20003-253-ET-25

Key events and scheduled submissions in this proceeding are as follows:

- February 13, 2024: The Wyoming Public Service Commission approved Cheyenne Light, Fuel and Power Company's (CLFP) low carbon surcharge tariff in docket no. 20003-223-et-23 1, 1.
- Fall 2024: Three Class II wells were permitted, drilled, cased, and logged on Black Hills Corporation property adjacent to Wygen II as part of a demonstration project under a coal to hydrogen grant 2.
- November 1, 2024: Black Hills and partners submitted a concept paper to the Wyoming Energy Authority (WEA) seeking an energy matching funds (EMF) grant for a demonstration project, with the required match intended to come from the CCC surcharge, contingent on commission approval 2, 2.
- November 12, 2024: Black Hills was notified their concept paper was not accepted due to inability to assure matching contribution 2, 2.
- April 28, 2025: CLFP filed an application to increase the carbon capture compliance (CCC) surcharge to 1.43%, with a proposed effective date of January 1, 2026 3, 1.
- May 8, 2025: The Commission issued a suspension order, initiating a six-month investigation term, and published public notice of the application 3, 1, 1.
- June 6, 2025: Deadline for interested parties to file statements, petitions, protests, or hearing requests regarding the application 1, 1, 1.
- July 1, 2025: Requested deadline for commission approval of the surcharge rate to allow resubmission for WEA energy matching funds by the next WEA review deadline 2, 1, 2.
- December 1, 2025: CLFP commits to file a compliance update with the commission on the status of the EMF grant application; if no grant is awarded, CLFP will request the CCC surcharge be set to 0.00% effective January 1, 2026 2, 1, 2.
- January 1, 2026: Proposed effective date for the increased CCC surcharge, if approved 1, 4.

This timeline summarizes major filings, commission actions, deadlines for participation, and scheduled compliance updates.

Cheyenne Light, Fuel and Power Company (d/b/a Black Hills Energy) has applied to the Wyoming Public Service Commission for authority to increase its Carbon Capture Compliance (CCC) surcharge to 1.43%, effective January 1, 2026. This surcharge is intended to fund compliance with Wyoming's low-carbon energy portfolio standards, as authorized by statute (up to 2%) 1, 2. The requested increase will provide $4.5 million, which will serve as a required 1:1 match for an Energy Matching Funds (EMF) grant application to support Phase I of a demonstration project for Carbon Geocapture (CGC) technology. If the grant is not awarded, Cheyenne Light will request that the CCC surcharge be set to 0.00% 1.

The CGC project is designed to demonstrate the viability of carbon capture at the Wygen II facility, as amine technology was deemed not economically feasible. The project involves two phases with a total projected cost of $20 million. The company is seeking commission approval by July 1, 2025, to meet the next grant application deadline. The proposed surcharge applies to all customer classes before taxes and fees. Cheyenne Light has also requested confidential treatment for certain commercial and financial data included in the application 1, 3.

The docket identifies the following areas of growth:

1. Development and Demonstration of Carbon Geocapture (CGC) Technology
- Growth Area: Advancing CGC as a preferred carbon capture solution at the Wygen II facility, with a focus on moving from pilot demonstration to commercial readiness.
- Key Considerations:
- Economic and operational feasibility: CGC is considered more promising than amine technology for Wygen II, both economically and operationally.
- Technological Readiness: The technical elements of CGC are at Technology Readiness Level (TRL) 8–9, but administrative aspects (like carbon credits) are at TRL 6–8; a pilot project could elevate the technology to full commercial readiness (TRL 8–9).
- Project Phases and Funding: The demonstration project is structured in two phases with a combined estimated cost of $20 million ($9 million for Phase I, $11 million for Phase II), and requires matching funds through a Carbon Capture Compliance (CCC) surcharge and potential Wyoming Energy Authority (WEA) grants 1, 1.
- Regulatory Approval and Grant Dependency: Implementation of the CCC surcharge is contingent on securing matching funds and regulatory approval. If the WEA grant is not awarded, the surcharge would be reset to 0% 1, 1, 1.

