Oregon PUC puts PacifiCorp’s coal decisions under microscope

The Oregon Public Utility Commission, in a July 8 approval of the 2013 integrated resource plan (IRP) of PacifiCorp, laid out some stringent reporting requirements for the utility related to coal-fired capacity decisions in the future.

Critics, including environmental groups, had pummeled PacifiCorp d/b/a Pacific Power during the IRP case for its continued reliance on coal-fired power and its plans to invest new money into air emissions controls to save some of that capacity.

“To address timing concerns raised by the participants for this and other projects for which PacifiCorp seeks acknowledgment, we clarify our expectation that PacifiCorp will inform us of future investment decisions and request acknowledgment before the investment decision is made and substantially completed,” said the July 8 PUC order.

To ensure this, the commission added these requirements for future IRPs and IRP Updates:

  • Beginning in the third quarter of 2014, PacifiCorp will appear before the commission to provide quarterly updates on coal plant compliance requirements, legal proceedings, pollution control investments, and other major capital expenditures on its coal plants or transmission projects.
  • In future IRPs, PacifiCorp will provide: timelines and key decision points for expected pollution control options and transmission investments; and tables detailing major planned expenditures with estimated costs in each year for each plant or transmission project, under different modeled scenarios.

“At the outset, many participants raised concerns about PacifiCorp’s analysis used to support its proposed environmental investments in its coal-fired generating units,” the commission wrote. “The NW Energy Coalition (NWEC) argues that PacifiCorp continues to underestimate the costs and risks of continued reliance on coal generation, and contends that the 2013 IRP fails to comply with IRP guidelines. NWEC states that the analysis proposed by Staff, if coupled with sufficiently stringent environmental compliance and carbon price scenarios, would likely capture the range of options necessary for an adequate analysis of coal investments. NWEC also expressed frustration with PacifiCorp’s system optimizer model, while it was pleased with the screening tool provided in conjunction with the utility’s 2011 IRP.”

The Citizens’ Utility Board of Oregon (CUB) contended that the breadth of possibilities that PacifiCorp evaluated was too narrow and that more possibilities should have been modeled. CUB expressed concerns regarding the mismatch of useful lives of pollution upgrades and the plants on which those upgrades would be installed.

Commission staff shared concerns about PacifiCorp’s analysis, and also proposed specific types of analysis that it would like to see going forward. These four types are described as an inter-temporal analysis, fleet analysis, technology tradeoff analysis, and analysis of the impact of alternatives on transmission.

“We recognize the additional coal analysis that PacifiCorp provided in this proceeding and the company’s willingness to establish a separate proceeding to address coal investments,” said the commission. “We conclude, however, that additional improvements are needed to PacifiCorp’s coal analysis on a going-forward basis, and that the current IRP process remains the appropriate forum for a robust and timely review of coal investment decisions. Rather than detail a specific coal analysis that will be required in the future, we instead direct the participants to schedule several workshops, at least one of which we will attend, to be held within the next six months to determine the parameters of coal analyses in future IRPs. … Following the workshops, Staff will present its final recommendations to us at a public meeting, at which time PacifiCorp and the stakeholders will have an opportunity to comment on the final proposed coal analysis before we adopt the requirements for future IRPs.”

Issues addressed by the commission for individual coal plants/units are:

Naughton Unit 3:

PacifiCorp’s 2013 IRP proposes the following actions for Naughton Unit 3:

  • Continue permitting and development efforts in support of the Naughton Unit 3 coal-to-gas conversion project. The permit application requesting operation on coal through year-end 2017 is currently under review by the Wyoming Department of Environmental Quality, Air Quality Division.
  • Issue a request for proposal to procure gas transportation for the Naughton plant as required to support compliance with the conversion date that will be established during the permitting process.
  • Issue an RFP for engineering, procurement, and construction of the Naughton Unit 3 natural gas retrofit as required to support compliance with the conversion date that will be established during the permitting process.

While the commission said it agreed that PacifiCorp should continue permitting and seeking requests for proposals for the gas conversion in 2018, it also agreed with staff that it is appropriate to reevaluate the gas conversion versus shutdown decision in the 2015 IRP when more recent load forecasts and gas price estimates will be available. It added a requirement that Naughton Unit 3 should be evaluated for shutdown in the 2015 IRP.

