Gov. Mark Gordon and the Legislature apparently believe Wyoming’s electricity customers are all chumps.
What other conclusion is possible, given their push to prop up the dying coal industry by retrofitting the state’s coal-fired power plants with wildly expensive, efficiency-killing carbon-capture systems by 2030?
PacifiCorp, which operates as Rocky Mountain Power in Wyoming, said last month it would cost between $400 million and $1 billion for each coal power plant unit to add carbon capture utilization and storage technology. A law passed in 2020 required the company to analyze the feasibility of such a move. The same measure spelled out who gets to foot the bill — PacifiCorp’s roughly 140,000 Wyoming customers.
It’s already uneconomical and environmentally irresponsible to keep burning coal for electricity generation, no matter how much tax revenue it brings to Wyoming. It’s killing our planet.
That’s why PacifiCorp announced plans in 2019 to close six coal-fired units at Wyoming plants within 10 years and rely instead on natural gas, cheaper renewables like wind and solar and new, experimental nuclear technology.
Lawmakers in 2020 passed House Bill 200 – Reliable and dispatchable low-carbon energy standards, which established brand new standards that — surprise! — can only be met by coal-burning plants utilizing carbon capture utilization and storage. Unless a company can prove the technology is not economically feasible, it cannot bill rate payers to recoup its capital investments in alternative power sources like carbon-free solar and wind energy.
The nonprofit Institute for Energy Economics and Financial Analysis warned before the new law was approved that it was a boondoggle. If the price tag of a CCUS retrofit is $1 billion, PacifiCorp’s 140,000 Wyoming customers must split the tab.
“[That’s] essentially imposing a tax of more than $7,000 per customer,” the IEEFA said. “In a state that doesn’t even have an income tax, we believe the proposal would generate massive public opposition.”
But it didn’t. House Bill 200 was approved by about a 2-to-1 margin in the House and Senate. Gordon, like his GOP predecessor, Matt Mead, has relentlessly pushed CCUS to “save” coal. The governor told the Wyoming Press Association in February he believes “we have the best chance of addressing climate change by doing something with carbon capture and sequestration.”
Gordon’s faith in CCUS should be shaken by the fact that Petra Nova in Texas — the technology’s flagship project — flopped on a grand scale.
The project, which was expected to earn a profit through selling CO2 for enhanced oil recovery, cost $1 billion in 2017. It was mothballed three years later when oil prices tanked.
Congress spent $1.1 billion a decade ago on eight CCUS research projects to reduce pollution. According to a Government Accountability Office report earlier this year, none of the “clean-coal” projects are operating.
IEEFA called HB 200 “part of a carbon-capture-experiment racket that has existed for years in [Wyoming], at taxpayer expense, but has nothing to show for it.”
Black Hills Corp noted in its Wyoming Public Service Commission filing in March that retrofitting two of its Gillette plants could result in rate hikes as high as $100 per month.
But because the PSC capped CCUS-driven rate hikes at 2%, Black Hills, Cheyenne Light, PacifiCorp and other utilities would have to spread out the charges over decades. Customers would be stuck paying higher rates far past the expected 30-year lifespan of a CCUS plant.
House Bill 200 was sold as a way to keep Wyoming’s coal plants operating while boosting state tax revenue, and shifting most of the cost of the bailout elsewhere. “We can export that tax burden to people in other states,” predicted Rep. Dan Zwonitzer (R-Cheyenne), the bill’s sponsor.
Sounds great, doesn’t it? The idea reminds me of another plan a few years ago to transport Powder River Basin coal by rail to a Washington state coal export terminal. Our coal would be shipped to China, and Wyoming’s coal mines would be saved.
Except Washington didn’t buy it for a minute, the company planning to build the terminal went bankrupt, and all Wyoming lawmakers could do is allocate millions of dollars to sue Washington for allegedly violating the U.S. Commerce Clause. The project is dead in the water.
Exporting our cost of CCUS equipment to the 1.8 million customers in the other five PacifiCorp states also sounds ideal for Wyoming, but it won’t happen. Why would any state regulators — especially in Oregon, Washington and California, which have solid commitments to move toward carbon-free emissions — tell PacifiCorp’s ratepayers they must share in Wyoming’s costs?
Reducing carbon emissions through CCUS would eliminate some pollution, but the move can hardly be classified as “green,” no matter how much Gordon and other HB 200 backers would like it to be.
There are even more reasons for Wyoming ratepayers to be upset with this fiasco. CCUS could significantly reduce electrical generation efficiency at plants, making it even more expensive.
The three units PacifiCorp has identified as its best prospects for CCUS conversion — two near Rock Springs and one near Glenrock — could sell carbon dioxide captured by the projects to companies for enhanced oil recovery, or to create new CO2 byproducts like synthetic jet fuel.
But those sales won’t help Wyoming ratepayers, because regulated utilities typically can’t include such factors outside their scope of services in setting rates. Where would the extra revenue go? To PacifiCorp stockholders, of course.
The companies could reduce costs by using federal tax credits, which would provide $50 per ton for captured and stored carbon, or carbon that is used in enhanced oil recovery projects. But to qualify, projects must begin construction by 2026. The companies probably won’t be able to jump through all the state regulatory hoops to start building by then.
Now, this is truly ironic: a proposal to increase the federal tax credit to $85 per ton is in President Joe Biden’s “Build Back Better” plan. It’s been blocked by Senate Republicans, including Wyoming’s coal-friendly John Barrasso and Cynthia Lummis, plus the chamber’s biggest defender of coal mines (especially the ones he owns) — Democrat Joe Manchin of West Virginia.
House Bill 200 lets Wyoming utilities off the hook if they can prove CCUS retrofitting isn’t economically feasible. Anyone who spends more than a minute examining the data should come to that conclusion.
If companies ultimately can walk away from the law’s outrageous $1 billion cost to ratepayers, it’s no harm, no foul, right? It seems the only thing customers would lose is some sleep worrying about it.
Uh, not exactly. PacifiCorp asked the PSC to grant a 0.5% surcharge on its rates, to raise $3.5 million from customers to help pay for its legislatively mandated feasibility studies. Talk about adding insult to injury.
Black Hills Corp hasn’t requested a surcharge, but it must complete the mandated feasibility study for its two potential CCUS plants. Reducing CO2 emissions by converting coal to natural gas, the company’s preferred method, would cost only 5% as much as CCUS retrofitting.
That ought to be enough to sink the idea once and for all — or until our elected officials find more ways to foist CCUS on Wyoming ratepayers, who still aren’t riled up enough yet to make this a major issue this election year.