Despite several years and a spate of new laws designed to delay the retirement of coal-fired power generating units, the state may have to press harder to broker a deal that results in a coal carbon capture project, according to some lawmakers.
“We’ll see what it’s going to take to make a business deal that will work for everybody — and everybody includes the ratepayers,” Joint Corporations, Elections and Subdivisions Committee member Sen. Charles Scott (R-Casper) said Wednesday morning.
Determined to preserve coal-fired power generation, Wyoming lawmakers have responded to publicly regulated utility plans to retire coal units with laws that require them to first analyze the cost of retrofitting them with carbon capture, use and sequestration (CCUS) technologies. Other measures require them to seek a third-party buyer willing to take on the risks and responsibilities of keeping the facility running.
The Wyoming Public Service Commission has the authority to allow a utility to retire a coal unit in Wyoming — but only if the utility can demonstrate that a good-faith effort proves a sale or the addition of CCUS technology would unduly harm Wyoming ratepayers.
So far, that looks to be the case, according to preliminary filings by PacifiCorp and Black Hills Power. It could cost $400 million to $1 billion to retrofit a single coal unit with CCUS, according to PacifiCorp, which operates as Rocky Mountain Power in Wyoming. Black Hills Corp estimated retrofitting its coal units would cost its average Wyoming ratepayer an additional $100 per month, WyoFile reported in April.
Whether a third party could buy a coal-fired power plant and do better remains to be seen. Meantime, one particular proposal has the Legislature’s — and the state’s — attention.
Dave Johnston power plant deal
Glenrock Energy, which owns a large stake in the Big Muddy oilfield near Glenrock, doesn’t necessarily want to buy one or more of the four coal-burning units at PacifiCorp’s nearby Dave Johnston Power plant, which is slated for decommissioning in 2027. However, it wants to arrange a deal in which investors foot the bill for adding carbon capture at one of the Dave Johnston coal units. Such an arrangement, the company says, would avoid passing the cost along to ratepayers. Company spokesmen offered no specifics on who these investors might be, but suggest that the federal 45Q tax credit for carbon sequestration facilities makes the deal attractive.
Glenrock Energy representatives claim that using the captured CO2 to boost oil production in the Big Muddy will improve the economics of extending the life of the Dave Johnston plant with CCUS. Factoring in oil production and other socioeconomic benefits — such as jobs — will help maintain or even reduce ratepayers’ bills, the company claims. It would also provide “over $1 billion for the state of Wyoming and Converse County over a period of several years” via royalties and various oil production and severance taxes, Glenrock Energy advisor Wally Wolski told the Joint Minerals, Business and Economic Development Committee on Tuesday.
“I believe a private industry solution can provide the greatest benefit for all stakeholders,” Wolksi said.
However, PacifiCorp — or any potential future owner of the Dave Johnston plant — might be reluctant to enter such a deal, and it isn’t clear whether the state can force the company to participate in such an arrangement. As currently proposed, the owner, be it Glenrock Energy, PacifiCorp or another entity, would still be responsible for the operation, ongoing fuel costs, environmental compliance and eventual decommissioning of both the CCUS and coal-fired power facilities.
In both the Minerals and the Corporations hearings this week, lawmakers wondered aloud about their powers to force or broker such a deal.
“Why the hell can’t we work together on a joint venture?” Minerals Committee Co-Chairman Rep. Mike Greear (R-Worland) said.
Sen. Scott said he’s working on a proposal to do just that. “I wouldn’t eliminate the possibility we might have to modify some of the provisions in existence,” Scott told the Corporations Committee.
PacifiCorp’s CCUS commitments
Despite its preliminary findings regarding CCUS retrofits, PacifiCorp has agreed to put out a call for bids to add the technology to units 3 and 4 at the Jim Bridger coal-fired power plant. It also agreed to put out a bid to retrofit all four coal-burning units at the Dave Johnston power plant.
PacifiCorp did so not only in response to the state’s legislation designed to keep coal plants burning — it was a key commitment in the sue-and-settlement agreement the state struck with PacifiCorp to avoid a federal shutdown order from the EPA over ozone emissions at Jim Bridger.
Soliciting bids for CCUS, however, isn’t a commitment to move forward with retrofits in Wyoming, PacifiCorp/Rocky Mountain Power lobbyist Rick Kaysen told lawmakers. The utility, which also operates in five other western states, is still obligated to provide low-cost and reliable power to all its customers while navigating a range of laws and regulations in each state — several of which are ditching coal-based power. Plus, the costs of retrofitting aging coal-fired power plants with CCUS remains a huge question.
“We are [considering] adding equipment to 50-year-old generating units,” Kaysen said. “So there’s a challenge right there.”
However, Kaysen also assured Minerals Committee members that PacifiCorp is “excited” about the prospect of proving CCUS applications to coal-fired power in Wyoming.
“I very much appreciate what I’m going to call a changed attitude from two years ago,” Rep. Greear said.
UW: Wyo is primed for CCUS
Despite a poor track record and numerous doubts among energy industry analysts regarding the economics of CCUS for coal-fired power, Wyoming is setting the stage to bring the technology to fruition, according to University of Wyoming School of Energy Resources Director Holly Krutka.
Wyoming has a long history of injecting CO2 for “enhanced oil recovery,” and is one of a handful of states to have fully analyzed several geologic structures to verify their suitability for permanent CO2 storage, Krutka told the Minerals Committee.
The state already has an operational CO2 pipeline that extends from the southwest to the northeast. The Legislature has established statutes, and state agencies have written guiding regulatory rules regarding CO2 injection. The SER is close to obtaining its first Class VI permit — a federal EPA requirement — to inject CO2 for permanent storage. That would greenlight a project near the Dry Fork Station coal-fired power plant outside Gillette, home to the Wyoming Integrated Testing Center — the state’s CCUS incubation facility.
SER and its research partners — including the U.S. Department of Energy — have also advanced both the efficiency and economic feasibility of applying CCUS, including at aging coal-fired power plants in the state, Krutka said.
The millions of public and private dollars poured into the efforts, along with Wyoming’s series of legislation intended to compel utilities to retrofit coal-fired power plants with CCUS technology, are about to come to fruition, she said.
“I feel like the School of Energy Resources is now actively working with our partners around the state to hand off this technology and ultimately see it deployed,” Krutka told lawmakers.