‘Don’t do it’: Utility responds to latest coal mandate

The Wyoming Legislature may double down on mandates designed to keep coal-fired power plants running, and fossil fuel revenues flowing, despite the high costs of existing directives and electric utility industry concerns. 

Senate File – 142 Carbon capture and sequestration would build on existing requirements that utilities looking to retire a coal unit first try to extend its life by adding expensive carbon capture, utilization and sequestration technologies, and possibly passing the cost onto customers. 

The measure, sponsored by Sen. Charles Scott (R-Casper), comes at the request of Glenrock Energy, a Wyoming oilfield operator, he said. The bill would ensure that CO2 captured at a coal smokestack is put to economic use, Scott said, giving priority to injecting the greenhouse gas into oilfields to boost oil production.

Glenrock Energy’s Big Muddy oilfield would generate an estimated $1.2 billion in revenue over 20 years if it had access to CO2 from the nearby Dave Johnston coal-fired power plant, according to the company’s own analysis Scott said.

“That figure gets my attention,” Scott told members of the Senate Corporations, Elections and Political Subdivisions Committee in January. That kind of revenue should cover the cost of retrofitting coal power units, Scott said, while also preserving jobs by extending the life of coal-fired power plants.

Retrofitting a single coal-burning power unit would come at a cost of $400 million to $1 billion, according to one estimate.

Having cleared the Senate, the bill is now being considered by the House — first stop the House Appropriations Committee, where the bill is expected to be considered on Wednesday.

Lawmakers have already gone too far in forcing utilities into coal carbon capture retrofits, Rep. Karlee Provenza (D-Laramie) said. She introduced House Bill 193 – Carbon capture energy standards-repeal to spike Wyoming’s existing CCUS mandates. The bill met a quick death when it failed introduction on the House floor.

Provenza said she brought the bill because she was alarmed at the cost estimates for adding CCUS, and the fact that ratepayers are already getting hit with price hikes to cover the costs of complying with Wyoming’s legislative mandates.

PacifiCorp, which operates as Rocky Mountain Power in Wyoming, was granted a request to add a 0.3% “carbon capture compliance” surcharge to its Wyoming customers’ bills to cover compliance costs. That will cost the utility’s ratepayers an extra $2 million this year alone. Black Hills Energy says it will ask to impose a carbon capture compliance surcharge to generate an estimated $3.4 million annually.

Provenza said the state could make better use of its time and resources trying to attract new businesses and ensuring there are replacement jobs for those lost in the coal industry.

“Trying to prop up a dying industry doesn’t make sense,” Provenza said. “Particularly in a state that prides itself in appreciating free markets and capitalism.” 

Benefits and risks

Some utility industry analysts have panned both Glenrock Energy’s claims regarding feasibility of CCUS retrofits at the Dave Johnston power plant, and a 2020 CCUS study commissioned by the state of Wyoming and the U.S. Department of Energy. 

Though carbon capture technologies are advancing, retrofitting old coal-burning units to scrub CO2 from the smokestack hasn’t proven successful — even when adding the value of using the CO2 for enhanced oil recovery, according to University of Wyoming energy economist Rob Godby.

“CCUS is far from a developed process,” Godby said. “So far it has not been shown to be commercially viable on a coal-fired power plant.”

Injecting CO2 to produce oil could produce revenue that helps cover the expense of a carbon capture retrofit, Godby said. But CO2 and oil are subject to volatile commodity markets, and there’s no way to forecast the added value of enhanced oil recovery over a long period of time. 

Plus, the coal units at Dave Johnston, for example, are more than 50 years old. The Dave Johnston plant was built in 1959 with coal-burning units added through 1972. PacifiCorp, which owns and operates the plant, plans to decommission all four units in 2027, replacing the power with wind and solar energy, according the utility’s most recent plan.

A CCUS retrofit of one or more coal units at the Dave Johnston plant “would effectively mean rebuilding them” and risking operational difficulties, Godby said. Adding carbon capture to coal plants also reduces their electrical generation capacity and requires more water consumption.

“There are significant risks to the forced implementation of CCUS,” Godby said. “I don’t see how you can hold ratepayers harmless given the current estimates of the cost of conversion and operation.”

By force

Former Goshen County Commissioner Wally Wolski, who lobbies on behalf of Glenrock Energy, noted that analysis by the Wyoming Enhanced Oil Recovery Institute suggests a robust CO2 enhanced oil recovery industry could generate $2.7 billion. That would provide “huge financial benefits for the development of stranded low-carbon oil in mature fields and legacy wells,” he said.

The Wyoming Public Service Commission, which regulates electric utilities, doesn’t currently account for the costs or benefits of enhanced oil recovery in its regulatory decision making. But it would under SF 142, Wolski said, and the state should empower its agencies to help bring coal carbon capture to fruition.

Big electricity producers remain reluctant to embrace the potential of extending the life of coal-fired power plants via CCUS, according to Scott. That’s why SF 142 takes a more aggressive approach than past legislation.

“I asked [a PacifiCorp official] twice, very bluntly; ‘What are your suggestions to make it more palatable,'” Scott said. “And the basic response was, ‘Don’t do it.’ So I’ve had to write the bill on the assumption that the utility is not particularly favorable to it, and you have to stop the things they might do to stall a project.”