fossil fuels.

David Eskelsen, a Rocky Mountain Power spokesperson, said that line of thinking “grossly misstates the actual conditions” that led to the utility’s application for a rate adjustment. He acknowledged that the company did make more power purchases from the market, but said it is obligated to do so in order to have enough energy on hand to meet sudden spikes in demand and keep its transmission system balanced, not because of an increase in renewable energy generation.

If anything, wind energy’s “lack of a fuel cost makes [it] quite valuable as a balance to the other costs of [fossil fuels],” which were more expensive due weather-related demand and Russia’s war in Ukraine, he said. Rates would be $87 million dollars higher for consumers in Wyoming had Rocky Mountain Power not built up its fleet of wind turbines, Eskelsen said. “That’s the real value of a diverse energy portfolio.”

If the Power Company of Wyoming can’t generate, transport and sell its electricity in say, California, at a competitive price, it will likely fail and Wyoming will lose the taxes the business provides altogether, Choquette pointed out. The quality of the winds, cost to build the farm and taxes the company pays are all factored into its offering price, Choquette said, and the current tax landscape keeps her company competitive.

A 2019 study from the University of Wyoming’s Center for Energy Economics and Public Policy found that under current law, the tax burden for wind developers in Wyoming is the fifth-highest among Western states. According to the study, if Wyoming increased its generation tax to $5 per megawatt hour, an idea floated during the 2017 legislative session and co-sponsored by Case, it could have doubled the lowest estimate of Wyoming’s tax burden for wind companies, making it the most expensive place to generate wind energy in the West. “This cost change could have a significant negative impact on wind developers’ willingness to consider Wyoming, and undermine the potential use of wind development as an economic diversification strategy,” the authors said.

Alternatively, according to the authors, if the state scrapped its sales and generation tax and instead introduced a “gross receipts tax,” which would tax companies on total earnings before expenditures, it could “lower the cost of wind development in the state by 1.5 percent and raise tax revenues from wind generation over the lifetime of a project by over 8 percent.”

This kind of approach tracks with Harpstreith and the Wyoming Taxpayers Association’s claims. Implementing a “low, broad-based and fair” electrical generation tax that applies to all renewable forms of energy is something she said her organization would be open to supporting. But the instability caused by overhauling tax codes again does not signal ‘come and invest here,’” she said, especially when wind companies can get effective, if not world class, resources from other places in the West.

Choquette echoed that point. An unpredictable cost landscape makes companies nervous, she said. As the legislature continues to propose higher taxes each session, “there’s this idea that we’ll increase the taxes and you’ll just keep on paying it,” Choquette said. “But I don’t understand that argument because it’s like any business” in that “we have to be competitive.”

If the industry faced too strong a blowback from legislators, Choquette said Wyoming’s excellent resources may not be enough to keep developers interested in building in the state. “Nobody in the industry is citing a project based on one criteria,” she said. “You can have a very good wind farm in a place with decent wind resources. You don’t need ‘the best.’” Factors like environmental impacts, landowner support, access to transmission lines and taxes all play a key role in developers’ thinking. 

The Long Run

Case, who holds a Ph.D. in Economics, says the wind industry is bluffing about not coming to Wyoming. “We’re nowhere near taxing at a level that would drive industry out of state, and industry is not going to leave,” he said.

His inability to change the generation tax or implement broader electrical generation taxes hasn’t taken the wind out of his sails. He expects to study the issue more leading up to the 2025 session, and propose more taxes next year. He attributes his failure to get new wind taxes passed so far to industry spending on lobbyists. “We’re getting out-lawyered,” he said. “I have no doubt that this industry can support more taxes.” 

And, if he did succeed in pushing a generation tax bill through the legislature, and “it does slow [the wind industry] down and makes people slow down just a little bit to give us time to adjust and to maybe develop better policies, I’m okay with that, too,” he said. “This is a reasonable position, and it’s realistic about the future of the world and climate.”

Choquette is equally bullish on her industry’s prospects. “There’s a broader group of people who support what we do,” Choquette said. She is optimistic that lawmakers in Wyoming will come to the same conclusions about the economics of wind generation in future legislative sessions.

“I talk to people around me who don’t necessarily love wind, but they love the idea of good, stable property taxes,” she said. “They love the idea of something that will create jobs in their community.”

Wickeum, the Rawlins mayor, expects that as the industry’s economic benefits become more robust, communities without wind farms will realize that wind energy’s growth is good for the entire state.

“Our community and our people overwhelmingly support [wind energy],” he said. “I really believe what we’ve done is right, is working and is correct. I’m pretty proud of it.”