Every two years, PacifiCorp (doing business as Rocky Mountain Power) is required to file an Integrated Resource Plan (IRP) outlining its strategy to supply and manage electricity for the next 20 years across six states that include Utah. The IRP is defined as a process to consider all known resources on a consistent and comparable basis “in order to meet current and future customer electric needs at the lowest cost to the utility and its customers.”
This year, PacifiCorp failed to meet that criterion.
Utah’s Division of Public Utilities reviewed the IRP and found that PacifiCorp has failed to conduct a proper analysis of generating capacity and energy demand. The mandated economic analysis failed to include a cost/benefit comparison of wind and solar projects with existing coal plants. Pacificorp also assumed unrealistically high costs for solar power and battery storage. In future, PacifiCorp needs to update its modeling assumptions for solar and wind power and battery storage.
The IRP also hides important information from regulators and consumers. The Sierra Club, assisted by Synapse Energy Economics, reviewed the IRP and found its coal unit valuations grossly lack transparency when compared to plans from other coal-dependent states such as Idaho and New Mexico. As a result, it is difficult to accurately evaluate ongoing costs of the value, risks and tradeoffs of existing coal plants as compared to possible clean energy substitutes.
In the 2011 IRP, PacifiCorp acknowledged that low natural gas prices could make coal power uneconomic. That forecast has come true. Today, natural gas prices are even lower than envisioned, resulting in the closure of many coal-powered plants throughout the U.S.
The Sierra Club analysis found that more that 40 percent of PacifiCorp’s existing coal-fired generators are non-economic today — even without considering the needs for upgrades to meet modern clean air standards. PacifiCorp has tried to use the issue of environmental compliance as a red herring, contending that these coal plants are competitive and therefore do not require cost/benefit evaluation unless compliance is enforced.
However, nine PacifiCorp coal-powered plants in Arizona, Colorado and Wyoming are currently non-economic regardless of potential environmental mandates. Another two plants in Wyoming will become non-competitive if utility executives don’t skirt Clean Air Act requirements. And another Wyoming plant, the Dave Johnston, is currently marginal and is scheduled for closure in 2028.
PacifiCorp made the decision to keep these plants running based on factors other than their cost effectiveness. The Sierra Club analysis projects comprehensive short-term costs of $86 million across 12 coal-fired plants and long-term costs of $430 million across nine plants over the next 20 years.
PacifiCorp is requesting approval of a wind-powered project in Wyoming, apparently with the primary purpose of securing federal tax credits for its shareholders, even though these credits will not benefit ratepayers. In addition, PacifiCorp is proposing a new transmission line from Wyoming to southern Idaho in order to accommodate access to new wind energy. This line would cost over $23 million, but would not be needed once the Dave Johnston Plant is decommissioned.
So, the power line would be underwritten by ratepayers in order to transmit power for about seven years. Sierra Club analysis found that PacifiCorp would actually save money to retire the Dave Johnston Plant early instead of throwing away millions to build a powerline that would be nearly obsolete before it is finished. Ratepayers should have no financial obligation in this project.
Michael Budig
Michael Budig is a volunteer for the Utah Chapter of the Sierra Club.