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Some question pollution tax breaks

October 6, 2006 by  
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By DUSTIN BLEIZEFFER

Star-Tribune energy reporter 10/06/06
Electrical utility customers — within and outside the state — stand to
benefit from two proposed sales tax exemptions for the purchase of pollution
control equipment on refineries and power plants in Wyoming, according to
supporters of the measures.

Two tax break proposals are before the Legislature’s Minerals, Business and
Economic Development Interim Committee. They’re referred to as “incentives for
new projects/new technologies” and “continuity of existing industrial
facilities.” Both would eliminate the sales and use taxes until 2015.
Wendy Lowe, a lobbyist representing Peabody Energy’s Powder River Coal Co.,
told legislators in Casper Wednesday that the federally mandated pollution
control equipment is expensive, and those costs are ultimately passed on to
utility customers. The proposed tax breaks before the interim committee would
“assist in reducing the continual escalation in electric power rates,” Lowe
testified.
One major electric utility customer in Wyoming that stands to avoid a pass-on
cost, should the tax breaks become law, is the state’s coal mining industry,
which pulls a continuous 130 megawatts in the Powder River Basin alone.
Peabody Energy, for instance, operates three large strip coal mines in the basin.
Bob Tarantola of Rocky Mountain Power said his company is going to spend
about $685 million to upgrade pollution equipment on its four coal-fired power
plants in Wyoming over the next eight years. He said the tax breaks would apply
to only $33 million of that cost, and the savings would be passed along to
its utility customers.
However, less than half of Rocky Mountain’s 4,000 megawatts generated in
Wyoming actually goes to Wyoming customers.
Of the more than 1,000 new megawatts of coal-fired electrical generation
planned and under construction in Wyoming, only 90 megawatts are dedicated to
Wyoming customers. Mike Easley, director of the Wyoming Infrastructure
Authority, said state officials are in the initial stages of deals to generate beyond
2,000 megawatts of electricity for markets in Colorado, Utah, Arizona and
elsewhere across the West.
Rep. Debbie Hammons, D-Worland, said she supports the idea of providing a
sales tax break, but would like to see a more detailed business model for each
proposal. The models should consider the impact to the communities where power
plants are built.
Hammons said the drafts, so far, lack the details that show how a sales tax
break would enter business decisions that power companies face in coming
years.
Dan Neal, executive director of the Equality State Policy Center, said he
doesn’t believe a sales tax incentive alone would persuade a power company one
way or the other, whether it’s considering building a new plant in Wyoming or
retrofitting an existing plant here.
“I think the state has to be very careful giving tax breaks to the very
people who are most capable of paying their taxes,” Neal said. “It’s not
essential to keep these companies in Wyoming.”
Ed Werner, candidate for Converse County commissioner, said the reason
Wyoming is faced with deciding whether to provide tax incentives is that the
federal government has issued air quality mandates but provided no funds to
industries to meet the mandates. Now, it’s up to the states, utilities and utility
customers to figure how to pay for it.
Speaking to the Star-Tribune, committee co-chairman Rep. Thomas Lockhart,
R-Casper, reiterated that a sales tax exemption is a one-time savings that may
help hook new power development and keep the power plants Wyoming already
has.
“Those jobs and long-term ad valorem taxes more than offset these tax
exemptions at the onset,” Lockhart said.
Energy reporter Dustin Bleizeffer can be reached at
_dustin.bleizeffer@casperstartribune.net_
(mailto:dustin.bleizeffer@casperstartribune.net) or (307)
682-3388.
* Last we knew: A legislative committee was given the task of determining
whether tax incentives might be appropriate to attract new energy technologies
to Wyoming and keep existing facilities here from closing.
* The latest: The committee worked on two draft bills Wednesday that would
provide sales and use tax exemptions for the installation of pollution control
equipment on existing refineries, power plants and similar facilities built
in the future.
* What’s next: The committee will review the draft bills in December after it
receives a report from the Public Service Commission and Legislative Service
Office.]]>
CLARIFICATION
A quote in Thursday’s news story about bills providing tax breaks for
industrial pollution control equipment is in need of clarification.
Dan Neal, executive director of the Equality State Policy Center, said the
tax breaks themselves are not essential “to keep these companies in
Wyoming.”

http://www.casperstartribune.net/articles/2006/10/06/news/wyoming/8d539a67c7590
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