The Los Angeles City Council on April 23 approved the entering into of a contract amendment for power out of the coal-fired Intermountain Power Agency (IPA) power plant in Utah that calls for the plant to be replaced next decade by a new gas-fired power plant at the site.
This is part of a Los Angeles Department of Water and Power plan to wean the city off of coal to meet state greenhouse gas reduction mandates. Intermountain is an 1,800-MW plant that supplies power to a number of other parties besides LADWP and gets its coal mostly from Utah mines.
On April 17, the council’s Energy and Environment Committee considered a March 20 Board of Water and Power Commissioners’ report, and Resolution No. 013225, authorizing the execution of the Second Amendatory Agreement No. BP 10437 between the LADWP and the IPA modifying the current IPP Power Sales Contract by providing for the construction and use of natural gas-fired units at the IPP site. The matter was then passed on to the council with a recommended approval, with the council approving it on April 23 on a 12-0 vote.
This Second Amendment will modify the current IPP coal-fired Power Sales Contract (PSC) approved in August 1980 by providing for the construction and use of natural gas-fired power generation units instead of the current coal fired power generation units at the Intermountain Power Project (IPP). The Second Amendatory Agreement is necessary for IPA to obtain the necessary commitment from all 36 IPA participants to participate in this change, said a council supporting document.
“Therefore, this request is not a final action; however, this Second Amendment is necessary to begin the process of initiating interest for a plan to meet a time-sensitive January 1, 2020 construction schedule commencement date,” said the document. “The termination date of the current PSC and the Second Amendment is June 15, 2027. The 36 participants in IPP include six California utilities and the remaining 30 are located in the State of Utah. The California utilities’ generation entitlement share is 78.9 percent and the remaining 21.1 percent generation share belongs to the Utah utilities.”
The major change in the amendment provides for the construction and use of combined-cycle natural-gas fired generating units instead of the current coal-fired generation units that would begin when the current PSC expires on June 15, 2027.
The other Second Amendment changes include:
- Requires the permitting and construction of the natural gas-fired units to begin no later than Jan. 1, 2020;
- Requires such replacement to be completed no later than July 1, 2025;
- Provides for IPA to make a renewal offer that extends the IPP participants’ contractual rights to the new facility output and transmission lines until 2077;
- Provides for a decommissioning fund for the two replaced coal-fired units;
- Provides for the reduction of the combined cycle power if required;
- Provides the ability of the IPP Coordinating Committee (consisting of participants) and IPA to choose an alternative power generation technology should one be developed that complies with applicable laws and regulations.
The IPA proposal provides for the construction of two combined-cycle natural gas turbines, each with a capacity not exceeding 600 MW (for a total capacity of 1,200 MW) that will replace the current coal fired units which have a net capacity of 1,800 MW capacity. The final capacity of the new facility will not be known until the total number of participants and demand has been identified. The natural gas units will utilize the existing infrastructure as much as possible, since there is enough land located at the site to accommodate both the coal-fired units and the proposed new natural gas units at the commencement of service. LADWP currently operates generation units which utilize this technology in two primary generation facilities.
LADWP commissioned a study in March 2010 (from Sargent & Lundy LLC) to estimate the conceptual project cost. While not for budgeting or planning purposes, a preliminary capital cost estimate provided for discussion purposes is $750m-$950m. These costs may change subject to the number of participants that commit to the combined cycle natural gas facility, equipment costs, labor costs, interest on bond financing and unforeseen legislative mandates. The impact on customer bills as a result of early conversion by 2025 is estimated to be an increase in power rates of 5% annually beyond the level projected for 2025.