Wyoming energy policy stalls on third-party power generation, ratepayer risk
CHEYENNE, Wyo. — Wyoming lawmakers face a policy divide on how to power massive new developments after utility and industry advocates failed to reach consensus on allowing third-party power generation, a move critics warn could leave residential ratepayers footing the bill for infrastructure failures.
The Wyoming Legislature’s Joint Corporations, Elections & Political Subdivisions Committee heard testimony Monday that exempting third-party generators could lead to higher costs for existing customers if incumbent utilities are still required to provide backup power.
The discussion, presented by the Wyoming Energy Authority and electricity consultant Kara Fornstrom of f3 Energy, rounded off a stakeholder engagement process addressing three policy areas: serving large loads, certificated territory integrity and the conflict of third-party generation.
The most contentious issue presented to the committee involved allowing unregulated facilities to serve large economic development projects — such as data centers — in circumstances where existing utilities can’t provide supply or offer uneconomically priced electricity.
“Unlike the first topic of serving large loads, where we did reach consensus … we did not find that consensus on the issue of third-party generation,” Forstrom told the committee. She said the goal of the effort is not about deregulation but establishing “regulatory certainty for third-party generators in limited circumstances.”
The WEA presented potential statutory language for the Legislature to consider, including an exemption for generation supplying a single customer with a projected electric usage of at least 100 megawatts.
A central theme was protecting ratepayers from the costs of new, large developments. Anthony Ornelas, administrator of the Office of Consumer Advocate, warned that if third-party exemptions are allowed, but existing utilities remain obligated to serve those customers if the third party fails, it could lead to high costs for current customers.
He offered a caveat regarding legislative exemptions: If third-party exemptions are adopted, the Legislature should “remove the obligation of our incumbent utilities to then provide backstop service to these large loads.”
When asked by Sen. Bill Landen how to address constituents who believe development is driving up their power bills, Public Service Commission Deputy Chairman Chris Petrie replied that the principle of “cost causation combined with [things that are used and useful to customers] should protect us quite a bit.” He said much of the change in power bills is driven by federal policy that accelerated the departure from using fossil fuels, like coal and oil, to green energy production and the decarbonization movement.
“The utilities and the commissions overseeing them faced with these pressures had to do something. You couldn’t just say, ‘Well, we defy you. We’re going to run the coal plant, and that’s that, and we don’t need to build any new stuff because this still works,’” Petrie said. “I personally feel that the transition concept was poorly explained to the public.”
Ornelas also offered his confidence in current tools to keep a rein on costs, explaining that Black Hills Energy’s Large Power Contract Service tariff provides “absolute protections for our native customers.” David Bush of Black Hills Energy agreed, saying that under LPCS, large loads requiring 100 megawatts must contract for 115% of capacity and pay for new infrastructure if they need new transmission, ensuring Black Hills Energy is “not building generation for them [the data centers].”
Industrial Pushback on High Thresholds
Representatives from industrial sectors pushed back against the WEA’s suggested 100-megawatt threshold for third-party exemptions, arguing it limits options for Wyoming’s foundational industries.
Thor Nelson, representing the Wyoming Industrial Energy Consumers, said current Wyoming industries, such as oil, gas and mining, generally operate between 20 and 80 megawatts. If the 100-megawatt minimum were enacted, he warned, “you will eliminate all of the mines and the oil and gas companies and everybody else from being able to avail themselves of this legislation and you will limit it only to data centers.”
Jody Levin, speaking for the Wyoming Mining Association, echoed the sentiment, saying that capacity issues are creating five- to seven-year timelines for load requests that are “effectively [a] no” for mining projects needing 50–65 megawatts.
Utility representatives, including Basin Electric and Tri-State Generation and Transmission Association, spoke about new programs aimed at partnering with large customers. Austin Rodemaker of Tri-State described plans to refile a High Impact Load Tariff after a recent rejection by the Federal Energy Regulatory Commission, saying the co-op model focuses on an affordable, responsible and reliable manner without profit gain. Joe Roth of Powder River Energy detailed Basin Electric’s new large load program, which uses a special-purpose vehicle to allow industry or third-party investors to share the risks and rewards of new generation resources.
The complexity of finding a balance, according to Rocky Mountain Power’s Thom Carter, involves ensuring stability for all, rather than pitting “rate classes against rate classes.”
The committee recessed after the discussion, with Sen. Cale Case saying electricity policy will continue to be a priority topic.