FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 09:25 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1929 |
Introduced |
SB57 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
Counties
Sources of Revenue:
Other Fund Counties
Legislation creates:
Creates New Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to establish a tax on the production of electricity from wind and solar collection for distribution to the counties to be distributed to the volunteer fire departments in that county.
This bill would impose an excise tax on the production of electricity from wind and solar resources. The tax would be paid by the entity producing such electricity on each megawatt hour of electricity at the point of interconnection with a transmission line. The tax rate would be established at $3 on each megawatt hour which is produced in the state beginning on January 1, 2026. There exists an exemption for those facilities that are owned or operated by the federal government, the state of West Virginia, or any county or municipality in the state. Tax proceeds would be distributed to all 55 counties based upon the number of volunteer fire departments in the county.
According to data provided by the Energy Information Administration, West Virginia generated 2.1 million megawatt hours of electricity from wind resources, and 47,000 megawatt hours of electricity from solar resources in 2023. Wind and solar power plants in West Virginia already pay an average of $1.3 million in State Business and Occupation Tax on generation capacity each year. According to our interpretation, passage of this bill would create an additional power generation tax on wind and solar plants resulting in an increase in revenue of approximately $2.7 million during the first six months of FY2026 and $6.4 million in subsequent fiscal years, before its distribution to the counties.
Administrative costs incurred by the Tax Division would be $95,150 in FY2026 and $44,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
95,150 |
44,000 |
| Personal Services |
0 |
44,000 |
44,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
49,500 |
0 |
| 2. Estimated Total Revenues |
0 |
2,700,000 |
6,400,000 |
Explanation of above estimates (including long-range effect):
This bill would impose an excise tax on the production of electricity from wind and solar resources. The tax would be paid by the entity producing such electricity on each megawatt hour of electricity at the point of interconnection with a transmission line. The tax rate would be established at $3 on each megawatt hour which is produced in the state beginning on January 1, 2026. There exists an exemption for those facilities that are owned or operated by the federal government, the state of West Virginia, or any county or municipality in the state. Tax proceeds would be distributed to all 55 counties based upon the number of volunteer fire departments in the county.
According to data provided by the Energy Information Administration, West Virginia generated 2.1 million megawatt hours of electricity from wind resources, and 47,000 megawatt hours of electricity from solar resources in 2023. Wind and solar power plants in West Virginia already pay an average of $1.3 million in State Business and Occupation Tax on generation capacity each year. According to our interpretation, passage of this bill would create an additional power generation tax on wind and solar plants resulting in an increase in revenue of approximately $2.7 million during the first six months of FY2026 and $6.4 million in subsequent fiscal years, before its distribution to the counties.
Administrative costs incurred by the Tax Division would be $95,150 in FY2026 and $44,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish a tax on the production of electricity from wind and solar collection for distribution to the counties to be distributed to the volunteer fire departments in that county.
The title to this bill states an intention to tax production of electricity from both wind and solar, without defining either term, but at multiple points in the bill the tax base seems to not include electricity generated by solar.
Although Section 1 of the proposed article states that the proposed tax is to be “imposed upon the production of any electricity produced from wind or solar resources for sale or trade on or after January 1, 2026,” the bill also provides that “[a]fter that date [three years after “the turbine or solar panels” first produced electricity for sale] the production shall be subject to the tax, as provided by this article, regardless of whether production first commenced prior to or after January 1, 2026” (emphasis added). This language can be confusing regarding the true effective date of the tax - if the production of electricity by wind or solar started in 2020, it could be argued that the tax should be imposed on such electrical production starting in 2023 rather than 2026.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov