PacifiCorp works on accounting for abandoned Naughton project

Rocky Mountain Power, a division of PacifiCorp, applied May 3 to the Idaho Public Utilities Commission for an accounting order authorizing it to record a regulatory asset associated with costs for a now-abandoned emissions control project at the coal-fired Unit 3 of its Naughton plant in Wyoming.

The company has since last year been before the Wyoming Public Service Commission in a case where it is seeking approval of a certificate of public convenience and necessity (CPCN) covering upgraded existing emissions controls, including upgrades to a long-built SO2 scrubber, and new emissions controls, including pulse jet fabric filters (PJFF) to replace an existing electrostatic precipitator and a first-time selective catalytic reduction (SCR) system for NOx at Naughton Unit 3. But recent analysis now shows that the most cost-effective control option for Unit 3 is to switch it to burning natural gas. There are no plans to fuel switch the 210-MW Unit 2 and 160-MW Unit 1 at Naughton, both of which also currently fire coal.

A fact sheet on the PacifiCorp website shows that the Naughton plant can burn as much as 2.8 million tons of sub-bituminous coal. That coal comes from adjacent coal deposits formerly controlled by Chevron Mining, with the mine recently bought by Westmoreland Coal (NASDAQ: WLB).

In the May 3 filing at the Idaho commission, Rocky Mountain Power said that in 2010 it began execution of the critical path schedule including development of detailed project procurement specifications and initiation of a competitive request for proposals process for the SCR and PJFF engineering, procurement and construction (EPC) contracting process. To maintain the project critical path schedule supporting a regional haze compliance deadline of Dec. 31, 2014, while proceeding through the CPCN process at the Wyoming commission, the company entered into a limited notice to proceed EPC contract in December 2011.

When the company became aware that the environmental improvements at Naughton Unit 3 were no longer economically supported, as described in rebuttal testimony filed by the company in April in the Wyoming case, the company suspended EPC contract activities. Total Naughton Unit 3 environmental compliance project permitting, development, engineering, and site assessment activities costs incurred to date are $7.9m. The company said it prudently incurred these costs, which were necessary to meet the time sensitive schedules prescribed by state and federal air requirements.

Rocky Mountain Power wants Idaho commission approval to transfer $7.9m out of FERC Account 107 (Construction Work in Progress) and record a regulatory asset in FERC Account 182.3 (Other Regulatory Assets). Idaho’s share of the regulatory asset will be established based on the system generation allocation factor, resulting in about $479,000 allocated to Idaho. The company said it won’t seek rate recovery of this money until its next rate case.

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.