Black Hills Energy's $258M project gets Wyoming regulatory nod

Oct. 20—CHEYENNE — State regulators have given their permission to the local utility for a power transmission project with a budget of some $258 million.

Earlier this year, Black Hills Energy requested that the Wyoming Public Service Commission approve its plans, which, at the time, were described as a 263-mile transmission expansion project that would take a couple of years to complete. The name of the project is Ready Wyoming. This is the final regulatory approval that is needed before it can move forward, a company spokesperson noted.

Earlier this month, PSC commissioners approved the plan at one of their regular meetings, officials told the Wyoming Tribune Eagle this week. The company has proposed to begin construction in the first quarter of next year and to "conclude the project in the fourth quarter of 2025," commissioners were told on Oct. 11, according to an online recording of the gathering.

Although some parties initially had concerns about the increased costs the utility might pass along to consumers and corporate users of electricity, it appears that some or all of these worries were addressed. Black Hills Energy contends the project will eventually result in what a PSC official described as long-term cost savings, because the power provider would not need to pay rising prices to the Western Area Power Administration. However, WAPA counters that its prices for the state are not actually rising.

Companies and others that have been participating in the PSC case agreed to not challenge rate-increase requests, as long as the company stays within the $258 million budget, according to Anthony Ornelas, who is the Office of Consumer Advocate's interim administrator. In addition to his office, intervening parties listed in the docket, No. 16998, include Microsoft Corp. According to Ornelas and to the docketing system, Holly Frontier Corp. and Dyno Nobel Inc. were also associated with the proceeding.

None of the companies commented Wednesday.

Concerns addressed

"If there are any cost overruns, the company ... would have a burden" to show rate hike approvals should be given, Ornelas said by phone Tuesday.

"There were not many in the way of what I would consider material conditions" imposed on Black Hills Energy, he said. "There were some reporting requirements."

Initially, when Black Hills Energy unveiled its request, the Office of Consumer Advocate told the WTE it had concerns that the amount of money by which the company would have to raise rates would not fully offset savings from relying less on WAPA. The advocacy office has changed its stance.

"After a fairly thorough and extensive analysis of the cost alternatives of this project compared to their existing transmission system, we thought there was as strong likelihood that this will have" a dampening effect on any necessary rate increases, Ornelas said in the interview this week.

The company might need to negotiate with property owners related to the project's path.

"We look forward to ongoing input and dialog with landowners and stakeholders that will result in positive outcomes, in terms of state economic growth, customer cost savings, and electric service reliability," spokesperson Laurie Farkas wrote in an email. "We're committed to sharing project information and working collaboratively to create a path for reliable, cost-effective energy for Wyoming. In coming months, we'll continue to hold meetings, listen to concerns, share information and talk with Wyoming residents."

WAPA

Right now, Black Hills Energy gets much of its power via WAPA, which has had cost increases over many years, Ornelas said.

"By all the best information available, those (cost hikes) were going to accelerate ... in the coming years." So "although it could result in a short-term rate increase for customers, we believe it will provide long-term net rate benefits," he said.

On its website, WAPA describes itself as a power marketing administration of the U.S. Department of Energy "whose role is to market and transmit wholesale electricity from multi-use water projects." It has a 15-state region with a "17,000 circuit mile transmission system" carrying electricity from 57 hydropower plants.

In response to the concerns about its prices for energy, WAPA noted that its "power and transmission rates are sold at cost," according to spokesperson Lisa Meiman. "To correct the record," she added in an email to the WTE, "WAPA decreased the transmission rate in Wyoming in 2020, 2021 and 2022 by 4.8%, 4.0% and 3.9%, respectively, for a 12.7% total decrease in the past couple of years."

For its part, Black Hills Energy pointed to Wyoming commissioners' "unanimous approval of our certificate of public convenience and necessity." It "appreciate(s) the collaboration with parties," wrote spokesperson Farkas, in her Wednesday email to the WTE.

A written PSC order will be forthcoming later, officials told the WTE.