Wyoming seeks to stall Colorado's exit from coal-generated electricity

Focus on Tri-State’s stake in Laramie River plant

by Allen Best

In 2009, Wyoming was riding high on coal. It supplied the coal that provided roughly half the nation’s power generation. The trains out of the Powder River Basin were almost non-stop, delivering the sub-bituminous low-sulphur coal from Wyoming’s subterranean to plants as far as Florida.

The Sierra Club had mounted a campaign in which it made fun of coal as a “dirty fuel.” One striking video had a lively young couple in the upper bunk delighting in the company of one another, and in the lower bunk a more pudgy young man fondling lumps of coal.

Still, when I visited Gillette, the center of the Powder River Basin, in April 2009 for a story that was published in Planning magazine, I heard no evidence of great worry.

Renewables? Nice, but …

Since 2008, coal production in Wyoming has declined by about half. Employment in the mines fell 40% over the decade ending in 2020.

The Casper Star-Tribune reports more disturbing news yet for Wyoming’s coal economy. Coal production in last year’s final quarter dropped by over 20% across the Powder River Basin. And recently, in a span of less than three months, two mines in the basin announced plans to close.

A trio of bills introduced into the Wyoming Legislature seeks to stem this decline. The argument underlying the proposed laws is that coal-fired generation must remain to ensure grid reliability.

One bill soon to be given to Gov. Mark Gordon for his signing before becoming law takes sharp aim at Colorado legislators 100 miles to the south along Interstate 25. House Bill 207 earmarks $1.2 million for use by Wyoming’s governor and attorney general to potentially sue other states restricting the import or use of Wyoming coal.

The central nexus for this not-so-friendly fire is Laramie River Station, a coal-fired power plant located near Wheatland, which is 70 miles north of Cheyenne. Basin Electric Power Cooperative operates the 3-unit plant and had 42.27% ownership in 2018. Metro Denver-based Tri-State Generation & Transmission had 27.1% ownership.

One unit sends power eastward, and power from the other two units is distributed in the Western grid—some of this to the 8 electrical cooperatives in Wyoming who are members of Tri-State, but more of it south into Colorado.

This was published in the March 31, 2021, issue of Big Pivots, an e-magazine, and updated to reflect news from this morning. For a free subscription, go to BigPivots.com

The bill was approved by the Wyoming House last week and by the Wyoming Senate on Wednesday afternoon. The Wyoming House Thursday morning concurred with the $1.2 million allocation by the Senate in a 36-24 vote.

The authorization is described by a University of Chicago Law School professor who specializes in electricity and the grid as a “waste of money.”

Two other bills appear to be directed at PacifCorp, the largest utility in Wyoming. Last year PacifCorp announced plans to close 2 of its coal-burning units at the Jim Bridger Power Plant near Rock Springs and the two remaining units of the Naughton plant near Kemmerer. It also operates the giant but aging Dave Johnston plant near Glenrock.

House Bill 166 would require utilities to take additional steps before they can receive approval from state regulators to retire aging coal or natural gas plants. That includes proving evidence that closing of the coal or natural gas plant would not threaten power reliability and would deliver “significant cost savings.”
House Bill 155 would task state regulators with analyzing how closing a coal or natural gas plant could affect grid reliability in Wyoming and nationwide before permission can be granted for retirement.

Grid reliability?

Wyoming State Rep. Jeremy Haroldson, a freshman legislator from Wheatland and a sponsor of H.B. 207, explained his reasoning for why Wyoming needs more money allocated for lawsuits. In a recent legislative hearing, he cited Colorado’s 2019 legislation, although he didn’t get the details quite right. He said that Colorado requires Tri-State to meet 80% renewables by 2034. (Tri-State wasn’t required, but it has agreed to reduce its emissions 80% by 2030 as compared to 2005 levels).

Jeremy Haroldson

“We can’t hold an 80% renewable portfolio with current technology,” he said, according to a transcript of the meeting provided to Big Pivots. “And this isn’t a wind or solar battle we’re talking about. This is a power technology issue that we are having a problem with, where if we don’t have a way to produce reliable energy, then we are finding ourselves in a place where we’re going to see lives potentially lost. And so out of that came House Bill 207.”

