A panel of lawmakers has advanced a draft bill to give power plant operators eight more years to comply with Wyoming’s low-carbon emissions standard.
The measure, Low-carbon reliable energy standards-amendments, would push back the deadline from 2030 to 2038. It would also exempt regulated utilities with fewer than 10,000 customers, carving out a Black Hills Energy service area that provides electricity to about 2,600 customers in Newcastle, according to the Joint Minerals, Business and Economic Development Committee, which discussed the bill last week in Gillette.
Additionally, the measure would set a minimum standard: Coal-fueled power units must capture at least 75% of the carbon dioxide that would otherwise be emitted into the atmosphere. The bill essentially extends a 2020 law that requires coal power plant owners to retrofit the facilities with carbon capture, use and storage technologies as an alternative to shutting them down.
Lawmakers said they want to extend Wyoming’s mandate in hopes that the expansion of the federal “Section 45Q” tax credits for carbon sequestration under the Inflation Reduction Act will improve the economics of such CCUS applications on coal plants.
“The intent of this whole carbon capture industry is to provide a way to save the fossil fuels industry,” Rep. J.T. Larson (R-Rock Springs) said. “Because if we don’t do anything, at this point, the rest of the country is going to move on without us.”
Wyoming has a low-carbon energy standard?
Yes, Wyoming — which vigorously fights against policies that tighten greenhouse gas emissions because it is reliant on coal, oil and natural gas for the bulk of its revenue — has a self-imposed “low-carbon” energy standard. The aim, however, is not to compel utilities to add more renewable sources of energy or to reduce fossil fuel use. Rather, the goal is to stem the retirement of coal-burning power plants.
The 2020 law, House Bill 200 – Reliable and dispatchable low-carbon energy standards, attempts to force regulated utilities to retrofit their coal-fueled power units in the state — most of which have been in operation for half a century — with carbon capture technology. If a utility opts to not retrofit a coal unit to capture carbon and instead decommission it ahead of schedule, the company would not be allowed to tap Wyoming ratepayers for any replacement power generation — say a 200-megawatt wind farm and battery storage facility to replace a 200-megawatt coal unit, for example.
To win an exemption from the mandate, a utility must prove that applying carbon capture to any given existing coal unit would be too costly for Wyoming ratepayers or would result in less reliable power.
There are five coal units in Wyoming that are subject to the law and currently under analysis for carbon capture retrofits; two at the Wyodak Complex near Gillette, one at the Dave Johnston plant near Glenrock and two at the Jim Bridger plant east of Rock Springs.
Initial cost-benefit analyses, so far, indicate that retrofitting a single coal unit would cost about $500 million, according to Black Hills Energy. That’s the low end and does not account for how inflation might change the calculation 10 years from now for a 2038 implementation deadline. Applying a carbon capture retrofit to Unit 4 at Rocky Mountain Power’s Dave Johnston coal-fired plant, according to some observers, would be even more expensive because it is a large-capacity generator and would still require additional pollution controls, according to the utility.
However, the proposed bill amending the low-carbon energy mandate would retain a measure in the 2020 law that caps the amount charged to Wyoming ratepayers to 2%.
Customers are already paying
Many electrical customers in the state are already paying for utilities’ costs to comply with Wyoming’s 2020 coal-CCUS standard. Those costs include hiring consultants to analyze various technologies and conduct cost-benefit and reliability modeling.
Black Hills Energy and Rocky Mountain Power — a division of PacifiCorp — currently tap their ratepayers for a “carbon capture compliance” surcharge. Between the two utilities, that adds up to about $5 million annually.
Both companies are expected to ask the Wyoming Public Service Commission for permission to continue the surcharge on an annual basis, with no guarantee that a Wyoming coal unit will be retrofitted for carbon capture.
Those annual “carbon capture compliance” surcharges might have gone away after 2024, and Wyoming’s coal-CCUS mandate rendered moot, based on the utilities’ current cost analyses, according to the Sheridan-based landowner advocacy group Powder River Basin Resource Council. Both utilities are scheduled to file their second annual report at the end of March, and the economics — even with federal tax credits — don’t appear to be improving, the council’s lead attorney Shannon Anderson said. But if the full Legislature passes the Minerals Committee’s amendments to the law during the upcoming budget session, those compliance surcharges will likely continue.
“We were just about to the point where, in March, House Bill 200 would have been gone,” Anderson said.
It’s also likely that all five of the coal units subject to the law might age out of the mandate or be converted to natural gas before the new 2038 compliance deadline, she added.
“It’s very unclear what the point of this exercise really is anymore,” Anderson told WyoFile. “Where we have concerns is where it becomes that state regulatory mandate that then forces customers across the state to pay for it. And we just don’t think that’s a good thing for Wyoming.”
Black Hills Energy, however, is in favor of continuing the mandate to 2038. Though the technology best suited for its two coal units subject to the law isn’t ready today, the company expects that carbon capture methods will soon reach economic viability.
“Were we interested in carbon capture prior to 2020? Honestly, no,” Black Hills Energy lobbyist David Bush told lawmakers last week. “We’re a smaller utility, so it’s a large expense for us to consider. And we were pretty happy just digging coal and burning coal.
“We’re now looking at implementing [carbon capture],” Bush continued. “The technology that we’re looking at is still evolving, and there’s a lot of new companies that are popping up as this technology grows. There’s a lot of excitement in the industry about this.”