Bill would penalize utilities for wind-generated electricity for Wyoming customers

Source: By Heather Richards, Wyoming Star Trubune • Posted: Friday, January 13, 2017

A bill proposed by six state lawmakers would charge utilities a penalty if they use wind or solar energy to provide Wyoming consumers with electricity.

If Senate File 71 were law, there would be six permissible resources for generating electricity for Wyomingites, including natural gas and coal. Wind and solar are not on the list, except for individual use.

Utilities would have a year to reach the first compliance milestone of the bill, in which each company would have to get 95 percent of its Wyoming-sold energy from the approved resources.

The following year, 2019, companies must reach 100 percent compliance.

Under the bill, if electricity were generated by wind or solar in Wyoming to serve customers in the state it would come with a $10-per-megawatt-hour penalty. That penalty would be double the suggested tax hike on wind also under consideration this legislative session.

Two of SF 71’s co-sponsors, Rep. Tyler Lindholm, R-Sundance, and Rep. Scott Clem, R-Gillette, referred comment on the bill to Sen. Larry Hicks, R-Baggs, who did not respond to calls requesting an interview.

The bill is unsound, said Shannon Anderson, lawyer for the Powder River Basin Resource Council.

“It would be very difficult to implement, difficult to regulate,” she said. “It goes against longstanding precedent to choose least-cost resources, and it ignores the reality of a multi-state grid.”

The benefit to Wyoming’s producers of traditional fuels like coal is unclear, as two-thirds of Wyoming generated electricity is shipped out of the state already.

For that reason, the bill likely does not matter, said Chuck Mason, an economist at the University of Wyoming’s Center for Energy Economics and Public Policy.

However, generally Wyoming politicians support a free market, and this bill doesn’t reflect that, he said.

“This strikes me as protectionism, and I don’t get it,” Mason said. “We would want markets to be unfettered and vendors to have access to the cheapest best sources of the things they are selling. If that happens to be wind or solar, then that will be wind or solar.”

While the bill appears to favor, at least symbolically, traditional fuels like coal, it could hurt consumers as renewable energy sources become more competitive.

In practice, the bill would function as a tax on all wind generated for Wyoming demand, said Rob Godby, director of the Center for Energy Economics and Public Policy.

However, the rate is high — 10 times the current wind excise tax of $1 per megawatt hour, he said.

“Certainly this will not ensure Wyoming rates are as low as possible – it amounts to an attempted indirect subsidy of traditional sources regardless of the cost of renewables,” he said in an email.

Rocky Mountain Power, which uses a number of wind farms in the state as part of its electricity portfolio, is reviewing the bill, said Dave Eskelsen, a company spokesman.

“Any comment that we may offer in the future will be well-considered,” he said.

The bill gives the Wyoming Public Service Commission, the state group that regulates utilities and governs consumer rates, until Nov. 1 to develop enforceable rules in accordance with SF 71.

The bill’s six sponsors are two senators, Hicks and Ogden Driskill, R-Devils Tower. The co-sponsors are Reps., Lindholm, Clem, Mark Baker, R-Rock Springs, Jim Blackburn, R-Cheyenne, Roy Edwards, R-Gillette, David Miller, R-Riverton.

Arno Rosenfeld contributed to this report.