Power rates creep up in Wyoming as utilities weigh carbon capture mandates

Wyoming's two investor-owned electric utilities are preparing to report on their progress in complying with a 2020 state law requiring them to investigate the potential for carbon capture retrofits at their coal-fired power plants.

Requests for proposals PacifiCorp and Black Hills Corp. issued over a year ago to gauge interest in the projects yielded tepid results. The only actual bid submitted to engineer, procure and build carbon capture, utilization and sequestration (CCUS) facilities came from Enchant Energy Corp., the company that sought and failed to develop a $1.6 billion CCUS project at the decommissioned San Juan coal-fired plant in New Mexico.

Meanwhile, Wyoming ratepayers are seeing new surcharges on their electricity bills to fund the utilities' carbon capture studies that some worry could increase were the CCUS projects were to proceed.

The utilities are required to explore the feasibility of CCUS projects under HB 200, legislation enacted to protect the state's fleet of coal plants. Wyoming is also the largest producer of coal in the US. The statute mandates that at least 20% of a power company's portfolio consists of coal-fired power plants equipped with the technology by 2030.

Under the 2020 law, utility rate requests to support the CCUS projects cannot exceed 2%. But Anthony Ornelas, administrator for the Wyoming Office of Consumer Advocate, said there's ambiguity around that language and that his office is looking into whether utilities may ultimately be able to exceed that limit.

PacifiCorp, a subsidiary of Berkshire Hathaway Energy, operates in Wyoming under the Rocky Mountain Power name. So far, state regulators have approved a 0.3% rate increase for its customers to pay for the analysis and bidding process associated with the CCUS law. A surcharge of 0.67% is going into effect Feb. 1 for customers of Black Hills subsidiary Cheyenne Light Fuel and Power Co. The new surcharges amount to $1 or less a month for household customers but will cost large commercial and industrial customers thousands of dollars a month, Ornelas said in an interview.

Large price tags

Rocky Mountain Power issued a request for proposals in late 2022 and received one bid, submitted by Enchant Energy, for two units at its four-unit 2,119-MW Jim Bridger plant, said David Eskelsen, a PacifiCorp spokesperson. There was no bid for a CCUS unit at the four-unit 755-MW Dave Johnston plant, also identified as a possible candidate for a carbon capture project.

The utility, serving 144,000 Wyoming customers, is now readying a plan analyzing the cost and feasibility of the projects due with regulators on March 31, Eskelsen said in an interview.

Black Hills Corp., which has 44,000 customers in Wyoming, said in an April 2023 filing with the Wyoming Public Service Commission that it received no viable bids for its carbon capture projects. Instead, the company said it would move forward with a preliminary front-end engineering study to assess CCUS costs more accurately. Like PacifiCorp, Black Hills must report back to the state on March 31.

PacifiCorp's initial estimates suggested that capital costs for one "full-scale carbon capture system" could range from $400 million to $1 billion, and has pledged not to spread those costs to ratepayers in other states. Black Hills has estimated its household customers could see monthly power bills jump $25.34, or by 15.6%, and even higher for small general service companies if carbon capture is installed on its Wyoming plants.

There are only two CCUS operating on coal plants in the world today, JX Nippon Oil & Gas Exploration Corp.'s Petra Nova project in Texas and Saskatchewan Power Corp.'s Boundary Dam plant in Canada. A third prospective project, North Dakota's Project Tundra, was recently selected for award negotiation by the US Energy Department for a development grant worth up to $350 million.

Enchant Energy, which bid on the Wyoming project, and the city of Farmington, NM, tried for several years to get a CCUS project built at the San Juan plant, a plan that PNM Resources Inc. and other plant owners rejected as too risky. The plant stopped operating in 2022 and is now being demolished.