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Wyoming governor weighs bill to save coal plants in the state

Highlights

Bill would require utilities sell plants to new operators

Utilities would have to buy power from the coal plants they sell

Wyoming Governor Mark Gordon, who wants to save the coal industry in his state, has about one week to decide whether to sign a bill that would require utilities to seek buyers for their coal-fired plants, rather than closing them.

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PacifiCorp, the state's dominant electric power utility, owns much of the coal plant capacity in Wyoming and spokesman David Eskelsen said his company does not oppose the bill. PacifiCorp faces increased challenges in operating its coal generation because three of the six states it serves have passed or are on the verge of passing laws that prohibit future use of electricity generated with coal.

Senate File 159, sponsored by Senator Dan Dockstader, Republican-Afton, passed the House 50-8 on February 26, and the Senate unanimously concurred February 27 just before the Legislature adjourned early February 28. Gordon has 15 days from the end of the session to act on the measure, excluding Sundays. According to the governor's communications director, Rachel Girt, the governor was still considering the bill Tuesday.

The measure is designed to limit the loss of jobs that would otherwise occur with coal plant closings and coal mining production losses. The Powder River Basin in northeast Wyoming and southeast Montana is the largest coal-producing region in the US.

REQUIREMENT FOR UTILITIES

The bill would allow utilities that seek to replace their coal-fired generation with other types of plants, such as renewable energy or gas-fired facilities, to do so only if they first make a "good faith effort" to sell the coal plants to new operators who would continue to run them. It would also require those utilities to buy the power from the coal plants they sell. Otherwise, utilities would be prohibited from recovering the costs of building replacement generation in customer rates.

In addition, utilities could sell the plants only if the offers to purchase the coal plants would reduce costs and risks to utility customers. The bill, which would not apply to cooperatives and municipal utilities, would exempt any buyer of a coal-fired plant from regulation as a utility.

PacifiCorp has been adding renewable energy to its system, including 1,150 MW of wind capacity, plus a high-voltage transmission line in Wyoming. In its 2017 integrated resource plan, the utility said that 3,650 MW of existing coal capacity will be retired through the end of 2036 and laid out plans to retire its Dave Johnston unit 3 by the end of 2027, and its Jim Bridger units 1 and 2 in 2028 and 2032, respectively. Both plants are in Wyoming.

The Berkshire Hathaway Energy subsidiary, under pressure from environmental groups, in December 2018 released an analysis showing a net benefit of retiring 13 of 22 coal units by 2022. A June 2018 Sierra Club study concluded that 11 of PacifiCorp's 22 coal units, representing 2,730 MW, consistently produce electricity at a higher cost than replacement energy options.

-- Jeff Stanfield, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Gail Roberts, newsdesk@spglobal.com