Utilities: Wyo CCUS mandate could spike monthly bills by $100


WYOMING -- Adding carbon-capture systems to existing coal-fired power plants in Wyoming could cost the average residential ratepayer an additional $100 per month, according to Black Hills Corp’s initial filings to the Wyoming Public Service Commission.

The retrofit costs alone could range from $400 million to $1 billion for each coal unit, according to PacifiCorp, which operates as Rocky Mountain Power in Wyoming. Adding carbon capture utilization and storage technologies would also significantly reduce electrical generation efficiency at the coal plants, further ramping up the expense for ratepayers. Generation efficiency could be reduced 14 to 35 percent at Wygen II and Neil Simpson II near Gillette, according to Black Hills Corp.

Both PacifiCorp and Black Hills Corp are moving forward with feasibility studies to further analyze whether it is viable to apply CCUS at five coal-fired power units in Wyoming.

The studies stem from a 2020 legislative mandate written into House Bill 200 –  Reliable and dispatchable low-carbon energy standards. Now law, the Wyoming PSC is wrestling with how to administer what some refer to as a coal-CCUS portfolio standard — the only such portfolio standard in the nation. It requires regulated utilities to determine how much CO2 capture can be applied to existing coal plants and still justify the costs to ratepayers. One preliminary conclusion by PacifiCorp and its consultant Kiewit Engineering Group, Inc. suggests that capturing 40% or more CO2 emissions would not prove economic for coal units included in its analysis. 

Lawmakers who supported HB 200 hoped a large price tag for adding CCUS might be justified when also factoring new jobs and revenue from selling the CO2 that’s captured from coal plants. The sold product could be utilized to produce untapped oil reserves and potentially create new CO2 byproducts. However, regulated utilities typically cannot include factors outside their scope of services in a request for ratepayer increases, such as tertiary oil production or the value of potential CO2 byproducts.

House Bill 200 proponents also sought to minimize the ratepayer burden by allowing the PSC to establish a cap for incremental rate increases. The commission in November set a 2-percent cap, potentially preventing something on the order of a $100-per-month increase. But regulated utilities must be allowed to charge ratepayers for full capital and implementation costs, which could result in extending the period that a utility charges ratepayers for a CCUS investment — potentially by decades. 

PacifiCorp estimates the 2-percent cap could generate a maximum $13.1 million annually for a CCUS project that costs between $400 million and $1 billion. 

“That means, presumably, you’d have to run [some coal units] for another 50 years,” Powder River Basin Resource Council attorney Shannon Anderson said. “If that doesn’t happen, then at some point ratepayers are going to be paying for systems that we are no longer using.”

State regulators are still wrestling with many questions and assumptions regarding the coal-CCUS feasibility mandate, PSC Chief Counsel John Burbridge said.

“There certainly is a lot of discussion about the cost of installing CCUS on currently operating coal units,” Burbridge said, adding that the new statutes stemming from HB 200 allow a utility to forego installing CCUS on a coal plant if it can prove to the commission it is not viable for ratepayers. “If they can show that, and convince the commissioners that this just isn’t economic for the customers, then I think it just kind of dies a slow death.”

Another result is that Wyoming ratepayers alone would likely shoulder the cost, Anderson said. 

PacifiCorp serves customers in six western states, including Wyoming. Typically, all six states negotiate to divide the cost of PacifiCorp’s capital investments based on each state’s reliance on a particular facility. However, states like Oregon and Washington may decline to take on power from a Wyoming-mandated coal-CCUS investment.

That could change if there were a federal carbon capture standard, but observers don’t anticipate that happening anytime soon.

“It just doesn’t make sense unless there’s some environmental mandate from [the Environmental Protection Agency] or Congress or somebody,” Anderson said. “It just doesn’t make sense when wind and solar are right there and so much cheaper.

“These filings are the first real numbers we’ve seen on what carbon capture means to the average consumer in Wyoming,” Anderson continued. “These are incredible penalties, really.”

Although it’s made no final determination and is still collecting third-party analysis for a complete CCUS feasibility study, PacifiCorp is asking the Wyoming PSC to approve a 0.5-percent surcharge to all its Wyoming customers to help pay for the mandated studies — which are already in motion — as well as implementation costs if the utility moves forward with a CCUS retrofit.

If approved, the new surcharge would generate $3.1 million in revenue from PacifiCorp’s Wyoming customers annually. The same surcharge — if extended to the 2-percent cap — could generate up to $13.1 million annually if it and the PSC eventually greenlight a CCUS retrofit, according to PacifiCorp filings.

A public comment period regarding PacifiCorp’s request [Docket No. 20000-616-EA-22] for the 0.5-percent surcharge ends on April 22. Public comments can be sent to [email protected].

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

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