Wyoming wind is in demand, but as the industry changes so should the regulations that govern it, according to some state lawmakers.
Small wind farms that have cropped up in the state benefit from a ‘70s-era federal law meant to open a niche for developers in the monopoly that is the electricity market in places like Wyoming.
Large utilities like Rocky Mountain Power have to buy the electricity that these small producers generate on a 20-year-contract. But Wyoming has some wiggle room on how that law is applied.
On Tuesday, the Joint Corporations Committee will discuss reducing the contract period to three years and add language to current statutes ensuring that utilities don’t overpay for the power they are required to buy. Their ultimate goal, they say, is to make sure rate payers in Wyoming are getting the best deal.
Why is this important now? The cost of wind is declining, said Sen. Cale Case, R-Lander.
It’s not a good idea to force utilities into a 20-year fixed contract when the price of developing wind is likely to be cheaper every year, he said.
Additionally, power from the small farms is supposed to cost the same as electricity the utility develops on its own, according to federal law. There’s reason to believe that not always happening, he said.
Wyoming rate-payers under the Public Utility Regulatory Policies Act are supposed to get the best possible deal for this power, and it’s not happening, he said.
The senator proposed similar legislation a few years back that was passed in the Senate but never made it through the House.
Utilities like Rocky Mountain Power, Wyoming’s largest electricity provider, have also pressed for a contract time change over the years. The utility is in the midst of increasing their wind presence in Wyoming, planning to spend nearly $3 billion dollars adding new wind and transmission, as well as repowering their existing turbines.
But qualifying facilities don’t necessarily fit into that plan.
“The wind projects that we will consider will be subject to a bidding process,” said David Eskelsen, spokesman for RMP. “So there will be at least a determination of individual projects and prices, and therefore the benefit they might bring to customers.”
The company’s argument mirrors Case’s.
“The fact that the utility is required to take the wind over such a long term may not result in the lowest price for customers,” Eskelsen said.
Wyoming is not the only state to have reconsidered how it handles the federal rules, said Robert Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming.
Rocky Mountain Power has seen an influx of small renewables in Utah, only there the developers are solar farms. Utah’s utility commission recently agreed to reduce the required contract time to 15 years.
Idaho went down to two years. It also changed the size of a qualifying farm after small producers were abusing the law, clustering multiple farms together that were really just a large wind farm, said Godby.
“All these things are potential issues,” he said of the falling price of wind and the potential high return small facilities can make off the federal law.
It’s a fair discussion to have, he said.
Whether or not the bills would ultimately protect prices for consumers isn’t clear.
Bryce Freeman, administrator of the Wyoming Office of the Consumer Advocate, said he understands the arguments on both sides. He’s just not sure it’s a significant problem.
For small developers, the 20-year contract attracts investors helping them get their projects off the ground. For utilities, the contract can tie them to a higher price for power, despite the fact that the cost of wind is falling.
But it doesn’t appear to be a significant issue, at least not one that’s come before the Office of the Consumer Advocate.
Only about 10 percent of the proposed projects that try to sell their electricity to Rocky Mountain Power under the federal guidelines end up being built, Freeman said.
“[Lawmakers] must have something in mind that I’m just not understanding at this point,” he said.
Case, the lawmaker from Lander, said he doesn’t have a problem with the federal law or the development of small wind farms. He’s not biased against wind energy, he said.
The law just needs to be congruent with the current state of the wind industry.
“The goal is to get the rate payers the best possible deal.”