Before retiring a coal-fired power plant in Wyoming, an owner must attempt to sell it and keep it burning.
That’s according to legislation signed into law last year by the governor. Since then, the state has been feverishly working to write up the rules both current owners and prospective buyers need to follow before a power plant is slated for decommissioning or sold. The Public Service Commission — the agency tasked with issuing the rules and overseeing the rollout of the new law — took a step closer Thursday to formally issuing the proposed rules for review. The commission held its fourth and final technical conference Thursday.
“Really now, we have to be focused on getting pen to paper and getting these (draft rules) in a position where we can make it a formal process,” said Kara Fornstrom, chairman of the Public Service Commission.
The commission plans to publish the final draft of its rules as early as this summer, with the goal of finalizing the review process by the end of this year.
What’s Senate File 159, again?
Senate File 159 requires utility companies to undertake a “good-faith effort” to sell coal-fired power plant units before retiring them. In other words, instead of shuttering the power plants producing electricity, a utility must make an attempt to sell the units of the facility to new owners.
The law, initially sponsored by Sen. Dan Dockstader, R-Afton, was proposed shortly after the state’s largest utility announced initial plans to potentially retire parts of its fleet of coal plants over time, including many peppered throughout the Equality State. The costs of producing electricity from coal have come under scrutiny in recent years as cheap natural gas and renewable energy sources have entered energy markets in force.
Publicly regulated utilities have a mandate to follow: ensure reliability of the grid while protecting ratepayers. Rocky Mountain Power has found a gradual retirement of some of its coal facilities will save customers money.
In reaction, state lawmakers worked in fervor to advance legislation that could save the mammoth power plants from being completely turned off. Extending the lives of the state’s mighty power plants could prop up, and even save, towns built on coal like Kemmerer, Rock Springs and Glenrock, lawmakers said. That effort led to the successful passage of Senate File 159 last year.
PacifiCorp, the parent company of Rocky Mountain Power, has since announced updated plans to accelerate the retirement of its coal fleet, including units at Naughton in Kemmerer, Jim Bridger near Rock Springs and Dave Johnston in Glenrock. Under the plan, the first coal unit in Wyoming will close in 2023. The utility’s decision to retire several coal-fired power plants in the near future has fired up contentious debate. Wyoming mines more coal than anywhere else in the country. It is also a leading contributor of coal-generated electricity in the Mountain West. Power plant shutdowns could lead to mass layoffs and an economic collapse in coal-dependent towns.
What’s in the rules?
But the logistics of implementing the new law remains complicated, and the Public Service Commission is still ironing out the exact rules. The commission has spent the better part of the past year soliciting input and recommendations from a number of stakeholders, including Rocky Mountain Power, Wyoming Industrial Energy Consumers, Coalition of Local Governments, the Powder River Basin Resource Council and others.
The discussions have revolved largely around how to protect ratepayers if coal-fired power plants continue to stay online. In addition, citizen groups have requested the commission to guard taxpayers against reclamation obligations or environmental liabilities down the road, in the event a new owner walks away or becomes insolvent.
In the latest round of comments submitted to the commission last month, landowners group the Powder River Basin Resource Council underscored the importance of conducting a rigorous review of potential buyers by assessing a company’s fitness to own and operate a power plant.
“We believe that financial assurance should be a mandatory, not a discretionary requirement,” Shannon Anderson, a staff attorney with the council, wrote in May 15 comments to the commission. “Bonding requirements are a critical mechanism to ensure that the liability for a coal plant does not fall back on the utility seller, and in turn its ratepayers, or the state and its taxpayers if the purchaser abandons operations or otherwise defaults on its obligations.”
But these requirements must also not inhibit interested buyers from pursuing the acquisition of a coal-fired power plant, according to industry groups.
“Wyoming’s coal fueled generation fleet is an irreplaceable source of dispatchable, base load power that is required for the continued provision of safe, reliable and adequate sever to electricity customers,” Terrance Manning, the CEO of Glenrock Energy, wrote in May 15 comments. The firm has long been in support of the opportunity to open up otherwise-retired power plants to new purchasers.
“To maximize the likelihood of a successful implementation of SF-0159, the purchaser of an otherwise retiring coal fuel generation facility must be afforded flexibility to deploy the electricity produced in a variety of ways,” Manning added.
The Wyoming Legislature did pass a bill this year that will give a new owner of a coal unit the opportunity to sell the electricity it generates to certain industrial customers within the service territory.
Ultimately, the Public Service Commission’s Chairman Kara Fornstrom said she will be working to consider each stakeholder’s comments against the agency’s obligations to Wyoming residents. She plans to issue draft rules for a formal review sometime this summer.
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