A legislative committee is drafting another bill to allow deregulated power zones in Wyoming, despite opposition from industry leaders.
“We are not in support of this bill,” Rocky Mountain Power spokesperson Rick Kaysen told the Wyoming Legislature’s Joint Minerals Committee last month. “We are not in support of the deregulated concept.”
Senate File 71 would allow entities that consume electricity “entirely within a deregulated industrial power zone” to be exempt from Wyoming Public Service Commission regulations.
The idea came from organizations that want to have “somebody produce power and sell it to them right on site,” Wyoming Sen. Jim Anderson, R-Casper, said.
Those organizations are looking to consume large amounts of power, he added, and it would benefit the state to bring them to Wyoming.
“That’s what we were after,” Anderson said. “I was very interested in these 1-gigawatt locations, of which we have none.”
System ‘constraints’
Wyoming’s current regulatory structure makes it difficult to attract those large-scale projects, Wyoming Sen. Chris Rothfuss, D-Laramie, said.
He pointed to a recent request for proposals from Black Hills Energy that generated about 15 responses from the “crypto(mining) community,” according to the company’s state government affairs manager David Bush.
Those 15 proposals combined to represent about 1 gigawatt of power, Bush said – but Black Hills couldn’t pursue them all, in part due to “the constraints of our system.”
Utilities in Wyoming aren’t allowed to “overbuild” their infrastructure, he explained.
The regulation prevents utility companies from raising customer rates in order to construct assets that might later be abandoned.
But the rule also makes it difficult to attract large power users to the state, Bush said, since those potential new customers have to pay to build their own infrastructure.
‘We don’t compete’
After hearing from Bush, Rothfuss suggested that Wyoming’s regulated utilities might be “incapable” of serving the large industrial power users that legislators would like to attract, from cryptocurrency miners to hydrogen producers and steel and aluminum manufacturers.
“We don’t compete with those,” Rothfuss said. “There’s no possibility to have a project that’s anywhere near that scale in the state of Wyoming based on our legal structure. … This isn’t the place that they would go.”
Amanda Cavaleri, the chief executive officer of Digital Reserve Energy in Wyoming, said her company has tried to bring several large power consumers to the state, but “it just hasn’t gone anywhere” because “it’s pretty well-known in many of these industries that the state’s utilities are unwilling or unable to move quickly, and the price is not competitive.”
If conditions were more favorable, she estimated that Wyoming could attract up to 4 gigawatts of business from “American-based companies (that) would like to be in Wyoming because of a lot of the other legislation in the state.”
“It’s a very pioneering state in many ways, and this is just the last little piece to the puzzle that I think would unlock tremendous economic development opportunity,” she said.
She added that the change would not “interfere” with the operations of local co-ops or investor-owned utilities.
“This is really … about private electricity transactions between two parties,” she said. “(It) doesn’t impact the individual consumer. … So I’m really a little bit confused about why this is such a difficult topic.”
‘Not really deregulation’
Wyoming Sen. Ed Cooper, R-Ten Sleep, who represents part of Fremont County, agreed that “it’s not really deregulation we’re talking about.”
“What we’re talking about is the ability (for) direct purchasing from a third party in a very limited situation,” he said. “We’re not talking about deregulating the whole system. … We’re talking about the ability for a larger industrial user (to) generate power on site and utilize that power on site.”
He referred to a comment from Kaysen, who reported that Wyoming’s investor-owned utilities currently have the capacity to generate a combined 5,230 megawatts of power.
Rocky Mountain Power represents the majority of that total – about 4,600 megawatts, Kaysen said – but most of their power (85 percent) is transported to markets outside of the state.
Cooper said he would like more of the power generated in Wyoming to stay within state boundaries.
“(We should) be looking for other opportunities to grow and to actually bring these new companies to Wyoming, rather than … exporting power and exporting jobs.” he said.
Rothfuss echoed Cooper’s comments.
“We have to find ways to actually develop in the state, to diversify in the state,” Rothfuss said. “(Instead) what we’re seeing is that we’re just an exporter of electricity – and we don’t even get the sales tax.”
At the end of the meeting, Rothfuss made a motion to draft two pieces of legislation – one that would represent “further revision” to Senate File 71 and another that simply provides for “direct third-party sale behind the meter.”
Cooper seconded the motion, which was approved.
The next Minerals Committee meeting is scheduled for October.