Wyoming’s largest utility is racing to complete wind upgrades and expansions before current federal subsidies expire.
The 2020 sunset of the federal production tax credit, which decreases the cost of wind energy for producers, dictated the near-term outlook in Rocky Mountain Power’s 20-year plan, released Tuesday.
Highlights of the plan include a $700 million upgrade in its Wyoming wind fleet and $2.2 billion invested in new wind and transmission.
The Salt Lake company plans to build up to 1,100 megawatts of new wind and transmission, including 140 miles of the Gateway West line, which will run from Medicine Bow to the Jim Bridger power plant in Sweetwater County.
The firm will attempt a significant amount of expansion in just a few years’ time, but the rush is necessary to keep the savings from federal subsidies, said Gary Hoogeveen, senior vice president of RMP.
Adding new wind capacity or updating existing wind farms by 2020 will restart the clock on the federal production tax credit for the existing wind, providing another 10 years of federal subsidies. New production in place by 2020 will also get 10 years of tax credits.
Federal subsidies save RMP between 2 and 3 cents per kilowatt hour produced.
“The reason we are able to do this at customer savings is because of the production tax credits,” Hoogeveen said. “It’s rather dramatic and considerable savings. Two and a half cents is probably half of what is necessary to make that work.”
The question of whether this expansion will increase customer electricity bills is still unclear. New infrastructure or increased capacity by utilities generally falls to the consumer eventually, depending on approval from Wyoming electricity regulators.
Executives said their goal was to avoid a rate hike, promising a cost benefit to customers over the life of new electricity coming online thanks to the extended federal tax break, increasing energy efficiency and a projected demand increase of almost 1 percent per year.
The new, larger wind blades and updated motors will boost the amount of energy produced at existing wind farms by 14 to 32 percent, according to the company.
The construction period for new wind and the Gateway West line will provide between 1,000 and 1,400 jobs in Wyoming and $80 million in tax revenue. Subsequent taxes for the new fleet will bring in $11 million per year starting in 2021, and state taxes on wind generation will kick in an additional $3 million annually by 2025, according to the company.
Rocky Mountain Power faces a number of hurdles to achieve its immediate plans. Though the permitting for the new leg of Gateway West is over, the tedious task of buying right-of-way across state, federal and private land is ongoing.
Laying new transmission has been a headache for a number of investors. The Power Company of Wyoming, which is developing the Chokecherry Sierra Madre wind project, has spent the last 10 years obtaining permitting for its transmission lines across a checkerboard of land ownership in southwestern Wyoming.
PacifiCorp, the parent company of Rocky Mountain Power, has been at it just as long. The company began the Gateway West project with an easement request to the Bureau of Land Management in 2007. Since then portions of the line have been through multiple public comment periods, geotechnical studies and environmental impact statements.
Other steps in reaching its goal include state approval. The company will also have to submit applications to the Public Service Commission for both the transmission line and the new wind fleet, said Jeff Larsen, the vice president of regulations.
“[The Commission will decide] if it’s the right thing to do and if it’s needed for our customers long term,” he said.
Rocky Mountain Power currently relies on coal for about half its output, but the black rock doesn’t receive significant attention in the company’s 20-year outlook.
Its wind capacity, however, has only grown in the last decade. Before the recession hit in 2008-2009, economic projections in the country showed substantial growth, and with that a climbing demand for new electricity. RMP invested heavily to keep pace only to watch the economy fall in the midst of its investments.