The latest integrated resource plan (IRP) from PacifiCorp anticipates the retirement or conversion to natural gas of 2,800 MW of coal-fired capacity over the planning period.
On March 31, PacifiCorp d/b/a Rocky Mountain Power filed the IRP with the Idaho Public Utilities Commission. “Development of the 2015 IRP involved a balanced consideration of cost, risk, uncertainty, supply reliability/deliverability, and public policy goals. PacifiCorp’s resource needs can be met with demand side management (DSM) and low cost short-term firm market purchases, labeled as front office transactions (FOTs), through 2027. The first deferrable thermal resource in the 2015 IRP preferred portfolio is added in 2028, one year later when compared to PacifiCorp’s 2013 IRP Update and four years later relative to the 2013 IRP preferred portfolio. By the end of the twenty-year planning horizon, PacifiCorp’s 2015 IRP preferred portfolio reflects an assumed reduction in existing owned capacity totaling 2,775 MW. By 2034, it is assumed that approximately 2,800 MW of existing coal generation will either be retired or converted to operate as natural gas-fired generation.”
PacifiCorp’s 2015 IRP preferred portfolio is built around a system reflecting the addition of 816 MW of executed wind and solar qualifying facility power purchase agreements from 36 projects having in-service dates by the end of 2016. To mitigate the cost of state renewable portfolio standard (RPS) compliance, analyses in the 2015 IRP continue to support the use of unbundled renewable energy credits (RECs) to meet projected compliance needs through the planning horizon.
During the 2015 IRP portfolio development process, PacifiCorp considered alternative Regional Haze scenarios, which reflect potential inter-temporal and fleet trade-off compliance outcomes for both known and prospective Regional Haze compliance requirements on existing coal units in PacifiCorp’s fleet. Analysis of near-term Regional Haze compliance requirements support converting Naughton Unit 3 in Wyoming to burn natural gas in 2018 and strategies that avoid installation of selective catalytic reduction (SCR) emissions control equipment at Wyodak, Dave Johnston Unit 3, and Cholla Unit 4, saving PacifiCorp customers hundreds of millions of dollars.
Just as PacifiCorp was initiating its 2015 IRP public process, the U.S. Environmental Protection Agency issued a proposed rule under §111(d) of the Clean Air Act (111(d) or the 111(d) rule) establishing state emission rate targets for existing resources through application of a best system of emission reduction (BSER). PacifiCorp considered EPA’s proposed rule in its 2015 IRP by studying a range of assumed compliance requirements and alternative compliance strategies. The 2015 IRP preferred portfolio meets PacifiCorp’s share of state emission rate targets among those states in which PacifiCorp serves retail customers and owns existing fossil generation potentially affected by the proposed rule. PacifiCorp’s compliance solution reflects a BSER that is primarily comprised of allocating system renewable generation among states, acquiring energy efficiency resources, and re-dispatching fossil-fired generation resources.
Coal resource actions identified in the IRP are:
- Naughton Unit 3 – Issue a request for proposals (RFP) to procure gas transportation and resume engineering, procurement, and construction (EPC) contract procurement activities for the Naughton Unit 3 natural gas conversion in the first quarter of 2016. PacifiCorp may update its economic analysis of natural gas conversion in conjunction with the RFP processes to align gas transportation and EPC cost assumptions with market bids. The Naughton plant is located near Kemmerer, Wyoming. Unit 3 of the three-unit plant is owned and operated by PacifiCorp and was commissioned in 1971. Naughton Unit 3 has a capacity of 330 MW.
