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Idaho Power Wants to Keep Burning Coal – Ken Miller

Jim Bridger Coal Plant, WY

Idaho Power has rolled out its long-awaited study of whether it should replace its coal plants with clean energy alternatives, and the findings were a predictable disappointment for those holding out hope the utility would turn away from dirty power.

The company’s “Coal Unit Environmental Analysis” was just one piece of a recent Idaho Power filing with the state Public Utilities Commission (www.puc.idaho.gov) that updates the utility’s thinking on how it will meet its growing electricity demand over the next two decades. Idaho’s regulated utilities are required to prepare these “Integrated Resource Plans” (IRPs) every other year as they continuously update their plans to use energy efficiency and conservation as well as more traditional power plants to meet their needs.

Among the updates Idaho’s largest electric utility brought to the Idaho PUC’s attention are new estimates on when a proposed 300-mile, high voltage power line from Owyhee County in southwest Idaho to the Columbia Gorge will be built. Idaho Power and its utility partners in the “Boardman to Hemingway” transmission project once hoped to have the line up by 2016, but they now believe it won’t be completed until after 2018 – if then. That project is designed to provide much-needed transmission “capacity” between Idaho and markets to the west. Idaho can benefit in the summer when its energy needs are up and demands further west are down, and can move power back to those regions in the winter when their demand goes up and Idaho’s goes down.

Idaho Power also provided the PUC with an updated “sales and load forecast” that reflects slower-than-expected growth in electricity demand due to the recession and other factors.  It also updated its natural gas price forecasts, which are important not only because Idaho Power burns more gas than it used to, but also because those prices are used to calculate the cost of other energy resources.  The company also freshened information on water issues – important because Idaho Power relies heavily on hydropower – and on the costs and other issues impacting its ability to integrate wind power onto its grid system.

But the headline-grabber in Idaho Power’s update to the PUCs in Idaho and in Oregon was its coal study. Idaho Power issued a news release announcing the study entitled “Study Supports Keeping Coal Plants.”

“A study released by Idaho Power shows that keeping its coal-fired power plants in the utility’s long-range plan is economically preferable to other options despite anticipated expenses for stricter environmental controls,” Idaho Power said in its news release. “In an update to its 2011 IRP, the company recommends that the Jim Bridger plant near Rocky Springs, Wyo., and the North Valmy Generating Station near Battle Mountain, Nev., continue to be included in its resource portfolio. A third plant, at Boardman, Ore., is slated to cease coal fired operations by the end of 2020.”

The Bridger coal plants in Wyoming, in which Idaho Power is a one-third owner along with majority owner PacifiCorp (Rocky Mountain Power), provide most of the coal generation to Idaho electricity customers. Idaho Power is also a half owner of the North Valmy plants in Nevada with Nevada Energy. Idaho Power did not decide to shut down the Boardman coal plant in Oregon ahead of schedule; that decision was made primarily by the plant’s majority owner, Portland General Electric. Idaho Power owns just 10 percent of that plant.

Clean energy advocates expressed concerns about several parts of Idaho Power’s coal plant study, which it had promised to complete for regulators in Idaho and Oregon. Among the concerns is the company’s failure to look at other options besides keeping the coal plants operating, replacing the coal generators with natural gas plants, or converting them to burn natural gas instead of the dirtier coal. The analysis did not look at the possibility of replacing some of the coal power with energy efficiency or renewable energy, either.

Like most utilities that burn coal for power for their customers, Idaho Power faces huge investments in its coal fleet to keep the plants in compliance with existing and expected state and federal health and environmental regulations. In many cases, utilities are finding it makes more financial sense to retire their coal plants early and replace them with cleaner alternatives rather than sinking hundreds of millions of dollars into their coal plants. Nationwide, coal consumption by utilities – the biggest sources of stationary greenhouse gas emissions in the United States – continues to decline as utilities ditch their coal plants to control costs and reduce future risks from environmental regulations.

