UPDATE: On Thursday evening, the House voted to introduce the bill with 50 aye votes. —Ed.
Newly introduced legislation backed by Gov. Mark Gordon would force utilities to implement carbon capture, and then allow them to pass up to $1 billion in investments on those technologies onto consumers’ electrical bills.
Two prominent lawmakers, including the bill’s sponsor, called it a “tax” embedded in a piece of utility legislation. Instead of funding state government, the money raised would subsidize utilities’ investment in a technology that observers say remains commercially unproven.
The bill introduced yesterday and sponsored by House Revenue Committee Chairman Dan Zwonitzer (R-Cheyenne) would use the Wyoming Public Service Commission to force electrical utility companies to incorporate an undefined percentage of “low-carbon” electricity into their energy portfolios. The bill defines low-carbon electricity as power generated using technology to capture carbon dioxide — technology Wyoming politicians hope will keep coal-fired power relevant.
No-carbon electricity — renewable energy like wind and solar — would not qualify. Utilities wouldn’t be able to recover the costs for building new wind and solar farms or any other new electricity sources until the Wyoming PSC determines the company is complying with the carbon capture mandate.
House Bill 200 – Reliable and dispatchable low-carbon energy standards, isn’t all stick for utilities, however. It offers significant carrots to the companies as well, incentives that would come out of the pocket of the state’s electricity customers. The bill does not distinguish between commercial and residential power users..
The Wyoming PSC governs electrical rates for utility companies operating in the state. The body’s mandate is ensuring “safe and reliable service to customers at just and reasonable rates.”
The bill appears to say each utility in Wyoming could pass on $1 billion in costs, said Joshua Macey, a law professor at Cornell University who studies utility laws. There are two utility companies — Black Hills Energy and PacifiCorp — operating coal plants in Wyoming that appear to fall under the proposed legislation.
Macey predicts the companies would welcome an easy path to increase revenue through rate-making.
“You would go as close to a billion as you can,” with your carbon capture investment, Macey said. “In fact you’d probably go to $800 million, make sure you recover it and then ask for $700 million more.”
In other states, Macey said, attempts at statutory caps on utility investments have not held up. “When you’ve invested $900 million and they say it will take $500 million more, it’s hard to say no at that point,” Macey said.
A lobbyist for PacifiCorp subsidiary Rocky Mountain Power said the corporation was still reviewing the bill. A lobbyist for Black Hills Energy did not respond to a voicemail by publication time.
“Industry knows they need coal, this gives them the way forward to keep baseload coal power holding the grid,” Zwonitzer said.
Exporting the cost?
Wyoming exports more than 80% of the electricity it produces. Zwonitzer suggested utility companies could likewise export 80% of the cost of carbon capture technology. States like Oregon and Washington are driving a transition to renewable energy and threatening Wyoming’s coal plants and the jobs and taxes they provide, Zwonitzer said.
This bill exports the cost of Wyoming’s efforts to save those plants onto electricity users in those states, he said. Coal power with captured carbon is a form of the green energy they want, he said. Residents of those states just don’t know it yet.
“While other states’ ratepayers may not like it,” he said, “it certainly helps meet the demand for cleaner energy. We’re just doing it another way.”
Macey disagreed. Public service commissions in other states would have to approve the rate increases for their customers, he said, and there is little indication Washington, Oregon or others would do so. Such refusals would leave the costs squarely on Wyoming ratepayers’ shoulders.
“No Wyoming legislator can confidently say that other states would bear some of these costs,” Macey said.
The legislation’s definition of “low carbon” still includes carbon outputs and might not assuage other state’s climate change concerns, Macey said.
The bill defines low-carbon electricity as electricity generated using carbon capture technologies and producing not more than 650 pounds of CO2 per megawatt hour of electricity. Coal plants averaged about 1,768 pounds of carbon dioxide per megawatt-hour in 2013, according to the Washington Post.
The Wyoming legislation is more ambitious than the starting levels of former President Barack Obama’s Clean Power Plan. That proposed regulation, now defunct, called for reducing carbon dioxide emissions from coal plants to 1,100 pounds of carbon per megawatt.
