Ready or Not: A Change is Coming

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ROCK SPRINGS — What does a fading coal industry mean for Southwest Wyoming’s socioeconomic future?

That’s exactly what two former Governors, two state senators and an acclaimed writer gathered on the theatre stage at Western Wyoming Community College to discuss on October 9. The discussion was titled “Breaking the Boom and Bust Cycle: Viewpoints from Southwest Wyoming.” That viewpoint garnered a lot of information six days earlier when the state’s biggest utility company released its long-term energy plan. One major takeaway from that plan is that the sun is setting on coal-fired power plants the state.

When you combine that with an announcement on October 10 of Halliburton laying off 650 employees in four states, the discussion topic started to seem eerily prescient. The Halliburton layoffs included an unspecified number of employees in Rock Springs and were attributed to “local market conditions.” The news came as a more immediate and abrupt reminder that this part of the state will continue to operate in an uncertain economic climate as long as there is a heavy reliance on extractive industries.

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Author Samuel Western gave an even less optimistic forecast during the October 9 discussion. “I think we’re going to have to choose between two Wyomings. One Wyoming will be counties like Sheridan, Laramie, Teton, Albany, possibly Natrona, they’ll be fine. Rural counties, especially that depend on extractives, will likely flatline,” Western said.

MOVING AWAY FROM COAL

PacifiCorp (operating as Rocky Mountain Power in Wyoming) released its 2019 draft Integrated Resource Plan (IRP) on October 3. The plan emphasizes a shift away from coal and towards renewable energy sources. The plan accelerated the retirement dates for several coal units in Southwest Wyoming. Jim Bridger unit one will shut down in 2023 instead of the previously anticipated 2037. Retirement of Jim Bridger unit two moved up from 2038 to 2028. Meanwhile, retirement of units one and two at the Naughton Plant outside Kemmerer advanced from 2029 to 2025.

All together, PacifiCorp plans to retire 16 of their 24 coal-fired units by 2030 and another four units by 2038, eliminating almost 4,500 megawatts of electrical generation capacity. PacifiCorp plans to replace that capacity with 4,600 megawatts of new wind generation and 6,300 of new solar by 2038. That includes almost 2,000 megawatts of new wind generation in Wyoming in the next five years.

“This one is the one that we landed on with being the least cost, least risk and best value for our customers, while still maintaining reliability and meeting the low emission requirements that we have,” PacifiCorp Communications Director Spencer Hall said of the selected portfolio that outlines the unit retirements and new renewable capacity.

Speculation about what the preferred portfolio selected in the IRP would indicate has created uneasiness in communities that have come to rely on coal plants and mines for jobs and economic stability. To a large extent, that uneasiness and speculation proved justifiable when PacifiCorp released their plans. The clear indication is that things are changing and communities will need to find ways to adapt.

However, Hall was optimistic about what the company’s resource strategy will look like for Wyoming workers. “If you look at the numbers, this is a gigantic investment in the future of Wyoming as an energy center in the United States,” Hall said. “We’re one of the biggest utilities in the country and we’re coming back to Wyoming and saying look, the future is going to be different, but it’s going to have a big investment in Wyoming. We see the future of Wyoming as an energy center for the country as very bright.”

“WE KNOW THE CHANGE IS COMING”

But panelists at the October 9 discussion had a less optimistic take on what the shift away from coal means for Wyoming. “The revenue from coal and the extraction industry is so large, it’s just unfathomable and to think of one particular segment of private industry or any type of industry being able to replace that is not a proper analysis,” Laramie County Senator Tara Nethercott said.

“46 percent of the property taxes in Wyoming are paid by the minerals industry and that’s going to start fading away,” Western said. Also suggesting that in order to continue funding education at an acceptable level, “We’re going to have to raise mill levies to the maximum.”

Also on hand at the discussion was Senate Majority Floor Leader Dan Dockstader of Afton. Dockstader sponsored Senate File 159 during the last legislative session. That legislation essentially makes it so companies have to look for buyers interested in continuing to operate coal-fired facilities before retiring them. Explaining why he introduced the legislation, Dockstader said, “We know the change is coming, that’s no secret. We’re just simply asking … that we transition this out in a way that we keep these people employed.”

Nethercott voted in favor of Dockstader’s legislation but pointed out that there’s only so much the legislature can do to incentivize private companies to continue to invest in coal. “I don’t think there’s anyone in disagreement about the need to continue to support all of our extraction industries. That’s a necessity, it’s not an option … All the while recognizing that these industries are owned by private corporations and so the role for government in those private corporations must be limited.” Nethercott also pointed out that the decline of the coal industry in the state is due mostly to “external factors.”

STRANDED

The fact that external market forces are deciding the future of Wyoming’s extractive exports may come as little consolation to communities searching for ways to adapt. “The early closure of any of your coal units can be expected to leave these communities and local businesses with stranded assets they have no way of recovering costs on. Your stranded assets will be straightforward to document. The cost of stranded assets to the communities and service providers will not be an easy task,” Wyoming House District 18 representative Tom Crank said in a letter to PacifiCorp in May.

From the company’s perspective, Hall said he doesn’t envision the transition away from coal to be as debilitating to communities as some think it will be. “We had a coal plant here in Utah that shutdown in 2015, it was decommissioned and there were no layoffs. So we’ve made that commitment to our employees, that if anybody wants to stay with us we’ll have a job for them. And we anticipate that being true across all of our plants,” Hall said.

Asked what he thinks of the possibility that the future of Wyoming as an energy sector will be “very bright” in the transition away from coal and towards renewables, Crank said, “It won’t be near the jobs. Currently, Wyoming’s tax structure isn’t set up to generate a lot of it. There will still be property tax from it and there’ll still be people with jobs paying taxes, but it will be nothing like the thermal coal that Bridger and Kemmerer have been in the past.”

OTHER CONSIDERATIONS

Most of the commentary and discussion around the future of extractives in Wyoming has centered on economic concerns Within the state. At the same time, it’s worth noting that PacifiCorp projects reducing annual CO2 emissions by over 20 million tons within the next twenty years based on their resource plan. While that might not be a major concern for Wyoming lawmakers, most of the energy that gets produced in Wyoming is exported to other western states where lawmakers have different priorities.

Regardless of what was revealed in the release of PacifiCorp’s IRP, coal mining activity in the Bridger mine will start slowing in the coming years. “The Bridger underground mine is assumed to close in 2022 with the surface mine assumed to continue to supply coal up through 2028. Third-party purchased coal is assumed to cover any coal fuel requirement after 2028,” PacifiCorp said in response to a stakeholder feedback question in May. That information was based on assumed closure dates of 2028 and 2032 for Bridger units one and two.