2. Partnerships and Collaboration for Carbon Capture
- Growth Area: Building partnerships with technology providers (e.g., Babcock & Wilcox, Membrane Technology and Research, Black & Veatch) for carbon capture demonstration projects.
- Key Considerations:
- Grant Application and Matching Funds: Success in obtaining grants is dependent on demonstrating assurance of matching contributions, which hinges on approval of the CCC surcharge.
- Project Timelines and Deadlines: The docket highlights the need for timely commission approval to align with WEA grant cycles (deadlines on March 1, July 1, and November 1 each year) 1, 1, 1.

3. Customer Impact and Cost Management
- Growth Area: Managing the financial impact on customers while complying with state low-carbon standards.
- Key Considerations:
- Surcharge Rate: Proposed surcharge of 1.43% on customer bills, with a statutory cap of 2%.
- Cost Recovery Principle: Focus on minimizing customer cost impacts, maintaining reliability, and ensuring costs are only incurred if grant funding is secured; otherwise, the surcharge is removed 1, 1, 1.

Each area reflects a balance between advancing carbon capture technology, securing funding and regulatory support, and minimizing customer impacts while achieving mandated low-carbon energy targets.

The main financial and timeline risks and concerns discussed in this docket are:

- The ability to secure a 1:1 matching grant from the Wyoming Energy Authority (WEA) is a key financial risk. Cheyenne Light’s application for Energy Matching Funds (EMF) was previously rejected in 2024 due to a lack of assurance regarding the matching contribution. Approval of the Carbon Capture Compliance (CCC) surcharge by July 1, 2025, is necessary to reapply for the grant and demonstrate matching funds. If the EMF grant is not awarded, Cheyenne Light will reset the CCC surcharge to 0.00% for all customers, effective January 1, 2026, meaning project funding is contingent on external grant approval 1, 1.

- Timeline risk centers on meeting the WEA grant application deadlines. Cheyenne Light requests a determination on its application by July 1, 2025, in order to resubmit for EMF in time for the next WEA review deadline. Missing this determination could delay or jeopardize project funding and the demonstration project itself 1, 1.

- The surcharge rate of 1.43% is proposed to fund phase I ($4.5 million) of the demonstration project. If the grant is not received, there will be no surcharge collected and thus no funds for the project, indicating a strong dependency on timely regulatory approval and successful grant application 1, 1.

- Energy matching funds are limited, which adds to the competition and uncertainty of receiving the grant, further increasing financial risk 1.

In summary: risks include failure to secure matching grant funds, missing regulatory approval deadlines, and limited availability of external funding, all of which could halt or delay the carbon capture demonstration project and affect the proposed surcharge implementation.

The main stakeholders identified in this docket are:

- Cheyenne Light, Fuel and Power Company d/b/a Black Hills Energy (the applicant utility)
- Wyoming Public Service Commission (the regulatory body)
- Wyoming Office of Consumer Advocate (consumer interests)
- Black Hills Corporation (parent company of Cheyenne Light)
- Wyoming Energy Authority (WEA) (grant funding agency)
- Partners in the carbon geocapture project, including Babcock & Wilcox, Membrane Technology and Research, Inc., and Black & Veatch
- Utility customers (ratepayers affected by the surcharge)

Positions of stakeholders:

- Cheyenne Light, Fuel and Power Company is in favor of increasing the carbon capture compliance (CCC) surcharge to 1.43% to provide matching funds for a demonstration grant for carbon geocapture technology. The company commits to resetting the surcharge to 0.00% if grant funding is not awarded 1, 2.
- Black Hills Corporation and its partners (Babcock & Wilcox, Membrane Technology and Research, Inc., Black & Veatch) are supportive of the carbon geocapture demonstration and are involved in seeking the grant, with the match to be funded by the proposed surcharge 1, 1.
- The Wyoming Public Service Commission is the overseeing authority and has not taken a position for or against but is processing the application and public notice, seeking public comment and setting procedural deadlines 2, 2.
- The Wyoming Office of Consumer Advocate is served notice and would represent consumer interests; explicit support or opposition is not stated in the excerpts 3, 4.
- The Wyoming Energy Authority only appears as a grant administrator, not as a proponent or opponent 1, 1.
- There is no record in the excerpts of other stakeholders (such as customers or advocacy groups) taking a formal position for or against the proposal as of the available information.

In summary, the utility and its project partners are in favor of the proposal. The regulatory and consumer bodies are neutral or have yet to state a formal position. No opposition from other stakeholders is documented in the provided excerpts.