Dive Brief:
- Oklahoma Gov. Mary Fallin (R) released a proposed executive budget this week that included a $0.005/kWh tax on wind generation and called for the early phaseout of incentives she says are no longer necessary.
- The Oklahoman reports that the proposed wind tariff, as a new tax, would require approval by three-fourths of the state's Senate and House.
- If Fallin's proposal is passed, the state would join South Dakota and Wyoming as the only states that tax wind.
Dive Insight:
Wind generation taxes are rare, and neither the press release for the proposed budget, nor the governor's State of the State address, mention the proposal. But the budget calls for a half-cent tax per kWh produced, and would speed the sunset of the state's zero emission credit.
"This industry was incentivized sufficiently to now be a major player in the Oklahoma energy industry, and a major winner of now-unnecessary incentives," the budget explains. An ad valorem exemption for wind production will cost state residents $40 million this year, according to the budget, and, assuming no changes to state law, would total about $840 million through 2032.
The Oklahoman reports the state's Incentive Evaluation Commission wants to see the tax credit capped or restructured. It is currently scheduled to expire in 2021.
Other states housing significant wind potential have also tackled taxing wind. Wyoming lawmakers last year rejected a proposal to increase the state's tax on wind production. Officials had been mulling raising the production tax from $1/MWh to $3/MWh. In 2015, the tax brought in $3.8 million. South Dakota also has a tax in place for wind farms 5 MW or larger.