The Idaho Power analysis also was criticized for failing to adequately account for likely regulations of such things as carbon dioxide, a leading source of global warming but something that environmental retrofits on power plants cannot address.

In its annual filing to the U.S. Securities and Exchange Commission in February, (http://www.sec.gov/Archives/edgar/data/1057877/000105787713000040/0001057877-13-000040-index.htm) Idaho Power acknowledged the perils of sticking with coal in an era when coal-fired generation has fallen out of favor:

“A number of federal, state, and local environmental statutes, rules, and regulations relating to air quality, water quality, natural resources, and health and safety are applicable to Idaho Power’s operations,” the utility wrote in its report. “These laws and regulations generally require Idaho Power to obtain and comply with a wide variety of environmental license, permits, inspections, and other approvals, and may be enforced by both public officials and private individuals. Some of these regulations are changing or subject to interpretation, and failure to comply with them may result in penalties or other adverse consequences. Environmental regulations have created the need for Idaho Power to install new pollution control equipment at, and may cause Idaho Power to perform environmental remediation on, its owned or co-owned Jim Bridger power plant in 2015 and 2016 at a cost of approximately $120 million, and a second set of control apparatus in 2021 and 2022. Idaho Power expects that there will be other costs relating to environmental regulations, and those costs are likely to be substantial. Idaho Power is not guaranteed recovery of those costs.…”

And then, more ominously, this:

“Moreover, there are many legislative and rulemaking initiatives pending at the federal and state level that are aimed at the reduction of fossil fuel plant emissions. Idaho Power cannot predict the outcome of pending or future legislative and rulemaking proposals, or the compliance costs Idaho Power would incur in connection with that legislation. Future changes in environmental laws or regulations governing emissions reduction may make certain electric generating units (especially coal-fired units) uneconomical and subject to shut-down, may require the adoption of new methodologies or technologies that significantly increase costs or delay in-service dates, and may raise uncertainty about the future viability of fossil fuel as an energy source for new and existing electric generation facilities.”

This is the future that Idaho Power is buying into. Clearly, the company understands the enormous risks associated with throwing its lot in with coal-fired power generation. Time will tell whether the cost of such risk-taking will be passed on to the company’s half-million customers.

The Snake River Alliance will be submitting detailed comments this week to the PUC with particular attention to Idaho Power’s coal study. We believe that when utilities want to spend such huge amounts of their customers’ hard-earned cash, that state regulators should first give those customers ample opportunities to provide their input. Otherwise, utility regulators will be asked to decide whether utility investments were “prudent” and can be recovered from ratepayers without a full analysis of the utility’s proposed spending.

That’s particularly important in this case because Idaho Power says it needs to decide whether to commit to these expensive power plant environmental upgrades this year, which leaves little time for public review of the company’s study or spending plans.

The Alliance reported in 2011 and 2012 on the extent of the reliance on coal by electric utilities serving Idaho customers. Out-of-state coal plants account for more than 40 percent of electricity sold to Idaho customers, with most of the remainder coming from hydropower and increasingly from natural gas. The Alliance’s 2012 report, “Kicking Idaho’s Coal Habit,” also showed how coal plants are being replaced nationwide with cleaner alternatives – something Idaho utilities continue to resist. Central to that report is that Idaho utilities won’t just walk away from their coal assets overnight – but rather must begin planning to shift away from coal, plant by plant, over the course of the coming decade. Check out the Alliance’s reports at: http://snakeriveralliance.org/coal-v-efficiency/

If you want to read Idaho Power’s full filing of its 2011 Integrated Resource Plan Update, go to www.puc.idaho.gov and then “File Room” and “Closed Cases” and then “Electric” and scroll down to IPC-E-11-11. You can also file comments by going to the PUC website and clicking on “Comments and Questions About a Case” and enter the above case number and typing in or pasting in your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762. To review the documents on Idaho Power’s website, go to www.idahopower.com/irp.