Wyoming lawmakers weigh a generation tax and new formulas to share revenue from data centers and large electrical loads

Legislators spent much of the hearing debating whether Wyoming should add a new tax on electricity generation and how to use proceeds from very large electrical loads, such as proposed data centers.

Daltton Quilty of the Legislative Service Office summarized a 2024 issue brief comparing western states’ tax treatment of generation, noting Wyoming lacks a gross receipts tax on generation and relies on a $1 per‑MWh wind excise tax (with a three‑year exemption for new turbines). The brief found Wyoming ranks low on combined incentives and, because the state is a major exporter of electricity, policymakers could use generation taxation to shift part of the cost to out‑of‑state consumers, the memo said.

Senator Casease framed a generation tax as a policy tool to capture export value and suggested pairing a production tax with reductions in the retail sales tax on in‑state electricity so Wyoming ratepayers are not harmed. "If we could get people in other states to help pay for electricity…that’s a positive thing for Wyoming," he said.

Legal counsel retained by the committee (identified in the hearing as Mr. Canowitz of Sterling) summarized constraints under the dormant commerce clause and related federal limits but said a non‑discriminatory tax on electricity produced in Wyoming appears legally defensible if carefully structured. "If you come into Wyoming and you produce electricity in Wyoming, you pay a tax on that," the counsel said, outlining design choices (volume‑based MWh, value/gross receipts, or accounting‑based measures) and noting tradeoffs for administration and crediting other Wyoming taxes.

Industry witnesses and stakeholders urged caution. Nick Stafle, representing the Wyoming Industrial Energy Consumers, warned that adding a generation tax could raise regional market clearing prices in integrated markets and ultimately increase costs for customers across the region. Cara Shet, a power company executive, emphasized that when state and federal receipts are counted, state taxes per MWh for some renewable projects already approach levels for coal on a state‑share basis and urged careful analysis to avoid disincentivizing generation.

Department of Revenue director Brett Fanning outlined two fiscal approaches the agency has used: an earnings/gross‑receipts approach (previously modeled as 3.5% on gross earnings, which without credits produced a larger top‑line figure later offset by credits to produce a lower net estimate) and a unit approach ($/MWh similar to Wyoming’s current wind excise). He said complexity arises when applying constitutional crediting rules (sales, use, ad valorem, and potentially severance taxes) and stressed the agency will need clear statutory language to estimate fiscal impacts.

Lawmakers also discussed proposals to pool or redistribute sales tax revenues from "very large electrical loads" (legislative drafts used thresholds such as 100 MW) so that one locality does not capture disproportionate windfalls when a data center or mega‑load locates there. Proponents urged the pool be used to make local governments whole or to finance direct distribution and other statewide priorities; opponents and industry caution that design details matter for competitiveness.

Committee members requested a number of follow‑ups: detailed, account‑level subsidy lists for generation projects; feasible fiscal‑note scenarios for earnings‑based vs unit‑based taxes; a legal memo clarifying where credits can be applied without running afoul of federal commerce clause precedent; and options for targeted retail sales tax relief for residential customers.