The Joint Corporations, Elections and Political Subdivisions Committee advanced legislation Friday that would allow the Wyoming Public Service Commission to reject utility companies from raising Wyoming power rates to pay for other states’ energy decisions.
During testimony before the Public Services Commission on Wednesday, an attorney for Rocky Mountain Power said a nearly 30% rate increase the company is proposing is mostly in response to increased energy costs.
Much of the hearing centered around whether a carbon tax that’s been placed on a power plant in Washington is being unfairly shouldered by people in Wyoming. Rocky Mountain Power’s position is that the carbon tax is an operational cost on a generation source used by all six of the states served by PacificCorp, which includes the Rocky Mountain Power operating division.
Under the draft legislation, Wyoming could be excluded from paying its part of a multi-state protocol (MSP) if specific costs don’t benefit the state.
The bill passed on an 11-1 vote with state Rep. Mike Yin, D-Jackson, voting against it.
Perception vs. Reality
Wyoming customers now pay a share of Rocky Mountain Power’s costs based on a model that determines how much energy a state’s customers consume. Wyoming's share is 15%.
Public Service Commission Chairwoman Mary Throne explained to the committee in September that the MSP already grants the PSC the authority the draft legislation proposes, and the commission has disagreed with and denied allocations in the past. Representatives from both Rocky Mountain Power and Montana-Dakota Utilities also testified for the legislative committee Friday and said that their companies are already held back from charging Wyoming users for out-of-state price increases.
Richard Garlish, vice president general counsel for RMP, said RMP doesn’t oppose the bill because the Public Service Commission already works to ensure the intended goal of the legislation.
“This … is that exercise we go through at the commission with all their different mechanisms they have at their disposal to prove that we’re being prudent and making those investments and recovering those costs and then overlaying consistent with the energy policy of the states we operate into,” he said.
‘Without A Shadow Of A Doubt’
For Rep. Jeremy Haroldson, R-Wheatland, what matters most is public perception. Although the PSC is in charge of approving utility rate increases in Wyoming, Haroldson said the Legislature still has a role in creating the laws it must follow.
“They want to know without a shadow of a doubt that when they pay their utility bill next month, they’re not paying for another state’s decisions,” he said. “There is a point as a Legislature that we need to stand in a gap right now and say, ‘Hey, we do care about these rates, we do care about what they look like, and we’re going to stand in the way.’”
Costs that may be excluded include the proportional costs associated with facilities that are built or operated to predominately benefit other states or entities outside Wyoming.
RMP is working toward completion of two transmission lines in Wyoming, which will provide more renewable energy service to Wyoming and lead to future rate increases on residents as part of the state’s 15% cost-share, which was approved by the Public Services Commission as a “used and useful” service for the Cowboy State.
The service and costs of these lines are shared between different states.
What’s A Fair Share?
Corporations Co-Chair Sen. Cale Case, R-Lander, said even though Wyoming will pay 15% of the project’s costs, he believes the state will realize only about 1% of the benefits.
“We got along fine without those lines for years and our load is not growing, our load is going to be smaller than it was in the old days,” Case said. “Those lines are built for the major purpose of taking renewable energy out of the state of Wyoming and taking it elsewhere.”
Sen. Charles Scott, R-Casper, sees the issue applying more broadly than the two transmission lines. He said the PSC may be ruling too liberally in the way it considers benefits to the state.
“It would give the basis to the commission and be reasonable about something like this,” Scott said.
RMP has argued the transmission lines will benefit Wyoming. It has also argued that renewable energy has reduced costs for Wyoming customers, not raised them.
Garlish also said that Wyoming has always been an energy export state, an effort the transmission lines will continue to assist with.
The bill states that the PSC may approve reduced costs for Wyoming ratepayers as long as the system costs are used to serve them, but relate to facilities that were built at a higher cost than potential alternative sources of electricity. This accounts for the possibility that alternative sources of energy may not have met electricity service requirements established by other states or entities outside of Wyoming.
Risk-Reward
Rep. Cody Wylie, R-Rock Springs, expressed concern that other states that have invested more heavily in renewable energy than Wyoming could lead to increased price hikes for Wyoming residents.
Sen. Brian Boner, R-Douglas, suggested expanding the bill at some point to also cover increased fees encumbered as a result of increased energy demand in other states, which was the main ineptus for the transmission lines.
Garlish opposed this proposal, saying it’s already covered under the PSC’s duties. He said states that have invested more heavily in green energy already pay increased costs when they are forced to depend on fossil fuel energy in emergency events.
Case said Wyoming must similarly protect itself from adverse market situations such as a drastically reduced demand for coal nationwide.
“Because we have to be able to sell it,” he said. “If we don’t have like-minded customers it could be really disastrous.”
Renewable energy has saved Wyoming money because, when it is producing, it is extremely cheap or even free to run. But part of the challenge with renewables is filling in the power gaps when they can’t run. Case said the net power costs of running renewables must also be considered when pursuing these energies.
RMP does not agree, which will be a point for PSC to decide on.
Garlish said other Western states are considering their own sovereign energy policies.
The committee also considered complementary legislation Friday that would specify the maximum increase in electric costs between rate cases that are the responsibility of customers.
Under this legislation, if the PSC approves any form of cost-tracking mechanism for a public utility to recover changes in electric supply costs between rate cases, it shall provide for a sharing of costs where customers are responsible for no more than 70% of the increases and the public utility is responsible for no less than 30%.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