The legal argument described by Haroldson is that Colorado’s decision about its power generation mix within Colorado constitutes a violation of the commerce clause of the U.S. Constitution when it has repercussions on power providers outside Colorado. He cited the precedent of North Dakota suing Minnesota over Minnesota’s requirements governing electrical power that extended to imported power.Preview (opens in a new tab)

A U.S. District Court in 2016 struck down Minnesota’s Next Generation Energy Act limiting electricity from coal-fired sources from North Dakota because of violation of the dormant Commerce Clause provision of the U.S. Constitution. The case is somewhat complicated but was dissected in this review by a law school professor in this 2018 posting on Energy Central.

Joshua Macey, an assistant professor at the Chicago Law School who specializes in energy law, is skeptical that Wyoming is spending its money wisely.

“I don’t see any possible way that Wyoming is going to recover the money, that (a lawsuit) will succeed,” he told Big Pivots. “It is a waste of money.”

Macey says he is intimately familiar about the court case in which North Dakota prevailed against Minnesota. An article that he co-authored called “The Federal Power Act’s Bright Line,” which was published in February by the Harvard Law Review, discusses that case at length.

In the Minnesota case, the law was written sloppily and there was the additional complication that Minnesota and North Dakota are both within the Midwest Independent System Operator system. Neither is the case with Wyoming vs. Colorado, if it comes to that.

Under the Commerce Clause, Colorado cannot say it will use only that electricity that is produced in Colorado. It can, however, say that it has environmental goals and that how the electricity is created must conform with Colorado’s laws.

Grid reliability is another tenet of the Wyoming bill.

In the Wyoming legislative committee, Haroldson said the technology capable of protecting the grid’s reliability has not been delivered and removing coal plants will impair that reliability.

Wyoming’s message to Colorado, he said, should be: “Hold on, let’s get some technology in place. Let’s do, let’s figure out carbon capture and those types of things, so we can produce clean, effective power that’s going to bring generation to the Front Range, that’s going to help make sure that we have a reliable power grid and do it in a way that’s intelligent.”

For Tri-State to meet its voluntary commitment to achieve an 80% reduction in carbon emissions by 2030 in Colorado, it must reduce imports from Wyoming. But the market for energy generation is already pushing Tri-State that way.

On Tuesday, Tri-State said that it was taking no position on HB-207.

“As an interstate power supplier operating across four states, we recognize and respect that each state has its own values on, approaches to and concerns about energy and environmental policy, and its own jurisdiction over utility facilities and resources,” said Mark Stutz, public relations specialist for Tri-State in an e-mailed statement.

The Colorado Attorney General’s office declined to comment.

Production from one unit of the Laramie River Station goes eastward to Nebraska and two units deliver electricity to the Western Interconnection Grid, including customers of Tri-State Generation & Transmission in Colorado. Photo/Allen Best

In Wyoming, Shannon Anderson of the Powder River Basin Resource Council described the allocation as a wrong-headed move for Wyoming. “It’s a chunk of change in a state strapped for cash and with limited opportunity for creating the change that bill sponsors want.

“$1.2 million may not seem like a lot of money in some places, but in Wyoming it is. It’s more than some agencies have for a whole year,” said Anderson, the staff attorney.

Wyoming’s government already is well staffed with attorneys versed in coal issues. This money will go to private sector legal firms, who tend to be costly, she said. “And what does it give Wyoming, if anything, in return?” she asked.

The bill passed on third reading in the Wyoming Senate on a 26-4 vote on Wednesday afternoon.

Tri-State’s opportunities, challenges

Duane Highley, chief executive of Tri-State, said at a February forum organized by the Sierra Club that Tri-State plans to cease taking power from Laramie River by 2033 and a coal plant in Arizona called Springerville by 2038.

“Those aren’t commitments,” he hastened to add, but the outcome of a single snapshot under a certain set of assumptions. Cost of power is at the bottom of it.

