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Carbon capture, Bill seeks to amend current law

By
Zak Sonntag with the Casper Star-Tribune, via the Wyoming News Exchange

Implementation plans, compliance would have new deadlines
 
CASPER — State leaders are poised to double down on a mandate that requires utilities to implement carbon capture systems (CCS) on coal fired power plants with the unanimous advancement of SF42 out of the Senate Minerals, Business & Economic Development Committee last week. 
 
The bill amends an existing law, HB200, and extends the deadline for compliance while simultaneously speeding up the due-date for utilities’ implementation plans, marking the latest in the state’s broader effort to sustain a legacy industry while keeping dispatchable energy on the western grid. 
 
Yet even as the bill could shore up Wyoming’s flagging coal sector, the brow-raising price tag of carbon capture systems raises concern amongst consumer advocates who say the bill is destined to drive up electricity rates in the Cowboy State. Indeed, the effort is on the cusp of raising rates already. 
 
Pursuant to parent law HB200, the Public Service Commission last month gave approval to utilities to levy a preliminary surcharge on ratepayers to fund the feasibility and engineering “feed studies” required by the law. 
 
However, the studies are not cheap, with estimates putting feed study costs for a single unit at around $10 million, according to Anthony Orneleas director of the Office of Consumer Advocate.
 
Furthermore, the expense of strapping carbon capture systems onto coal-power facilities will drive prices significantly higher still. The ballpark cost to implement a new CCS project at an existing coal-fired unit, for instance, is estimated at around $1 billion. 
 
There are currently 17 coal-fired units in the state, whose elderly age — averaging 40-years-old — makes for a dubious proposition, according to those who stand against the move. 
 
Advocates for the bill describe the effort as a necessary response to an onerous regulatory environment; with pressure building to reduce climate warming CO2 emissions, coal — which produces the most CO2 per megawatt than all other electric-generation — will need to clean up or clear out. 
 
“The fact is, we’re looking at a federal regulatory regime that is very interested in eliminating CO2, and many states and many consumers themselves are very interested in reducing CO2. So in order to keep our market, we believe it’s very important to move forward with removing CO2,” said Randal Luthie, energy advisor to Gordon, who argues the effort is needed bolster Wyoming’s coal economy in the face of increased competition from natural gas and renewables, along with decisions by client states to purchase less emission-dense electricity. (Almost all Wyoming coal is used for thermal power generation.) 
 
Even as the bill aims for certain implementation dates, to a large extent the timeline is beyond the control of either utilities or the state. With most carbon capture technologies still in developmental phases, opponents say the legislation shifts too much risk onto ratepayers, leaving everyday Wyomingites on the hook to underwrite expensive and commercially unproven carbon capture system applications. 
 
“It’s likely that the end result of all of this will be the absence of a viable project, and ratepayers will have paid millions into something that is never going to be put to useful life for customers in Wyoming,” said Shannon Anderson, attorney for the consumer group Powder River Basin Resource Council, speaking before the committee last week. 
 
Despite the high cost, legislators wager it will be an overall benefit if it can prolong the coal sector. Wyoming produces more coal than any other state, with eight of the the 10 largest coal mines in the U.S, translating into 5,100 direct jobs paying an average salary of $83K.
 
Proponents also point to a major federal policy enactment liable to offset high CCS project costs — a tax credit known as 45Q that pays entities who capture carbon, although the OCA has pointed out that it's too early to know if the 45Q credit will meaningfully lower the expense for ratepayers, in part because of the multifaceted ecosystem for CCS. 
 
“One of the challenges is that there are a lot of hands in that cookie jar,” said Orneleas. “We have to capture the carbon, have somebody transport the carbon, then we’ll have to sequester the carbon. And there could be unitization and several landowners. Everybody will likely want a piece of the credit and some way to make it economic for their slice of this process. So it’s just too early to say [how big a difference 45Q is] beyond some of the high level estimates.” 
 
SF42 would also exempt utilities with a customer base below 10,000 customers, including Black Hills Power, for whom implementation of the technology could raise rates between 300% and 500%, according to initial estimates.
 
This story was published on February 23, 2024.

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