Wyoming lawmakers consider energy deregulation for data centers, industrial power

CASPER, Wyo. — The Wyoming Joint Minerals, Business and Economic Development Interim Committee is considering a proposal to exempt some electricity generators from public utility regulations to meet power demands from state industries.

The draft bill would allow electricity producers to operate outside utility rules if they serve one customer with a demand of at least 25 megawatts. It would also apply if they serve up to four customers with a combined demand of at least 100 megawatts. A staff alternative would limit the exemption to new or expanded power demands after July 1, 2027.

Supporters said utility rules slow economic growth and fail to meet the needs of industrial consumers.

“The facts on the ground have not changed,” said Pete Obermueller, president of the Petroleum Association of Wyoming. “We are in a situation where electricity customers in the entire state essentially are facing one of three, and in some cases multiple, problems as it relates to electricity price, capacity and reliability.”

Jody Levin, representing the Wyoming Mining Association and the trona industry, said her sector is vulnerable to power disruptions. She said the industry can’t rely on the alternate draft that only addresses future load growth. A recent 15-minute power disruption damaged a boiler, took a plant offline for three months and cost revenue, she said.

“We are not asking for widespread deregulation, but we are asking for when you find yourself in these very challenging situations, you can’t get power, you’re seeing reliability disruptions, when is it appropriate for you to then have a mechanism to protect your operations,” Levin said.

Mary Throne, representing data center developer Prometheus Hyperscale, the developer behind the proposed 1.5-gigawatt data center project straddling the Natrona-Converse county line, also supported the bill.

“I think generation flexibility is necessary to meet the demands of data center development,” Throne said. She said third-party generation is a tweak to the utility model.

Utilities opposed the legislation. They said bypassing the grid could leave residents to pay the costs.

Thom Carter, representing Rocky Mountain Power, said the current draft fails to protect customers from the financial risks of stranded assets or the costs of maintaining backup power reserves.

“Both versions … do not exempt the risk for if you’re going to leave,” he said, adding that without protections, “my current ratepayer then has to carry the cost and the risk for the backup.” Carter said the company is developing an alternative to offer different tools for varying load sizes.

David Bush of Black Hills Energy said the bill could threaten the company’s power contract tariff in Cheyenne. The tariff uses industrial growth to keep base rates low for other customers, a tool that’s been cited by Cheyenne city leaders as being directly responsible for protecting ratepayers amid the city’s recent data center industry’s growth.

Rural electric cooperatives also opposed the draft bill. They said they’re already developing tariffs and micro-grid concepts to serve customers quickly without legal changes.

Chris Petrie, deputy chairman of the Wyoming Public Service Commission, said his agency is working on rules to create a designation for non-public utility generators. Utilities have a legal obligation to serve their territories, he said.

“The idea here is that we want safe, adequate, and reliable service at just and reasonable rates to be available everywhere in the state,” he said.

The committee opted to carry the bill forward to its next meeting in August without making any immediate amendments.

Rep. Martha Lawley, R-Big Horn/Washakie counties, introduced a motion to advance the bill using only the first option of the draft, but withdrew it after legislative staff said no motion was needed to advance a bill as-is.

The committee also supported a motion by Sen. Tara Nethercott, R-Laramie County, to draft a second bill to put the Public Service Commission’s proposed rules into law. The senator said the new draft would “provide some statutory authority which is more powerful than rulemaking” and give the Legislature a vehicle to solve the issue.

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