CHEYENNE, WYOMING (Nov. 26, 2019) — A legislative committee last week backed a bill that would allow the buyers of early retirement coal plants access to the grid, a deregulatory step that could affect electricity consumers statewide.
The bill, which will be considered during the Wyoming Legislature’s coming session, is part of a continuing effort to encourage new buyers of coal-fired power plants built and run by the state’s large electrical utility companies.
One utility, PacifiCorp, which owns Rocky Mountain Power, has announced plans to close seven coal-fired plant units in the state over the coming decade. The closures will eliminate crucial jobs for towns like Kemmerer, Glenrock and Rock Springs.
Lawmakers tabled a related draft bill that could have imposed steep costs on utility companies seeking to retire units early, holding them responsible for the “socioeconomic impacts” in communities where the plants are located. The Joint Corporations, Elections and Political Subdivisions Committee did not vote on that draft legislation, but voiced an interest in bringing it back after the coming 2020 legislative session that begins in February.
The moves were part of a committee meeting jam-packed with utility issues. The Wyoming Public Service Commission, which regulates monopoly utilities, told lawmakers it would open an investigation into whether PacifiCorp’s decision to close power plants is driven by economics, as company representatives say, or political motivations, as many Wyoming politicians argue. Lawmakers also voted down efforts to reform and cancel legislation for “net metering” for small-scale solar power owners.
‘A more deliberate way’
The Legislature first responded to the pending retirement of coal units in the 2019 session by passing a bill that forces utilities to try and sell power plant units before closing them before the end of their useful lives.
Now lawmakers seek to add to that measure with the passage of a draft bill that allows the new buyer of a coal plant or unit to sell electricity using the utility company’s existing grid. Businesses that have voiced interest in buying a coal plant or unit include anything from cryptocurrency mining companies to energy companies that could trap and sell carbon dioxide for enhanced oil recovery.
A plant buyer would need to reach customers, however, and electrical grids are expensive infrastructure to build. Not being able to patch into the existing electrical grid would likely stymie any buyer, meeting attendees said.
“If we’re going to do this successfully we have to give … the people that buy these plants an opportunity for market,” said Sen. Charles Scott (R-Casper), a committee member.
The bill is tantamount to “piecemeal” deregulation, said Denise Parrish with the Wyoming Office of Consumer Advocate. Her agency serves as an independent counterpart to the PSC, and its purpose is to advocate for state residents who pay the bills for electricity and other public services. Deregulation undoes the existing legal structure — where utility companies are granted monopolies to operate public services for the state but regulated to keep prices reasonable for consumers.
Lawmakers are tinkering with that system by proposing open-ended legislation, Parrish warned the committee, without knowing the consequences.
“If the committee wishes to open the market, it should do it in a more deliberate way,” she said.
Lawmakers on Wednesday acknowledged that they were moving into a new world.
“We’re disrupting how we’ve done business in the state of Wyoming for a long, long time,” Sen. Dan Dockstader (R-Afton) said.
Dockstader does not serve on the corporations committee but has been a driving force behind legislation to enable buyers for power plant units utility companies want to retire.
Other bill opponents, like the Wyoming Rural Electric Association and Rocky Mountain Power itself, also said they worried about a sudden step into deregulated electricity markets that lawmakers hadn’t thought through.
Lawmakers are considering deregulation “specifically focused on just one source,” Rocky Mountain Power spokesperson John Cox said. The Legislature might run afoul of federal utility regulators if it forces electrical grids to accept power from coal plants not owned by utilities, he said.
One bill proponent, the CEO of an energy company that has expressed an interest in captured CO2 for oil recovery from coal-fired plants, said the bill represents a “special circumstance,” not deregulation. Still, Glenrock Energy CEO Terrence Manning said, the bill could result in electricity customers paying the plant buyers’ for power.
Prospective buyers want to be certain of “a reasonable rate of return,” Manning said, “which may or may not be on the backs of the Wyoming ratepayers.”
Manning’s company has pushed for the plant-purchasing measures since the Legislature began considering them.
The reworking of long-standing utility statutes had so far steamed forward with broad popularity among lawmakers, many of whom accuse utilities of bending to states where worries about climate change are driving a desire for renewable energy.
Despite its support of the first bill, the committee tabled the second coal plant bill, which would have directed the PSC to demand “transition assistance” money from utility companies before they retire coal-fired electricity generating units early. PSC deputy chair Mary Throne worried that allocating such funds was beyond the commission’s scope.
“I don’t think our commission is comfortable with this role of doling out transition assistance,” she said.
Lawmakers worried a flaw in the bill put them in a dangerous position. Forcing the utility company to pay for the “socioeconomic impacts” of closing plants out of its own pockets might not be constitutional. The money for socioeconomic impacts would have to come from ratepayers themselves.
“Some people might call it a hidden tax through your utility bill,” consumer advocate Parrish said.
The committee could consider that bill again after the 2020 legislative session ends.
PSC opens investigations
The PSC has opened an investigation into how PacifiCorp arrived at its decision to close some power plant units earlier than expected, Throne told lawmakers. The commission would investigate the company’s “motivations,” she said. PSC staff will dig into economic decision-making and subpoena documents as the commission seeks to uncover whether it was politics — and not economics — that drove the utility to announce coal plant closures.
It will mark the first time the PSC had opened such an investigation, Gov. Mark Gordon’s Chief of Staff Buck McVeigh told lawmakers. The governor is likely to involve himself in the investigation, McVeigh said.
The PSC in recent months has faced significant and unusual pressure from lawmakers who want the regulators to do more to stop utility companies from moving on from coal.
PacifiCorp had no incentive to change power sources for reasons beyond economics, company spokesman Cox told the committee. If Wyoming discovered the utility was making decisions for reasons beyond resource costs, the PSC could reject a company request to bill ratepayers for new energy infrastructure.
“I have a financial incentive to not be driven by [ideological reasons],” Cox said.
The committee also killed two measures that would have diminished small-scale solar owners’ ability to sell their power back to utility companies. One bill would have decreased the amount of money utilities would have to pay net metering customers for their excess electricity. The other bill would ultimately have eliminated the current net metering statute altogether.
Some committee lawmakers are concerned that net metering created a subsidy where utility customers who don’t own solar systems are paying for the electricity produced by customers who do. The Office of Consumer Advocate produced a memo showing subsidies do exist, and Parrish testified that subsidies could grow if more solar power comes online.
Solar proponents packed the committee hearing room to oppose the measure, which they said would invalidate their investments in clean power, among other concerns. After hours of public testimony, lawmakers killed both proposals on tie votes, according to a report in the Casper Star-Tribune.
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