Wyo. ponders bill to save ailing power plants

Source: Benjamin Storrow, E&E News reporter • Posted: Tuesday, February 19, 2019

Wyoming has long contemplated alternative ways to burn its ample coal reserves. Few have ended well.

One developer famously proposed building a massive power plant fueled by waste coal. He ended up in prison last year, convicted of stealing $5.7 million in federal stimulus money meant for the project (Greenwire, June 28, 2018).

Another company spent more than a decade pushing a plan to build a $2 billion facility capable of turning coal into petroleum products. Its leaders, which included former Enron Corp. executives, threw in the towel in 2016 (Greenwire, June 21, 2016).

Fast-forward to 2019. Calls from state and local officials are growing to support a Casper company’s plans to capture carbon off the Dave Johnston power plant, a 762-megawatt coal plant in central Wyoming operated by PacifiCorp. That company, Glenrock Energy, hopes to extend the life of a plant slated to close in 2027 by storing and selling its carbon.

There are two factors animating this year’s push. One is Congress’ passage last year of tax credits for carbon capture and sequestration projects. The second is a PacifiCorp study that found most of its coal plants are uneconomical and may be closed sooner than expected (Climatewire, Dec. 5, 2018).

The power company’s findings have riled the state. Not only is Wyoming America’s top coal miner, accounting for roughly 40 percent of U.S. production, it is home to a small armada of coal plants that ship power across the West. Coal revenues are a bedrock of the state budget and have long been used to construct new schools.

“There were some provocative statements made with that, and there are some real consequences to communities in Wyoming,” Gov. Mark Gordon (R) said in a recent interview, echoing concerns around Cheyenne, the state capital.

The study has spawned attempts to save PacifiCorp’s coal fleet. A bill crafted by a group of large power consumers would require PacifiCorp to search for a buyer if it moves to close a coal plant early. If a buyer can be found, the new owner would sell the plant’s electricity back to PacifiCorp or another regulated utility in the state. There’s a catch: The deal would have to come at no additional cost to customers.

The Senate unanimously passed the bill last week, while a House committee followed suit this week. Gordon indicated he is predisposed to signing it.

“Wyoming is trying to stand up a policy option that reflects the value of these industries to Wyoming,” the governor said. “So if there is someone that wants to buy the asset and continue to operate it, that’s great.”

A long list of questions faces supporters of the measure. The market of potential buyers for PacifiCorp’s coal facilities is slim, as evidenced by an unsuccessful two-year campaign to find a new operator for the Navajo Generating Station in Arizona, a massive coal plant slated to close in December (Climatewire, Feb. 7).

It’s also not clear there would be a long-term market for electricity generated by PacifiCorp’s coal fleet. Oregon and Washington, two of the utility’s largest markets, are taking steps to eliminate coal-fired generation.

Under the Wyoming bill, ratepayers in the state would assume all the costs of buying power from a coal plant that sold its electricity to PacifiCorp. That suggests limitations in the bill. Roughly 80 percent of electricity generated in Wyoming is exported to other states. The state cannot consume all the electricity its power plants produce.

“It is the economics that are driving the consideration of the early closures,” said Nancy Kelly, a policy adviser at Western Resource Advocates. “Those economics aren’t going to go away by requiring PacifiCorp to search for someone else to buy the facility rather than close it.”

PacifiCorp has remained neutral to date. The utility worked hard to include provisions in the legislation that allow it to walk away from a plant if no buyer can be found.

Rita Meyer, a vice president at Rocky Mountain Power, the utility’s subsidiary in Wyoming, said the company understands the state is trying to save one of its critical industries.

“We think there is good intent by the Legislature,” Meyer said. “We’re following it closely to see how it comes out of the legislative process.”

Proponents see an opening to jump-start the industry. They doubt the results of PacifiCorp’s study, noting it did not account for reliability. One of its modeling scenarios also included a carbon tax, which remains a long shot politically.

And they see policy decisions in Oregon and Washington as a potential motive behind the company’s consideration of an early exit from its coal plants.

Dave Johnston is likely the place where the bill will be tested. The plant rumbled online in 1958, but its location makes it attractive for CCS. The coal plant is located near the Salt Creek oil field, where carbon is already pumped into wells to stimulate production.

“We want to make sure as Wyoming looks at the world and looks at this thing, if there are other options available and people are willing to invest, we should take the opportunity and take it for a test drive,” said Thor Nelson, an attorney representing the Wyoming Industrial Energy Consumers, which had a hand in crafting the bill.

Glenrock Energy CEO Terrence Manning told lawmakers this week that his company has been in talks with PacifiCorp about purchasing Dave Johnston. He urged the state to act quickly before the 45Q tax credits approved by Congress for CCS projects expire in 2023. The price tag for one project could be $500 million, he said.

Manning, in an interview, acknowledged the project remains a tall order but argued it has a series of factors in its favor. NRG Energy Inc. showed it was possible to retrofit an old coal plant with CCS at its Petra Nova plant in Texas. Global interest in carbon capture is growing. And Wyoming is highly motivated to protect the jobs associated with the facility.

“Whether we can pull this off is somewhat in the cards, but we see the right momentum,” he said.

Time will tell if the company can achieve the breakthrough Wyoming is looking for — or if it will join the ranks of ignominious Wyoming coal projects that came before it.