“The economics dictate that you can’t continue to operate some of the lowest-priced coal plants in the country,” he said.

In 2018, the Rocky Mountain Institute studied Tri-State’s coal-burning fleet and found that only Laramie River was delivering power at a rate better than what could be had from renewables.

Duane Highley

In his Sierra Club-Zoomed presentation, Highley also emphasized the relatively low cost of coal from Laramie River, likely a consequence of its relative proximity to the strip mines of the Powder River Basin two hours to the north.

It’s a coal plant with one of the lowest operating costs in the nation, he said.

Laramie River delivers coal-fired power at 1.1 cents per kilowatt-hour. This compares with an average 1.7 cents per kilowatt-hour for both wind and solar in the 1,000 megawatts of wind and solar projects that Tri-State plans in the next few years. But wind itself sometimes approaches 1 cent per kilowatt-hour, and solar is routinely less than 2 cents, he added.

Tri-State supplies customers in Nebraska via the power lines from Laramie River connected directly to the Eastern Interconnection Grid. That grid, in the Great Plains, is laden heavily with cheap wind.

“Laramie River on that side sometimes has trouble running because there is so much wind available and it’s at such a good price that even one of the lowest priced coal plants in the nation has trouble competing,” he said, referring to Laramie River.

Reliability—the core argument in the Wyoming bills—is another matter.

First, a note about the reliability of coal plants. The fuel is consistent, but they have their problems, as can be seen at Comanche 3, the relatively new coal plant at Pueblo, which was down for repairs during much of 2020.

Highley addressed reliability in his Sierra Club appearance.

“I cannot leave this subject without talking about reliability, because we can only move as fast as we can reliably make power. It’s job one for us. If we fall down on that job, literally public health and safety and lives that could be lost are on the line. We have to keep that our first and foremost priority.”

Coal, he said, does have reliability.

“What does a coal project have? it has a 30-day supply of coal on the ground at the plant site.”

Storage answers?

As for battery storage – the lithium-ion technology hasn’t arrived yet to meet the needs of a very-low-carbon future.

“The battery that a utility can buy today lasts somewhere from 2 to 4 hours. A 6-hour battery is pretty much of a stretch,” Highley said.

He cited an example from this winter. “We had a period in Colorado when we had about 3 days of gray skies and no wind,” he said. “Those would be very difficult days for us if we didn’t have fossil fuels in the mix today.”

Batteries can help, but they need to provide storage for 24 to 48 hours, he went on to say. Too, while costs have declined, they need to continue to decrease.

“We are looking for the storage technology that is better than lithium-ion batteries and has a scalability that would be suitable for—finally— a former coal plant such as the Craig site. We think this is one of the best (sites) in the Western grid for mass storage at utility scale,” he said.

Three units at Craig Generating Station will be closed during by 2030. Photo/Allen Best

Tri-State has been working with the Electric Power Research Institute on a $100 million low-carbon research initiative in the hope of securing energy storage technology needed to fill in the gaps of renewables. Leading contenders, said Highley, are hydrogen and ammonia. Tri-State hopes to have that technology in place by 2030, when it takes the last of the Craig units off line.

Can natural gas fill the void? Perhaps. That is what Colorado Springs Utilities sees as it closes its coal plants. Highley said Tri-State is considering it—and he doesn’t see a concern about creating infrastructure that becomes an expensive stranded asset.

“When we retire Craig Unit 3, we need something that can run for those 3 or 4 days a winter—primarily winter—when we’re not getting wind and solar input. That gas plant is the plan. It runs a very small percentage of the time, and we still achieve 80% even when burning natural gas for reliability.”

Highley said Tri-State is looking at an internal-combustion type of natural gas plant introduced by General Electric. That’s the same plant that Colorado Springs plans to use.

But the plant may not necessarily have to burn natural gas. If hydrogen technology can be developed, renewable energy can be created to produce hydrogen, which can be stored and then burned as needed to fill in the gaps of storage.

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