Hunter Unit 1:

PacifiCorp proposed the completion of installation of the baghouse conversion and low NOX burner compliance projects at Hunter Unit 1 in Utah as required by the end of 2014. The commission declined to acknowledge this plan because PacifiCorp failed to bring it the Hunter 1 investments in its 2011 IRP and now the investment decisions are substantially complete. It emphasized that this is one of the reasons it wants to hold frequent coal workshops.

Jim Bridger Units 3 and 4:

The 2013 IRP proposed for Jim Bridger Units 3 and 4 in Wyoming completion of installation of selective catalytic reduction (SCR) regional haze compliance. Based upon the information it has at this time, the commission declined to acknowledge this plan. It said some of the modeled alternatives suggest that the installations of SCRs are not the lowest cost resource option. Staff ran a model that demonstrates that it is more economical to retire Bridger 3 and 4 than to install the SCR equipment. “Based upon the information we currently have, we cannot dismiss these results as unrealistic or unreasonable,” the commission said.

The commission also concurred with staff that there are gaps in PacifiCorp’s analyses. Staff and other participants raised several other specific issues related to the merit or lack of merit of installing SCRs at Bridger 3 and 4, such as the impact of retirement on reliability, inter-temporal and fleet trade-off analysis between units, or the impact of retirement on future transmission investments. “However, we lack the necessary information in this proceeding to weigh these issues and they will be more thoroughly investigated in a future rate case proceeding,” the commission said. “Finally, PacifiCorp is going ahead with the investments in installing SCRs regardless of our decision in this proceeding. We will undertake a thorough and fair review of the prudence of PacifiCorp’s decision in a future rate case proceeding.”

Cholla Unit 4:

The 2013 IRP proposes that PacifiCorp continue to evaluate alternative compliance strategies that will meet regional haze compliance obligations, related to the U.S. Environmental Protection Agency’s Federal Implementation Plan requirements to install SCR equipment at Cholla Unit 4 in Arizona, subject to future review in an IRP Update.

“We do not believe that the IRP Update is the appropriate forum for considerations of investment decisions such as Cholla 4 and we expect PacifiCorp to bring us these decisions in a timely manner in the future,” the commission wrote. “However, because of the timing of this investment decision it is of the utmost importance that we review it sooner than the next IRP.” So it mandated an IRP Update on this issue, which will be filed no later than six months following the final order in this proceeding.

Craig and Hayden:

PacifiCorp is a minority owner of the Craig and Hayden coal plants in Colorado. Although SCR is planned to be installed at Craig and Hayden between 2015 and 2017, PacifiCorp’s 2013 IRP does not include an action item related to these investments. Oregon commission staff proposed that within three months of the order in this proceeding, PacifiCorp will schedule and hold a confidential technical workshop to review existing analysis on planned Craig and Hayden environmental investments. “We adopt Staff’s proposed recommendation related to Craig and Hayden,” the commission wrote.

Wyodak:

The final Federal Implementation Plan (FIP) in Wyoming requires PacifiCorp to install SCR at its Wyodak coal plant by 2019. In staff’s memo for a March 17 public meeting, staff recommended a new action item for Wyodak which outlines inter-temporal and fleet analysis to be performed on Wyodak in the next IRP. In supplemental final comments, both CUB and the Sierra Club recognized that the final FIP in Wyoming requires the SCR equipment to be installed by 2019. Staff supported inclusion of the Wyodak analysis in the 2015 IRP, but said there should be some guidance around the type of analysis required.

“We agree that the correct approach for the investment in a SCR for Wyodak by 2019 is to include a robust analysis in the 2015 IRP,” the commission said. “We also agree that it is important to establish expectations for the type of analysis we require in the 2015 IRP. Consistent with our decision on the coal analysis expected in the 2015 IRP, we conclude that Staff’s suggested frame of reference is an appropriate starting point for the stakeholders and Commission to consider in the workshops over the next six months. We adopt Staff’s recommendation with the caveat that Staff’s proposed analysis will be the starting point for discussions about analyzing the SCR investment at Wyodak, but that the workshops in the next six months may modify Staff’s proposed framework.”

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.