- Dave Johnston Unit 3 (Wyoming) – The portion of EPA’s final Regional Haze Federal Implementation Plan (FIP) requiring the installation of selective catalytic reduction (SCR) at Dave Johnston Unit 3, or a commitment to shut down Dave Johnston Unit 3 by the end of 2027, is currently under appeal by the state of Wyoming in the U.S. Tenth Circuit Court of Appeals. If following appeal, EPA’s final FIP as it pertains to Dave Johnston Unit 3 is upheld, PacifiCorp will commit to shutting down Dave Johnston Unit 3 by the end of 2027. If following appeal, EPA’s final FIP as it pertains to Dave Johnston Unit 3 is or will be modified, PacifiCorp will evaluate alternative compliance strategies that will meet any new requirements, as applicable, and provide the associated analysis in a future IRP or IRP update. The Dave Johnston plant is located near Glenrock, Wyoming. Unit 3 of the four-unit plant, owned and operated by PacifiCorp, was commissioned in 1964. The capacity of Dave Johnston Unit 3 is 220 MW.
- Wyodak (Wyoming) – Continue to pursue the company’s appeal of the portion of EPA’s final Regional Haze FIP that requires the installation of SCR at Wyodak, recognizing that the compliance deadline for SCR under the FIP is currently stayed by the court. If following appeal, EPA’s final FIP as it pertains to installation of SCR at Wyodak is upheld (with a modified schedule that reflects the final stay duration), PacifiCorp will update its evaluation of alternative compliance strategies that will meet Regional Haze compliance obligations and provide the associated analysis in a future IRP or IRP Update. The Wyodak plant is located near Gillette, Wyoming. The single-unit plant was commissioned in 1978. PacifiCorp operates Wyodak and owns 268 MW of the 335 MW of capacity.
- Cholla Unit 4 (Arizona) – Continue permitting efforts in support of an alternative Regional Haze compliance approach that avoids installation of SCR with a commitment to cease operating Cholla Unit 4 as a coal-fueled resource by the end of April 2025. Cholla is a four-unit plant located in Joseph City, Arizona. PacifiCorp owns Unit 4, which contributes 387 MW of capacity to the PacifiCorp system. Arizona Public Service (APS), the operator of the plant, owns units 1, 2, and 3. PacifiCorp acquired Cholla Unit 4, which was commissioned in 1981, from APS in 1991.
Regional haze issues vary by state, affected power plant
The state of Arizona issued a Regional Haze SIP requiring, among other things, the installation of SO2, NOx and PM controls on Cholla Unit 4, which is owned by PacifiCorp but operated by Arizona Public Service. The EPA approved in part, and disapproved in part, the Arizona SIP and issued a FIP requiring the installation of SCR equipment on Cholla Unit 4. PacifiCorp filed an appeal regarding the FIP as it relates to Cholla Unit 4, and the Arizona Department of Environmental Quality and other affected Arizona utilities filed separate appeals of the FIP as it relates to their interests. All appeals are pending. PacifiCorp said it is working with Arizona Public Service as well as state and federal agencies on an alternate compliance approach and associated approvals for Cholla Unit 4.
The state of Colorado issued a Regional Haze SIP requiring, among other things, the installation of selective non-catalytic reduction (SNCR) technology at Craig Unit 1 by 2018. Environmental groups appealed the EPA’s action, in which PacifiCorp intervened in support of the EPA. In July 2014, parties to the litigation, other than PacifiCorp, entered into a settlement agreement which requires installation of SCR equipment at Craig Unit 1 in 2021. Following settlement, the EPA filed a motion with the Tenth Circuit Court of Appeals seeking a voluntary remand to the EPA of those portions of the EPA’s approval of Colorado’s SIP relating to Craig Unit 1. This motion is pending. PacifiCorp noted that it opposed the settlement agreement between the EPA and other parties to the litigation.
