Oregon PUC imposes no coal price restrictions for Jim Bridger

The Oregon Public Utility Commission on Oct. 28 approved a cost case for PacifiCorp d/b/a Pacific Power, and in that order said the company needs to do a periodic assessment of outside coal prices for the Jim Bridger power plant in Wyoming.

PacifiCorp owns two-thirds of both the power plant and the adjacent Bridger Coal (BCC) surface and deep mining operation, while Idaho Power owns the other one-third shares of each. The plant also takes some outside coal from nearby mine sources in southwestern Wyoming, mainly Black Butte Coal.

PacifiCorp submitted to the Oregon commission its Transition Adjustment Mechanism (TAM) filing on March 1, to update net power costs (NPC) for 2014 and set transition credits for Oregon customers who choose direct access in the November open enrollment window. The company filed several corrections to its initial filing on May 14.

In its initial filing, Pacific Power requested an overall decrease of $15.5m in NPC for calendar year 2014 over what is currently collected in rates. The company identified major cost drivers for the 2014 NPC as a decrease in overall system load of 0.85% and a decrease of purchased power expense of $69m, offset by an increase in coal expenses of $41m, an increase in natural gas fuel expense of $6m, an increase in wheeling, hydro, and other expenses of $10m, and a decrease in wholesale sales revenue of $4m.

In its filing, related to Jim Bridger coal supply, the company said that the Bridger Coal operation is a cost-effective supply source for most of the plant’s needs.

The Industrial Customers of Northwest Utilities (ICNU) group raised the issue of pricing for outside coal supply from Black Butte Coal, saying the Bridger Coal supply should be priced in 2014 at the Black Butte Coal prices. PacifiCorp argued that if it took more coal from Black Butte Coal, on top of the coal it takes from Black Butte under a years-old contract, then that extra coal would be higher priced than under the current Black Butte deal.

“In response, ICNU cites in its brief to the testimony of a Pacific Power witness in Utah, stating that Pacific Power intends to replace significant amounts of BCC supply with Black Butte coal in 2015-2017,” the commission noted. “ICNU argues this strengthens its claim that Black Butte has sufficient capacity to supply Bridger with coal at prices below BCC’s. Pacific Power counters that ICNU selectively quotes from and misrepresents the company’s Utah testimony. We find ICNU’s use of the 2014 contract cost of Black Butte coal as a substitute for BCC coal under the LCM rule to be unpersuasive in this docket. We reject the proposed adjustment.”

However, the commission adopted a proposal, endorsed by commission staff, the Citizens Utility Board of Oregon and Pacific Power, for the company to prepare a periodic fuel supply plan that compares affiliate mine fuel supply to other alternative fuel supply options, including market alternatives, to facilitate implementing prudence and affiliate transaction standards in future rate proceedings.

Said Sept. 25 PacifiCorp testimony in this case: “ICNU claims that PacifiCorp revealed that it will replace some BCC deliveries with Black Butte Coal in 2015-2017, which ‘casts extreme doubt on the veracity of PacifiCorp’s claim that ‘evidence in this case makes clear that Black Butte mine does not have sufficient excess capacity to supply the Bridger plant.” This statement is just one of ICNU’s many misleading citations to Cindy Crane’s testimony in umelated cases. The testimony was filed in Utah and Wyoming certificate of public convenience and necessity (CPCN) cases involving environmental investments at the Jim Bridger plant. The Company developed several alternative long-term fueling plans for the Jim Bridger plant for different scenarios reviewed in the CPCN process. On this issue and others, ICNU selectively cites ‘facts’ from Ms. Crane’s testimony, even though it is clear from her testimony that she is referring to planning assumptions or hypotheticals. The record in this case shows unequivocally that PacifiCorp has not committed to a coal supply plan for 2015 and is still exploring options to address the expiration of the Black Butte contract.”  

Jim Bridger is a 2,120-MW power plant that burns between 8 million and 9 million tons of sub-bituminous coal per year. About two thirds of the coal is supplied by the Bridger Coal mining operations and is delivered via a 2.4-mile belt conveyor. The rest comes from other Wyoming mines via rail.

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.