Ratepayer liability for coal carbon capture limited to 2%

Public utilities that add carbon capture technology to coal-fired power plants in Wyoming may increase rates by a maximum 2% to cover the cost, according to rule revisions the Wyoming Public Service Commission adopted Friday.

Utilities may also claim an exemption from the 2020 law that mandates adding carbon capture technologies as a prerequisite to retiring coal-fired power units. Exemptions can be claimed in the instance that an environmental, reliability and economic analysis determines the step unfeasible.

The PSC approved the rule revisions as it prepares a regulatory framework to implement HB 200, Reliable and dispatchable low-carbon energy standards, passed in 2020. The regulatory authority has until the end of March to finalize its proposed suite of HB 200 rules.

The commission received dozens of public comments regarding the Chapter 1 and Chapter 3 rule revisions, most of them in favor of allowing for an analysis-based exemption and limited ratepayer liability.

“It is important for you to acknowledge the failed economics of carbon capture throughout the nation,” ratepayer Sylvia Bagdonas of Laramie wrote to the PSC. “The public does not want the Wyoming Public Service Commission to pass on a portion of the cost of this expensive and unproven technology to Wyoming ratepayers through surcharges on their utility bills.”

An economic analysis should also include the benefits of technologies that add coal carbon capture and help prevent the early retirement of coal-fired power plants in Wyoming, according to the Wyoming Coalition of Local Governments.

“The coal-fired electric generation facilities not only provide access to reliable and cost effective generation resources, but also jobs, revenue, and financial stability to both the state of Wyoming and counties where the facilities are located,” WCLG Chairman Eric South wrote in comments to the PSC.

The Wyoming Legislature passed a measure earlier this year that authorizes the PSC to require such analysis, but it’s unclear whether or how it might do so. That provision is not part of the PSC’s HB 200 rulemaking process.

Regulated electric utilities in Wyoming must notify the PSC by the end of March whether they will seek a rate surcharge to implement carbon capture systems.

Wyoming ratepayers could begin paying for carbon capture systems before they are actually applied to a power plant. That provision is in place because financing for coal carbon capture is difficult to find, Powder River Basin Resource Council attorney Shannon Anderson said. 

“The financing piece is not there yet for carbon capture unless, of course, the government foots the bill,” Anderson said. “So here, the ratepayers are going to foot the bill.”

There’s still much to hash out by the March deadline. But what’s clear is that rate increases related to coal carbon capture systems would fall on Wyoming ratepayers alone rather than spread across a utility’s multi-state ratepayer network, Anderson said.

“There’s a provision in the [Rocky Mountain Power multi-state] protocol that allocates costs that are a direct result of choices in state law to the state in which those costs were created,” she said.

Lawmakers have considered a raft of measures over the past three years in an attempt to slow or block plans to retire coal-fired power generation in the state, including another provision that requires a utility to first seek a buyer before it is allowed to retire a coal-burning unit. 

Wyoming’s largest utility, Rocky Mountain Power, plans to decommission its entire coal-fired power fleet across several states by 2039.

The utility plans to retire coal units 1 and 2 at the Naughton power plant near Kemmerer by the end of 2025. Its coal units 1 and 2 at the Jim Bridger plant will be converted to natural gas in 2024, while coal units 3 and 4 are scheduled for decommission in 2037. Its Dave Johnston coal-fired power plant near Glenrock is scheduled for retirement in 2027.