A just introduced bill to the Wyoming Senate would, if passed, seem to outlaw the use of wind and solar resources to help power the state. The Electricity Production Standard, introduced by “Senator(s) Hicks and Driskill and Representative(s) Baker, Blackburn, Clem, Edwards, Lindholm, Madden and Miller”, defines the specific energy sources that would be considered “eligible generating resources”:
“Eligible generating resource” means an 7 electricity generating resource either located within 8 Wyoming or delivering electricity into Wyoming from another 9 state that produces electricity from one (1) or more of the 10 following sources or system:
(C) Natural gas
(D) Net metering system, as defined by W.S. 19 37-16-101(a)(viii);
Note that two booming electricity sources, that are dropping precipitously in price and growing fast in usage, are essentially absent from this list: solar and wind. In the Great Plains, wind power is the cheapest — by far — new electricity source and a potentially significant revenue generator for farmers ‘farming wind’ and for the state selling power to other states and markets (such as into Chicago) as grid connections and capacity improve.
As to ‘essentially absent’, the Wyoming net metering regulation authorizes systems up to 25 kilowatts — thus the individual home owner and a farmer with a small wind turbine could keep their systems. A 25kw system, however, is essentially irrelevant for utility-scale decisions.
The legislation then puts in a mandate that by 2019,
each electric utility shall procure a minimum of one hundred percent (100%) of its sales of electricity in Wyoming from eligible 19 generating resources.
And, if a utility fails to meet that 100% standard, the penalties would be serious:
If an electric utility is unable to meet the standards specified in W.S. 37-16-302 in any compliance year, the electric utility shall pay an administrative penalty, assessed by the commission, of ten dollars ($10.00) for each megawatt hour of energy credits the electric utility failed to procure. An electric utility may not recover this penalty through its electricity rates.
This $10 per mWh translates into $0.01 per kWh. More significantly, this is not something ‘recoverable’ through the ratepayers: it would have to be absorbed out of the utility’s profits. E.g., this is extremely serious ‘motivation’ for a utility to use one of the listed energy sources.
In other words, with that limited net metering exception, this legislation seeks to outlaw Wyoming and Wyoming residents benefitted from the fastest growing, cheapest, and cleanest electricity option.
Update 3: Okay, here is the sort of damage that could result from this myopic fossil-foolish legislation.
— Daniel Cohan (@cohan_ds) January 14, 2017
Quick Update: A Casper Star Tribune on the article headline uses the words “Bill would penalize …” That headline and the article somewhat the substantive impact of the $10 fee. Due to the ‘can’t be charged to ratepayers’ provision, the bill would essentially eliminate utility-scale wind/solar from use due to the very serious profit implications as highlighted above. Shareholders of a publicly-traded firm would have a pretty-easy win in suing a CEO for choosing to use wind/solar & therefore driving down profitability ….
As part of this, what, btw, is justification of the $1 wind excise tax? Is this a revenue item that somehow balances for revenue from coal mined & burned in the State? In any event, that $1 tax is $0.001 per kWh (rather than $0.01 from proposed bill) and can be billed to the ratepayers (and thus, oddly, actually could lead to increased profitability & a (very) mild incentive to used wind dependent on the PUC/PSC rule sets in Wyoming … can they apply profit margin to mandated fees?). The article didn’t pick up that difference between the existing $1 excise tax & the $10 proposed fee.
UPDATE 2: Strong informative story at InsideClimate gets sponsor on the record:
When asked about the motivation for the bill and concerns about it driving away future wind generation, bill sponsor Republican Rep. David Miller from Fremont County said, “Wyoming is a great wind state and we produce a lot of wind energy. We also produce a lot of conventional energy, many times our needs. The electricity generated by coal is amongst the least expensive in the country. We want Wyoming residences to benefit from this inexpensive electrical generation.”
“We do not want to be averaged into the other states that require a certain [percentage] of more expensive renewable energy,” Miller wrote in an email to InsideClimate News.
If it is “more expensive renewable energy”, why does Wyoming need to place a $10 fee on every megawatt hour (that would not be recoverable in the rate base)?