Selling carbon for shareholders
The bill offers another bonus to utilities. Captured carbon has economic value to some. Technology boosters point in particular to energy companies’ desire to pump CO2 into old oil wells to stimulate production.
If a utility can find a way to sell some of its captured carbon, the bill would allow it to apply to the PSC to turn that profit back to its shareholders — as opposed to reducing the cost for ratepayers. PacifiCorp, the utility seeking to retire some Wyoming power plants early, is owned by Berkshire Hathaway, the holding company of billionaire investor Warren Buffett.
Gordon-backed
The bill is an answer to a call Gordon made in his state-of-the-state speech Monday.
“Wyoming will demonstrate what no other state has had the courage to do,” Gordon said. “We will require true CO2 sequestration, not just some artificial notion that wind and solar can cure climate change all by themselves.”
On Wednesday, Gordon’s spokesperson Michael Pearlman told WyoFile that Zwonitzer’s bill is what Gordon referred to in the speech.
As Wyoming’s mineral-industry revenue drops, lawmakers have rejected any attempt at imposing new taxes — even very slight ones — to make up for the decline. But subsidizing a new energy technology on the backs of electricity users is a form of tax, Zwonitzer’s co-chairman on the Joint Revenue Committee said.
It’s “a tax on ratepayers,” Sen. Cale Case (R-Lander) said.
“It’s technically feasible,” Case said of the technology, “but it’s really expensive.” If the subsidy was confined to the state’s borders, Case estimated that calculating $1 billion into ratemaking could raise electricity rates in Wyoming by 15%.
Earlier this year, the Joint Revenue Committee rejected an electrical generation tax that would have taxed utility companies for each megawatt hour they produced in Wyoming. That’s a simpler way to raise money for Wyoming through its energy customers in other states, Case said.
Zwonitzer did not shy away from calling the bill a tax.
“I think Wyoming ratepayers need to understand that as the coal industry declines taxation is [going to be] happening somewhere,” he said. “If this bill were to pass … we can export that tax burden to people in other states.”
Paying for carbon capture will keep the coal industry afloat to the benefit of all the state’s residents, he argued, justifying the rate hike.
“The longer we can keep coal going at a sustainable level the better not only for employment but for the overall tax burden,” he said.
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UPDATE: On Thursday evening, the House voted to introduce the bill with 50 aye votes. —Ed.
I’ll put the Bottom Line at the top here : Wyoming is hellbent on prolonging coal , even when it is a really bad idea coming and going.
What this bill and the others in the body of Corpus Coal credo FEELS like is the consumer will end up paying way more in utility bills regardless of the policy path taken. If we force the aging powerplants to use coal instead of natural gas – which we can’t even give away since it sells for below true cost of production in Wyoming due to the glut of it – we will pay more for higher base productions costs , then the voodoo carbon capture and/or sequestration schemes that are inefficient , costly , and basically ridiculous. OR we punitively penalize the consumer for turning away from coal by demanding alternative energy. Either way the consumer pays more for Coal-Not Coal. Except in every state around us the move is on to convert over to wind and solar and ??? away from fossil fuels… something that Wyoming should have used its mineral trust fund money to advance twenty years ago to hedge against the inevitable day that coal would no longer be our cash cow. Well, that day is here. And Wyoming not only did not prepare for a world that no longer wants our coal at any price , it is actually marching backwards on coal . It’s a little illusory: by continuing to prop up coal in Wyoming thus defending the status quo while the rest of the world moves forward , Wyoming effectively is going backwards , losing ground. The net result is the same. Regression will not create revenue. But assessing coal at a 15 percent severance tax twenty years ago instead of a ridiculously low 6-7 percent to appease the corporations, and investing the proceeds in alternative energy then would have paid off handsomely by now.
