When it comes to rising utility rates, many Wyomingites bristle at the thought of wind turbines in Wyoming serving California’s growing appetite for renewable energy.

Why should Wyoming rate payers pay for California’s expensive renewable energy?

In Rocky Mountain Power’s current rate increase request of 17.3 percent for Wyoming customers, utility officials say the rising cost of coal is a bigger factor.

“One of the single biggest factors in our Wyoming pricing request is related to coal,” said Jeff Hymas, spokesman for Rocky Mountain Power, Wyoming’s largest regulated utility. “We have expiring contracts for coal used at our power plants, and expiring contracts for power we have to purchase.”

The average spot price for coal has risen in recent years, which means contracts negotiated today are influenced by today’s higher pricing.

The rate increase does include costs for Rocky Mountain Power’s new Dunlap I wind farm in Wyoming. But, Hymas said, Wyoming customers only pay for what they use. Wyoming’s percentage of the utility’s electric generation, transmission and other relevant costs is 16 percent compared to 2 percent for the company’s California customers.

“Another reason for the Wyoming rate increase request are new emissions controls required because of more stringent environmental policies. Those are very expensive,” said Hymas.

The utility spent about $844 million on environmental retrofit projects throughout its six-state service territory from 2005 to 2009, and it expected to spend about $321 million more in 2010 alone. Those upgrades, by the way, employed hundreds — perhaps thousands — of American workers.

However, Wyomingites are correct to scrutinize any rate request by a regulated utility. In 2009, Rocky Mountain Power asked for a 13.7 percent rate increase (an additional $71 million annually for Wyoming customers), but the Wyoming Public Utility Commission scrutinized the request and cut the rate hike to $35 million. A big part of the cut came from Rocky Mountain Power agreeing to a lower rate of return on investments in new facilities.

No matter what the Wyoming Public Service Commission does to the current rate request, it’s certain the utility will come back for more in years to come. Electrical demand increases, and old systems need to be updated. Hymas said it doesn’t matter if it’s wind, solar, coal or geothermal, any new electrical generation facility will cost more because of the higher cost of steel and other commodities.

“Any new electric generating facility built today is going to have significantly higher costs than our facilities built decades ago, no matter what resource you’re using,” said Hymas.

Contact Dustin Bleizeffer at (307) 577-6069 or dustin@wyofile.com.

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Published on January 5, 2011

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