The latest coal production rates confirm what many tied to Wyoming’s mineral-rich Powder River Basin already know: Demand for coal is waning nationwide.
Utilities have shied away from coal in favor of cheaper natural gas and burgeoning renewables. The shift has hit the basin hard.
Coal production in the basin fell nearly 14 percent last quarter compared to the same period the year before — the lowest production totals for the region in over two decades, according to data released by the U.S. Mine Safety and Health Administration.
In response, several utilities, including the state’s largest, have declared plans to accelerate the retirement of coal-fired power plants, many peppered throughout the state of Wyoming. State lawmakers have worked in fervor this past year to advance legislation that could save mammoth plants from being fully turned off. As Wyoming lawmakers trudged through their first week of the Legislative session, bills to save the coal industry continued to dominate committee meeting conversations.
During Senate Corporations Committee meetings held Tuesday and Thursday, lawmakers unanimously advanced a bill to open up transmission lines and customers to new purchasers of otherwise retired coal-fired power plants.
The legislation — if it becomes law — would modify the traditional regulatory framework that has dominated Wyoming’s utilities sector for decades. It also builds on Senate File 159, a law passed in 2019 requiring utilities to undertake a “good-faith effort” to sell coal-fired power plant units before retiring them.
Under the bill draft, a new owner of a coal unit would be able to sell the electricity it generates to a customer of that utility within the service territory.
But with the loss of customers, a former owner of a coal-fired power plant may be left with a smaller pool of customers paying the utility’s rates, critics of the bill say. As a result, these “stranded costs” could be transferred to existing ratepayers, bumping up their electrical costs.
“You have to be very careful how you’re deregulating the transmission system,” University of Wyoming economist Rob Godby said Tuesday. “Partial deregulation potentially leads to a lot of unintended consequences that could make people worse off when you’re trying to protect a particular sector — in this case the coal-fired power plants, workers and the coal production that supports it.”
Balancing customer cost and company profit
Late amendments to the bill introduced last week sought to alleviate potential price hikes on ratepayers, while also providing sufficient customer bases to new owners.
One such amendment written by Glenrock Energy and the Wyoming Industrial Energy Consumers could open up direct sales between these coal-fired facilities’ new owner and industrial scale utilities capable of delivering one megawatt of power or greater.
At the same time, it would offer utilities the latitude to bundle energy generated by those plants with renewables or other energy sources to stabilize price fluctuations that could come from the loss of a significant customer.
Thor Nelson, an attorney for Holland and Hart representing the Wyoming Industrial Energy Consumers, called the amendment an “economic opportunity” for the state and for the utility industry.
Under the new amendment, the state’s coal utility structure would come to resemble Utah’s. In Utah, an industrial customer can subscribe to a large renewable project, and the utility can bundle that project with another, reliable source. The change is designed with the needs of clients like data centers or other large energy consumers in mind. Ideally, the bill could create a pathway for a newer, high-need clientele who could help bolster the viability of the state’s coal-fired power plants.
Consumers would also be protected through a three-tier fee schedule covering the cost of purchasing the energy from the plant, as well as fees covering the backup service and any additional costs the utility, like Rocky Mountain Power, might incur.
Though several utilities expressed concern over larger clients purchasing energy on an industrial scale and impacting rates for consumers, the amendment passed Thursday. If the bill becomes law, it would allow investor-owned utilities to purchase coal energy, albeit only within a plant’s existing service area.
An additional revision to the bill considered but not passed during Thursday’s committee meeting would have enabled new owners to expand their customer base and tap into multiple service territories. Public Service Commission Chairman Kara Fornstrom cautioned that the unprecedented changes would shift the traditional mandate held by the commission and could cause delays or financial impacts.
Sen. Cale Case, R-Lander, remained skeptical of allowing companies to dip into other service territories and would only support a bill with language proposed by the Public Service Commission.
Though lawmakers ultimately advanced the bill Thursday evening, the legislation will likely still undergo significant scrutiny.
“It still needs a lot of work,” Case concluded.
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