PacifiCorp defends large future place for its coal-fired capacity

Plans by PacifiCorp d/b/a Rocky Mountain Power to largely stick with its current coal-fired capacity are justified, despite the claims of environmental critics, the utility said in rebuttal testimony filed Aug. 7 at the Wyoming Public Service Commission.

The Wyoming PSC is one of several state commissions in the PacifiCorp service territory looking at the utility’s latest integrated resource plan (IRP). The utility on Aug. 7 rebutted critics that included the Powder River Basin Resource Council (PRBRC) and the Interwest Energy Alliance (IEA).

The PRBRC claims that PacifiCorp failed to model the true cost of complying with the federal Regional Haze Rule, which hits a number of coal-fired power plants in the western U.S. PRBRC also stated that PacifiCorp ignored requests to consider Regional Haze assumptions tied to federal implementation plans (FIPs) as a base case scenario and did not adopt recommendations to consider selective catalytic reduction (SCR) controls on specific coal units located in Wyoming.

Consequently, PRBRC requests the commission not acknowledge parts of the IRP related to continued reliance on or increased costs associated with coal-fired generation, and that the commission should wait until future certificate of public convenience and necessity (CPCN) proceedings in Wyoming to consider these costs, as those proceedings provide opportunity for more robust analysis about the anticipated costs and alternative power options available to the company.

PacifiCorp responded that it has incorporated base case and stringent case Regional Haze requirements in its IRP analyses.

“In establishing these cases, PacifiCorp utilized reasonably anticipated Regional Haze compliance outcomes, whether driven by then-current SIP requirements, then-current FIP requirements, or in the case of the Company’s Utah coal-fueled units, potential long-term Regional Haze compliance rulemaking outcomes regarding SCR,” the company said. “While there will always be varying opinions regarding potential alternate outcomes to multi­ party rulemaking processes, the Company reasonably selected its base case scenario investments. To arrive at its stringent case Regional Haze scenario, PacifiCorp incorporated then-current information regarding U.S. Environmental Protection Agency’s (EPA) proposed, but not finalized, FIP for the state of Wyoming, accelerated SCR installation schedules for the Company’s Utah coal-fueled units, and added SCR installations at its partially owned Craig Unit 1, Colstrip Unit 3 and Colstrip Unit 4 coal-fueled resources. To state that PacifiCorp has not reasonably incorporated potential FIP outcomes in its IRP analyses is not accurate.”

The Wyoming commission should reject PRBRC’s recommendation to not acknowledge parts of the IRP related to coal-fired generation and wait for future CPCN proceedings to consider costs related to coal, the utility added.

“The IRP is a planning tool used by PacifiCorp to identify specific actions it will take over the next couple of years to meet the needs of its customers,” it noted. “The 2013 IRP considered both base case and stringent case Regional Haze assumptions that considered the potential for future EPA actions to implement FIP requirements under the Regional Haze Rule. Most importantly, the IRP is not a request to construct specific facilities. Such a request would be made through a CPCN proceeding as required. Postponing acknowledgement of the 2013 IRP, as recommended by PRBRC, does not in any way absolve PacifiCorp from its obligations to file CPCN applications requesting authority to construct specific facilities related to environmental investments as agreed to in previous stipulations. The Commission will have an opportunity to address the investment and operating cost in comparison to other alternatives for those specific units at that time. Therefore, the Company sees no relevant association between the 2013 IRP and PRBRC’s concern with coal costs.”

PacifiCorp says it is properly taking into account future environmental risks

The PRBRC claims that PacifiCorp’s IRP and IRP Action Plan only reflect known actions related to coal, and do not properly anticipate likely actions that will be needed in response to new regulatory proposals. PRBRC said the 2013 IRP should better explain what PacifiCorp is doing to research, promote, or otherwise determine the feasibility of carbon capture and sequestration (CCS). Finally, PRBRC asserts the 2013 IRP underestimates the risk of increasing coal prices.

“As noted throughout the 2013 IRP, the Company has incorporated significant proxy compliance costs for emerging environmental compliance obligations,” PacifiCorp said. “The Company has not reflected only known environmental rulemaking actions related to coal. PacifiCorp’s analyses specifically incorporate proxy compliance costs attributed to emerging coal combustion residuals rulemaking and cooling water intake rulemaking, where a reasonable amount of information exists regarding the potential outcomes of these yet-to-be-finalized rulemaking efforts. Where no proposed action existed at the time scenario input assumptions were developed, reasonably anticipated proxy compliance costs were not developed as such efforts would have been speculative, at best. Nonetheless, as discussed above, the uncertainties analyzed in the 2013 IRP may or may not materialize, and as is the case in any planning process, new facts will be introduced after the analysis has been completed. This is precisely why PacifiCorp continuously refreshes its long term planning through the IRP and IRP Update process.”

