Sierra Club report pushes for pre-2020 retirement of North Valmy coal plant

The Sierra Club on June 3 released an economic analysis authored by Synapse Economics which concludes that NV Energy continuing to operate the 522-MW North Valmy coal plant is more expensive than other energy sources, including solar and natural gas.

The report found that transitioning to Nevada clean energy resources by 2019 rather than continuing to import hundreds of millions of dollars worth of coal each year for the plant would benefit NV Energy’s customers as well as Nevada’s environment.

Said Elspeth DiMarzio, Organizing Representative for the Sierra Club’s Nevada Beyond Coal Campaign: “The Valmy coal plant is more expensive to operate than a clean energy facility would be, and the likely need for future pollution controls exposes NV Energy customers to serious financial risk.”

North Valmy is already tentatively scheduled to stop burning coal in 2025. Advocates are pushing for NV Energy to stop burning coal at the plant before 2020 so Nevada can create clean energy jobs, clean up the air, and get rid of the state’s biggest source of climate pollution.  

“I urge the Governor’s New Energy Industry Task Force to review this study closely,” said Travis Ritchie, Staff Attorney with the Sierra Club Environmental Law Program. “We now have clear evidence demonstrating that the Valmy coal plant is more expensive to operate than clean energy. The simplest way for the task force to promote the development of utility-scale clean energy is by recommending early closure and replacement of Valmy with clean technologies like solar and energy efficiency.”

The Synapse report provides an assessment of the recent and forward-going economics of the North Valmy Generating Station, a 522-MW, two-unit coal plant located in Valmy, Nevada. Assessments performed by the plant’s co-owners, NV Energy and Idaho Power, as well as more recent information on alternatives to operating the plant, point to an early retirement benefitting both the co-owners and their ratepayers, said the report.

In 2012, NV Energy proposed retiring Valmy unit 1 in 2021. However, the request was rejected by the Nevada Public Utilities Commission, which instead approved a 2025 retirement date for both Valmy units. The commission cited “system reliability” concerns, as well as loss of fuel diversity and inability to hedge against high gas prices as reasons for forcing the company to keep Unit 1 online past its economic life, said the report. However, since the commission’s decision, the report said the following has happened:

  • Significant transmission investments now obviate the reliability argument for keeping Valmy on-line. The on-going Southwest Intertie Project (SWIP) including the One Nevada line (ON line) is connecting the northern and southern grids in the state and complementing renewable energy development in Nevada.
  • The decline in natural gas prices and renewable energy costs have left Valmy unable to compete. Recent operating data show the plant operating at less than one-third of its capacity in 2015.
  • The longer the plant operates, the greater the risk that it will need to invest in major emission controls. NV Energy sought earlier retirement of Valmy Unit 1 in part because of the costs of compliance with environmental regulations.

The other owner of the Valmy plant, Idaho Power, found in its 2015 Integrated Resource Plan (IRP) that retiring Valmy Unit 1 in 2019 instead of 2025 would save Idaho ratepayers $74 million, the Synapse report added.

Said the Feb. 18 annual Form 10-K report of Idaho Power parent IDACORP about that IRP: “The 2015 IRP identified a preferred resource portfolio, which includes the completion of the Boardman-to-Hemingway 500-kV transmission line and the potential early retirement of the North Valmy power plant, both in 2025, with no other new resource needs prior to 2025. However, as noted in the 2015 IRP, there is considerable uncertainty surrounding the resource sufficiency estimates and project completion dates, including uncertainty around the timing and extent of third party development of renewable resources, implementation of the EPA’s rules under Section 111(d) of the Clean Air Act, the actual completion date of the Boardman-to-Hemingway transmission project, and the economics and logistics of plant retirements. These and other uncertainties could result in changes to the desirability of the preferred portfolio and adjustments to the timing and nature of anticipated and actual actions.”

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.