Idaho Power starts cost recovery process for planned coal shutdown

The Idaho Public Utilities Commission is taking public comment through Jan. 13 on a plan by Idaho Power Co. to pass along costs of related to the Boardman coal plant in Oregon, in which Idaho Power owns a 10% stake.

Portland General Electric, a 65% Boardman owner and the plant’s operator, has agreed with regulators to shut the plant in 2020 for clean-air reasons. Idaho Power is asking state regulators to approve an accounting and cost recovery plan for expenses associated with the shutdown of Boardman.

Idaho Power has estimated a revenue deficiency of about $1.4m in its Idaho jurisdiction due to accelerated depreciation of Boardman plant accounts, decommissioning costs and pollution control investment. The utility is not seeking rate recovery at this time, but indicates it will ask the Idaho commission in 2012 to recover costs from customers at the same time as the annual Power Cost Adjustment (PCA), which is a credit or surcharge that becomes effective June 1.

Idaho Power’s 10% share of the Boardman plant is about 58.5 MW. Boardman is subject to the federal Clean Air Act, Oregon’s Regional Haze Plan and Oregon’s Utility Mercury Rule, requiring the plant to be fitted with various emissions controls. After analyzing each of the Boardman-related control technologies and their deadlines, Portland decided that closing the plant would be the most cost-effective approach. Shutting it in 2020 would allow enough time to find other energy sources without impacting customer reliability. Even with the 2020 closure plan, plant owners still must install new burners and scrubbers to reduce NOx and SO2 emissions by 50%.

Idaho Power proposes to complete a depreciation study in 2012 and establish a balancing account to track costs and benefits related to closure. Idaho Power said the balancing account will help the company track, on a cumulative basis, the difference between revenues and expenses to ensure customers pay only for actual expenditures.

In the application filed with the Idaho commission in September, Idaho Power said that Boardman is a pulverized-coal plant located in north-central Oregon. It went into service in 1980 and consists of a single generating unit. Based upon currently approved depreciation rates, Boardman’s expected plant life extends through at least 2030. Portland has 65% ownership of the plant, Bank of America Leasing has 15% ownership and Power Resources Cooperative has 10% ownership, the filing noted.

In July 2011, a consent decree was filed with the U.S. District Court for the District of Oregon memorializing a settlement reached among the Sierra Club, four other non-profit corporations and Portland related to Boardman. The consent decree imposes certain SO2 emission caps on the Boardman coal-fired boiler and would allow continued operation of Boardman until Dec. 31, 2020. The consent decree was approved by the court in September 2011.

Portland hired consultant Black and Veatch to conduct a new decommissioning study based on end-of-2020 closure. In March 2011, B&V provided an initial estimate of total decommissioning costs less salvage of approximately $80m in 2010 dollars.

Coal for Boardman is transported by rail from Powder River Basin coal mines in Wyoming. The U.S. Energy Information Administration database shows Boardman taking coal in September 2011, the latest month for available information, from the Eagle Butte mine of Alpha Natural Resources (NYSE:ANR).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.