Opinion: Carbon capture mandates are short-sighted, hurt Wyo ratepayers

Power lines leading from Jim Bridger Plant at Point of Rocks. (Angus M. Thuermer Jr./WyoFile)

Columnist asks why state leaders continue to ignore and resist the winds of change

Opinion by Greg Findley, WyoFile

In a state known for its strong winds, Wyoming’s elected officials sure don’t seem to have learned how to gauge how hard or which direction the winds are blowing.

At least where energy markets are concerned, they would rather bury their heads in the coal than acknowledge that the nation is rapidly moving away from the expensive and highly polluting coal-powered electricity currently produced in Wyoming toward lower-cost clean renewable energy.

Ignoring — and resisting —  these winds is short-sighted. It will lead Wyoming to miss out on the opportunity to diversify its economy and stay relevant as an energy producer, and it will cost the state’s electricity ratepayers — us — a lot of money.

As utilities try to replace outdated and expensive Wyoming coal units with the renewable energy that our neighboring states want, our elected officials keep trying to force them to keep coal plants open. In 2019, Wyoming passed Senate File 159, which requires public utilities planning to retire old and uneconomical coal units in Wyoming to first attempt to sell them.

If this sounds like government interference in the private sector, it is. But in 2020, this government overreach got worse when the legislature passed House Bill 200, Gov. Gordon’s plan to create the nation’s first (and only) “coal standard.” This law forces electric utilities to add expensive and unproven carbon capture technologies onto already uneconomical coal before they can recover the costs of any investments in renewables.

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Carbon capture technology is extremely expensive and it has failed miserably at the two power plants in North America where it has been tested. At Texas’s Petra Nova plant, the carbon capture operations required so much energy that NRG Energy built an entirely separate natural gas power plant — the emissions of which were not offset by the Petra Nova technology — just to power the scrubber. Then the plant was shut down in 2020 as it proved to be uneconomical and unreliable. And at the Boundary Dam Power Station in Saskatchewan, adding carbon capture to a single generator cost over $1.5 billion, and it still failed to remain reliable or to meet its carbon capture goals.

Rocky Mountain Power, the largest utility serving Wyoming, modeled carbon capture at all of Wyoming’s coal units in its 2021 biannual Integrated Resource Plan, but didn’t select it as the best option as it failed to meet the company’s mandate of providing electricity at the lowest cost and least risk. In fact, Rocky Mountain Power found that reasonable capital costs for carbon capture would need to come down at least 33%, or revenue for captured carbon dioxide would need to increase by at least 84%, to break even.

To encourage utilities to keep coal plants open and to experiment with expensive carbon capture, HB 200 allows utilities to recover the costs of carbon capture investments by adding these costs to the rates Wyoming customers pay for their electricity. To further sweeten the deal, the legislature has said utilities can seek an even higher rate of return than normal on these investments, and that utilities don’t need to share any profits from the sale of captured carbon dioxide with their customers.

The bill explicitly says those profits, along with profits from the higher rate of return on equity, can go to the utility’s shareholders. Of course, since other states don’t want overly expensive coal energy, they won’t allow utilities to add these costs to the rate base for their state’s customers. This means that Wyoming ratepayers get stuck paying the entire bill, and we could see our electricity rates skyrocket in a misguided attempt to keep coal alive.

The good news is that Wyoming has some of the best renewable energy resources in the United States, including that same wind our legislators and governor are trying to buck. Renewables such as wind and solar are on average five times cheaper than coal-fired power plant retrofits.

While renewables can’t replace the lost coal revenues, they give us a leg up in launching a diversified economy and can save ratepayers money.

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Thankfully, Wyoming’s Public Service Commission has drafted rules that say that utility companies can avoid installing carbon capture technology if they can prove it is not economically feasible. The PSC is accepting comments on those rules now, making this an excellent time for ratepayers across Wyoming to speak up about what energy future and electricity prices they want to see.

I urge you to submit written comments to the PSC in support of affordable electricity, and specifically, the commission’s rule that requires utility companies to evaluate the economic and technical feasibility of carbon capture before they pass those costs on to ratepayers. You can email your comments to wpsc_comments@wyo.gov by Oct 22.

Our future demands your action.

 

 

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.