PacifiCorp said it has been monitoring CCS for many years. In 2006-2008, it evaluated various gasification technologies for a new integrated gasification combined cycle (IGCC) plant to be located in Wyoming, which was a resource that must include carbon capture. PacifiCorp has reviewed and continues to review studies and pilot projects conducted on technologies for carbon capture on both conventional boilers and advanced generation options.

In addition, PacifiCorp said it has supported efforts by local entities in both Wyoming and Utah, to understand the geological conditions in proximity to the company’s power plants as part of the effort to characterize the underlying geology for underground sequestration. At the Jim Bridger coal plant in Wyoming, the company supported a number of University of Wyoming test programs to evaluate alternative carbon capture concepts. The company has been involved in two potential pilot projects that were to be located at Wyoming coal plants to evaluate two promising carbon capture technologies; both parties decided not to pursue the pilot projects. PacifiCorp noted that it was also deeply involved in the state of Wyoming’s efforts to prepare legislation that provides more legal and regulatory certainty that is needed to successfully implement commercial sequestration.

“At this point in time it is clear that with currently available technologies, the costs of carbon capture, when also taking into account auxiliary power requirements, are very high,” PacifiCorp added. “Liability issues associated with geological sequestration of carbon dioxide is also a concern. For these reasons, the Company finds the continued monitoring of CCS the most prudent path going forward.”

PacifiCorp defends coal price assumptions

With regard to coal prices, PacifiCorp said it included in its portfolio development process varying assumptions for coal costs in combination with varying assumptions for Regional Haze requirements and market prices for natural gas and wholesale electricity. Of the 19 resource portfolios developed among five different Energy Gateway transmission project scenarios, four portfolios were developed assuming high coal price assumptions, and four were developed assuming low coal price assumptions.

IEA states that stakeholders requested PacifiCorp model additional potential investments or retirements early in the IRP public process, suggests that portfolios including transitions from fossil fuels to larger penetrations of wind and solar resources were eliminated, and recommends that PacifiCorp be required to review and update its modeling prior to the Spring of 2014, when confirmation of revised EPA rules applicable to coal plants in Wyoming is expected. IEA claims that absent revision, the 2013 IRP could potentially drive imprudent investments.

“During the portfolio development phase of the 2013 IRP process, PacifiCorp incorporated stakeholder comments when selecting the wide range of assumptions that influence (1) compliance alternatives to varying environmental compliance obligations for existing coal units and (2) the type, timing, size, and location of potential future resource needs,” PacifiCorp responded. “In all portfolios, costs for both known and prospective environmental compliance requirements were considered. With respect to air emissions requirements, uncertainty in potential future compliance costs were captured by evaluating ‘base case’ Regional Haze investments patterned after known state implementation plan requirements and potential long-term environmental compliance requirements and by evaluating ‘stringent case’ Regional Haze investments patterned after prospective federal implementation plan requirements and potential long-term environmental compliance requirements. For emerging coal combustion residuals and cooling water intake rulemaking, PacifiCorp incorporated proxy compliance costs into its analyses. PacifiCorp also evaluated uncertainty in future environmental compliance costs by including in its portfolio development process a wide range of prospective future carbon dioxide (C02) emission costs. PacifiCorp evaluated five different C02 price assumptions in the portfolio development process, which includes scenarios with C02 price levels required for the U.S. power sector to achieve an 80 percent reduction in emissions by 2050.”

There are numerous portfolios looked at where a large portion of PacifiCorp’s coal fleet retires or is converted to burn natural gas by the end of the 20 year planning horizon, PacifiCorp noted. In the 2013 IRP, 94 different core resource portfolios were developed among five different Energy Gateway transmission scenarios. Of these 94 resource portfolios, 25 showed more than 4,000 MW of coal either retiring or converting to burn natural gas by 2032. Ultimately, PacifiCorp said it did not select these resource portfolios as its preferred portfolio. IEA states that these portfolios were eliminated but fails to mention that they were not chosen as the preferred portfolio in the 2013 IRP because the modeling showed these portfolios to have higher costs and higher risk as compared to the alternatives, PacifiCorp said.

IEA’s claim that evolving environmental compliance needs for Wyoming coal plants will drive imprudent investments if the IRP is not updated prior to the 2013 IRP update, which will be completed spring 2014, is simply untrue, the utility said. The IRP is a useful planning tool that provides the foundation for actions the company will take to meet the needs of its customers into the future. However, when PacifiCorp makes investment decisions, it said it relies upon the most current information and analysis available at the time the decision is being made.

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.