Environmental regulations on Rocky Mountain Power haven’t disappeared since the election of President Donald Trump, but in some cases there is less pressure, a company official told lawmakers in Casper on Wednesday.
“I think in general, the questions that we see have been, ‘With a new administration in place, have all your rules changed? Have the rules gone away?” said Chad Teply, vice president of strategy and development. “The rules have not gone away in all instances. But what I would say is what we are seeing from a federal perspective is maybe a different way in how rules are being administered.”
Rocky Mountain Power operates in three western states: Wyoming, Utah and Idaho. The company has spent millions meeting regulations like the Environmental Protection Agency’s Regional Haze Standard which cost $150 million per unit to comply at Jim Bridger plant in Rock Springs. The Salt Lake City-based firm, a subsidiary of PacifiCorp, gets about 30 percent of its generation from Wyoming resources, but the state only consumes about 17 percent of its power.
Environmental regulations have placed pressure on an ageing coal fleet in Wyoming that is, at the same time, competing with other, cheaper generation sources.
Wyoming’s coal-fired units at RMP’s four power plants were built between the ‘60s and ‘80s, Teply said. Some, like Bridger’s units 1 and 2, could face accelerated retirements as the cost to retrofit those units in order to meet standards is weighed against the ability of the company to get the financial investment back before the life of the unit comes to end.
There was a time, Teply said, that coal was always at an economic advantage when these issues came up.
“The market has changed so significantly with the price of natural gas, with the implementation and deployment of new renewable projects, the power market and the competing generators that these coal units have to compete with have become an equal playing field,” Teply said.
That is not to say that RMP is about to close down the coal-fired generation in their fleet, which not only employs Wyoming workers but uses coal from Wyoming plants. But the economics are less favorable for coal than they were in the past.
At Bridger for example, one of the older coal units could be retrofitted at high cost, or it could be converted to natural gas used mainly for peak demand, Teply explained. Another option would be to shut it down—achieving compliance by taking that unit’s emissions offline altogether. Even with a choice to switch to natural gas, there would be a cost and likely a reduction in employment, he said.
Jim Bridger provides jobs for more than 300 people, the nearby mine employs another 250.
“We technically have about six different scenarios around Bridger and the rest of our fleet,” he said. “From the economic perspective, the one that came in with the lowest costs today is the accelerated retirement case. If we were to commit to an accelerated retirement, that from an economic perspective would be the best outcome for customers.”
Those scenarios, as Teply explained, are updated at the very least every five years.
Rep. Lloyd Larsen, R-Lander, asked if in RMP’s outlook the economics were favoring a move of new generation sources closer to the demand centers, which are not necessarily in Wyoming.
Teply said that’s not always the case, certainly not in the case of wind or solar.
“Renewables, you first target where is the given renewable resource? What are the areas that are best developed for that resource? For Wyoming (it’s) wind, for Utah (it’s) solar, in our system,” he said. “In those cases if you have transmission or the ability to deploy transmission you would tend to get much more energy and costs effectiveness out of an appropriately located renewable resources versus deploying it at load.”
With changes to the electricity sector, from regulations to economics, Larsen asked that RMP continues to keep Wyoming lawmakers in the loop for potential changes, noting a considerable “angst” for Wyomingites regarding some of the market issues that Teply mentioned.
“You well understand, I hope, that the state of Wyoming and Rocky Mountain Power have been sleeping in the same bed for a number of years,” said Larsen, a member of the Select Federal Natural Resource Management Committee. “You’ve kept us warm, and we are very grateful for that. But it really causes angst when we look at the accelerated retirement of some of these plants, the impact it will have on the state and the potential that these jobs and these resources could potentially go closer to load.”
Rocky Mountain Power recently committed to a $2.2 billion investment in new Wyoming wind and transmission in the next few years. The company would like to complete upgrading its current wind fleet as well as building 1,100 megawatts more. It’s under a certain amount of pressure to finish by 2020, which would make the assets qualify for federal subsidies for ten years. Those subsidies sunset for the older generation in 2022, but a completion of new or upgraded wind facilities by 2020 restarts a decade of federal tax credits.
“We appreciate that we do have a commitment to our employees in the state of Wyoming and a responsibility as a corporate neighbor in this state,” Teply said. “As we do embark on opportunities and our planning reviews over the years, that is definitely in the forefront of our thoughts.”