Case in point: one state south of us in Colorado at least 35,000 new jobs in alternative energy have been created in the last decade , wind and solar both. Wyoming frets and whines about losing a couple thousand coal mining jobs and support jobs. If Wyoming had done what Colorado did, we would be riding the wave of newer greener energy development while we weaned off coal incrementally, and likely have more jobs than before. We wouldn’t be selling hundreds of millions of tons of coal, but that is solely due to the markets not wanting the stuff. There was no War on Coal. It was not Obama’s fault. The EPA is not the enemy. It was the markets and Wall Streeters that collapsed coal demand. Republicans believe in free markets and market soliutions, yet there they go, trying to jam state government sideways into the dying coal business directly . Republicans are supposed to deplore government interference in business , right ?
Does anyone else see the gross hypocrisy of what the Governor and Wyoming Legislature are doing in their vainglorious attempt to rescue coal as being totally antagonistic to Republican ideology and platform policy ?
Wyoming will be dragged into the 21st century one way or another. Right now we seem to have made it all the way to 1954. But isn’t it better to go somewhere on your own two feet willingly than be dragged there ? Wyoming needs to embrace the concepts behind the amorphous Green New Deal ; embrace alternative energy and engage it in the entrepreneurial spirit. If we do not, all we can really look forward to is higher costs to prop up coal as we pay the states around us full retail cost for their alternative energy feeding our grid instead of exporting Wyoming wind power and Wyoming solar and ??? energy wholesale after giving our own residents a good rate . Instead we throw money at carbon capture, which in return costs more and more money and will never pencil out. The laws of thermodynamics can be bent a little , but not broken. Once again it will be markets, not government policy , that calls the shots. Carbon capture is probably a losing proposition.
When coal no longer pays the bills and fills the state treasury , what’s left for Wyoming to draw on ? Cattle. Sheep. Hay. Sugar beets. None of which have solid business models and are inefficient at the higher elevations anyway with such short growing seasons . Tourism ? – high employment, low wages, low yield, mostly seasonal. What else have we got ?
There was a bill intoduced at the Lej last week to consider using defunct coal mines as landfills for expended wind turbine blades. The irony of burying a dead turbine blade in a cemetary that was once a coal mine is not lost here.
So in order to reduce carbon emissions, we are going to dig up a bunch of carbon and burn it while capturing *some* of that co2 so it doesn’t go into the atmosphere right away. We will then put that *portion* of captured carbon back into the ground where about 90% of it will stay, but the other 10% will come back up out of the ground along with a whole bunch more of ‘new’ carbon (oil}. That oil will then mostly be refined and burned (a large majority of it in car engines) or turned into plastics with virtually all of that co2 ultimately releasing into the atmosphere.
All of this will come with massive monetary costs given the existing technology (None of which is even new, nor has it had any notable recent improvements in terms of efficiency). Almost all of those massive costs will be subsidized and paid for by Wyoming electric customers.
And we are made to believe that this all somehow makes more sense than just leaving the carbon in the ground in the first place, and using other existing, growing, efficient, economically viable, actually ‘low carbon’ technology to produce electricity instead?
Under this grand scheme being pushed by the Wyoming Governor and legislsture, Coal and oil companies get to produce MORE coal and oil while *pretending* they’re solving a problem that they caused and actually continue to make worse, all while shifting the costs of doing so straight onto their customers who will then be forced to only consume electricity produced by this insanely costly process. (See SF 125)
The ‘carbon capture’ scheme is not ‘carbon-neutral’. It isn’t even ‘low carbon’. In it’s currrent form with current technology, it is possible that it will produce even more carbon than if we just did nothing instead. And it is INSANELY expensive. This is a bona fide racket facilitated by our state government.
This is key: “It’s technically feasible,” Case said of the technology, “but it’s really expensive.” If the subsidy was confined to the state’s borders, Case estimated that calculating $1 billion into ratemaking could raise electricity rates in Wyoming by 15%.
Another point is under the proposed multistate protocol, which details how to allocate costs across the PacifiCorp/Rocky Mountain Power system, costs associated with laws like this that are state policy choices are attributed only to customers in the state that passes the law. So in my opinion it is clear that WY ratepayers only would be responsible for any costs associated with PacifiCorp’s compliance.