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Ethanol plant plans to stay open after subsidy ends

June 4, 2012 in Events, Features, News, Opinion

CHEYENNE — The owner of Wyoming’s lone ethanol plant predicts it will continue to stay open after Wyoming’s 17-year-old ethanol tax credit ends.

Terry Oldfield, CEO of Renova Energy, which owns Torrington’s Wyoming Ethanol plant, said the company will undergo changes n including buying less corn from Wyoming farmers n in the wake of the Legislature’s decision earlier this year to end the subsidy.

However, he said earlier fears the plant could close are unlikely to come true.

“There will be a shift in our overall business strategy,” he said. “But we will keep going with our production as much as possible.”

The Legislature voted during this year’s budget session to repeal the state’s ethanol tax credit in 2015.

Wyoming began subsidizing the production of ethanol in 1995, and the Legislature recently extended the tax credits through 2022.

The state offers a credit of 40 cents for every gallon of ethanol produced in Wyoming. The subsidy is funded by the state’s fuel tax that otherwise would go toward funding transportation projects.

This costs the state about $3.2 million a year, according to the Legislative Service Office. Lawmakers targeted the tax credits this past session as the state searched for ways to add more funding to help maintain the state’s deteriorating highway system.

“As the times change, so do priorities, and we’ve seen a paradigm shift in how we go about funding our highways,” said Sen. John Schiffer, R-Kaycee, when lawmakers were debating the bill on the Senate floor. “We need to make the choice of continuing to subsidize an industry that really doesn’t need it or putting it back into our highways that do need it.”

Oldfield said before the legislative session that it was “very doubtful” the plant could stay open if lawmakers accepted the original version of the bill that caused the tax credits to expire in 2013 instead of 2015.

Lawmakers opted for the later date, and Oldfield said the extra two years will allow the plant to prepare itself for the transition.

Repealing the tax credit also means the end of a requirement that Wyoming Ethanol buy at least 25 percent of the corn it uses from in-state growers.

Oldfield said the plant had been paying a premium for the corn grown by farmers in Goshen and Platte counties. He said without the requirement, the plant would look to the open market to get the best prices.

Lawmakers said allowing the subsidy to expire in 2015 will give corn growers time to prepare for this possibility.

Sen. Curt Meier, R-LaGrange, opposed the bill during the session because he said the plant has a positive economic development impact on the area.

He said he also was worried local farmers who have been selling corn to the plant would be impacted. But he said the compromise of moving the repeal date to 2015 will give the farmers time to change their crops or look elsewhere to sell the corn.

In addition, he argued against the bill because he said the Legislature should have upheld its informal agreement to keep the tax credits through 2022.

Meier said the lawmakers had formed a non-binding agreement to extend the subsidy in exchange for Wyoming Ethanol completing an expansion of the plant.

Oldfield said he understands lawmakers can’t make formal promises for a future Legislature to uphold. But he said the lawmakers’ move to repeal the credits was in bad taste.

“I was disappointed,” he said. “Personally, I have lived in Wyoming for 30 years, and I’ve never seen a political climate where they act like that.”

Meier agreed it was a “frustrating” move, and he said he worries it could create the impression to the business community that Wyoming does not stand by its word.

But he said the loss of state revenues will force lawmakers to make these types of difficult choices.

“The big picture is that natural-gas prices continue to go down,” he said. “And we very well will have some more tough decisions to make beyond just whether to have an ethanol credit.”

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