In May 2011, the state of Utah issued a Regional Haze state implementation plan (SIP) requiring the installation of SO2, NOx and PM controls on the coal-fired Hunter Units 1 and 2 and Huntington Units 1 and 2. In December 2012, the EPA approved the SO2 portion of the Utah Regional Haze SIP and disapproved the NOx and PM portions. The EPA’s approval of the SO2 SIP was appealed to federal circuit court. In addition, PacifiCorp and the state of Utah appealed the EPA’s disapproval of the NOx and PM SIP. PacifiCorp and the state’s appeals were dismissed. In addition, and separate from the EPA’s approval process and related litigation, the Utah Division of Air Quality undertook an additional BART analysis for each of Hunter Units 1 and 2 and Huntington Units 1 and 2, which will be provided to the EPA as a supplement to the existing Utah SIP. In October 2014, Utah proposed to amend its SIP with the updated BART analysis concluding that no incremental controls (beyond those included in the May 2011 SIP) were required at the Hunter and Huntington units. The public comment period for the amended SIP closed in December 2014, and the SIP is expected to be submitted for approval to the EPA in early 2015.
In January 2014, the EPA issued a final action in Wyoming requiring installation of the following NOx and PM controls at PacifiCorp facilities:
- Naughton Unit 3 by December 31, 2014 – selective catalytic reduction (SCR) equipment and a baghouse
- Jim Bridger Unit 3 by December 31, 2015 – SCR equipment
- Jim Bridger Unit 4 by December 31, 2016 – SCR equipment
- Jim Bridger Unit 2 by December 31, 2021 – SCR equipment
- Jim Bridger Unit 1 by December 31, 2022 – SCR equipment
- Dave Johnston Unit 3 – SCR within five years or a commitment to shut down in 2027
- Wyodak – SCR equipment within five years
Different aspects of the EPA’s final action were appealed by a number of entities. PacifiCorp appealed the EPA’s action requiring SCR at Wyodak. PacifiCorp requested, and was granted, a stay of the EPA’s action as it pertains to Wyodak pending resolution of the appeals. A final decision on the appeal is expected in 2016. With respect to Naughton Unit 3, in its final action the EPA indicated support for the conversion of the unit to natural gas and that it would expedite action relative to consideration of the gas conversion once the state of Wyoming submitted the requisite SIP amendment. PacifiCorp has obtained a construction permit and revised Regional Haze BART permit from the state of Wyoming to convert Naughton Unit 3 to natural gas in 2018. Wyoming has not yet submitted a revised Regional Haze SIP incorporating this alternative compliance approach to the EPA.
To comply with the federal Mercury and Air Toxics Standards (MATS), PacifiCorp continues to plan for retirement of its Carbon coal-fired facility in Utah in April 2015 as the least-cost alternative to comply with MATS and other environmental regulations. Implementation of the transmission system modifications necessary to maintain system reliability following disconnection of the Carbon facility from the grid is underway.
Analysis of compliance alternatives to installation of SCR at Wyodak, Dave Johnston Unit 3, and Cholla Unit 4 and analysis of an early retirement alternative to the natural gas conversion of Naughton Unit 3 supports the following key findings:
- Inter-temporal and fleet trade-off alternatives support a strategy that avoids installation of SCR at Wyodak, consistent with PacifiCorp’s on-going legal appeal of the SCR requirement.
- Eliminating the need for SCR at Dave Johnston Unit 3 with a firm commitment to retire the unit by the end of 2027 will avoid the need for incremental capital expenditures and run-rate operating costs.
- Natural gas conversion of Naughton Unit 3 in 2018 is lower cost when compared to an early retirement alternative.
- Inter-temporal and technology trade-off analysis supports a strategy that eliminates the compliance obligation to install SCR at Cholla Unit 4 with a firm commitment to cease operating the unit as a coal-fueled resource in 2025.
- Each of the findings noted above retain compliance planning flexibility associated with EPA’s draft rule under §111(d) of the Clean Air Act (111(d) or 111(d) draft rule).
- Avoiding SCR at Wyodak, Dave Johnston Unit 3, Cholla Unit 4 and converting Naughton Unit 3 to natural gas in 2018 will save customers hundreds of millions of dollars when compared to the alternative compliance scenarios studied.