Mike Pomorski A different kind of excise tax

In a recent AP article, a senior executive for a national energy industry organization was quoted saying about the state of Wyoming, “it is very disturbing to hear that one of the great states for resources wants to tax the industry and discourage the development of jobs in their state.”   We hear a lot about excise tax issues as they relate to natural gas production, most recently in the ongoing discussion in Pennsylvania.

But that quote does not come from a natural gas production group.   It comes from Denise Bode, the CEO of the American Wind Energy Association.   But to be frank, we are not surprised that Ms. Bode is taking on this issue as she is a long history of supporting the oil and natural gas industry.

As it turns out, Wyoming, a state with impressive wind energy potential, is considering taxing wind generation.  The proposal would place a three dollar excise tax on each MWh of commercial wind power generated in the state.  Granted, comparing fossil fuel excise taxes and the Wyoming wind proposal is not straightforward given significant differences in each industry, but in the abstract these taxes are similar in that they both require a producer of an energy resource to pay a tax that reflects the impact the legislature believes the production has on the community (whether that impact be environmental, associated with water resources or other land use, aesthetics, etc.).

Wyoming is a major fossil fuel producer (and the second largest producer of natural gas, after Texas, by gross withdrawals in the onshore lower 48 in 2007), so you could certainly debate the motives behind the proposal.  Nonetheless, it will be interesting to see if the continued growth in wind generation nationally leads to similar calls for excise taxes in other states, and, if it does, how those taxes will affect the economics of wind generation.

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