Here Today, Gone Tomorrow

Wyoming takes back promised tax credit
By Holly Jessen | May 10, 2012

During the 2012 budget session, the Wyoming Legislature voted to let a 40-cent-per-gallon tax credit for ethanol lapse on July 1, 2015. The bad news is—legislators originally said the tax credit would remain in place until 2020, but the good news is, that talk of cutting the tax credit at the end of 2013 didn’t materialize. “It gives us a little bit of time to formulate some plans and implement some actions to survive,” says Terry Oldfield, CEO of Renova Energy, which operates Wyoming Ethanol, a 10 MMgy corn-ethanol plant in Torrington, Wyo.

Wyoming Ethanol and the tax credit both came into existence in 1995. “That’s what brought the plant to fruition,” Oldfield says of the tax credit. Although there is a 0.5 MMgy sugarcane bagasse ethanol plant in Upton, Wyo., Wyoming Ethanol is the state’s only full-scale commercial facility and its only corn-based ethanol plant. It started out as a 2 MMgy ethanol plant and was later expanded to 5 MMgy. In the meantime, the company had been returning to the legislature, asking for a more long-term extension to the five-year tax credit. In 2006, the company asked for an extension to 2022 in exchange for a commitment to spend $15 million to double the size of the plant. An extension was granted and the company shelled out $17 million bringing the plant’s nameplate capacity up to 10 MMgy. “And then they decided that the company didn’t need [the tax credit] anymore, this last session,” Oldfield says.

Although lawmaker’s decision to let it sunset is disappointing, Renova Energy is relieved it’s going to happen in 2015 instead of 2013. Oldfield had told the Wyoming Legislature that if the tax credit were cut off in 2013 he didn’t see how the ethanol plant could keep operating. But, with a little more time on the clock, the company is going to give it their best shot. “We certainly haven’t given up,” he tells EPM. “We plan on keeping the plant going.”

A requirement that the company purchase a minimum of 25 percent local corn will also lapse with the tax credit. Depending on market conditions at the time, that may mean the ethanol plant will start shipping in corn from other areas, since it currently pays a premium for local corn. “If you talk to the agricultural people in Goshen County, Wyoming, they’ll acknowledge that a bushel of corn, after the plant started operating, appreciated by about 30 to 40 cents a bushel,” he says. —Holly Jessen