Power play: Legislators move to take control of Utah coal plant before it closes

A draft bill proposes an Intermountain Power Project board with a majority of legislators, which would replace current cities’ oversight and seek a longer life for coal.

(Trent Nelson | The Salt Lake Tribune) International Power Project's coal-fired power plant in Delta on Thursday, Oct. 5, 2023. Utah legislators are considering a bill that would put legislators in control of the power plant.

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Utah legislators got their first look on Wednesday at a bill to put Millard County’s Intermountain Power Project under legislative control. Their intent is to look at a way to keep using Utah coal after the plant moves to a new natural gas and hydrogen plant in two years.

Sen. Scott Sandall, R-Tremonton, presented the Legislature’s Public Utilities, Energy and Technology Interim Committee with a draft bill that would give lawmakers four of the seven seats on a new governing board for the Intermountain Power Authority, replacing a current board made up of representatives of the 23 Utah cities that can draw power from the plant. Two other seats would come from the cities, and the last would be appointed by the governor.

The bill comes after a legislative audit released last month that found IPA – an entity created by the Legislature decades ago – was managing the plant with too much deference to its largest customer. The Los Angeles Department of Water and Power takes more than 95% of the power IPP produces, and it has since the project was built in the 1980s.

Sandall said the bill would bring “a fresh set of eyes” that could explore a variety of options for the coal plant. The current board of city representatives has a “narrow view” of the possibilities, he said. The committee didn’t vote on the bill after Sandall’s briefing.

Expensive options

Those possibilities include adding new pollution-control and carbon-capture technology to the coal units so they can continue to operate, an expensive proposition that also could require building out more transmission lines to get the power to potential customers. And a consultant at Wednesday’s meeting also raised the possibility of converting coal to hydrogen and graphite at the site. Omnis Fuel Technologies has purchased a coal plant in West Virginia with the intent of making such a conversion, which would be the first of its kind.

IPA spokesman John Ward said IPA has no comment on the legislation at this time.

Over the years, two practices have come to bother legislators. One was that the plant has progressively used less Utah coal, in part because its California customers have built up more renewable sources and need less from the plant. The other is that it has employed fewer people and paid fewer taxes in the state than was originally anticipated.

“What the state receives has diminished,” Sandall said.

But Sandall also made the point that nothing in his legislation is designed to inhibit the advancement of IPP Renewed, which is IPA’s next-generation plant currently under construction next to the coal plant at the IPP site north of Delta. The plan for IPP renewed is to burn a mixture of natural gas and “green” hydrogen produced from solar energy. By 2045, the plan is to have it running completely on hydrogen, making it a carbon-free source of electricity.

California passed laws that set deadlines for prohibiting coal-fired power in the state. That put IPA on the course of closing the coal plant and opening the IPP Renewed project.

(Trent Nelson | The Salt Lake Tribune) Construction of a new green-energy system at International Power Project's coal-fired power plant in Delta on Thursday, Oct. 5, 2023.

Protecting IPP Renewed

“The most important thing we think is that we are allowing the IPP Renewed project to move forward,” said Josh Craft, government and corporate relations manager for Utah Clean Energy, a nonprofit that advocates for cleaner energy sources. IPP Renewed is a unique effort that includes storing “seasonal” amounts of hydrogen in underground caves that have been carved out of salt deposits under the power plant.

The new IPP Renewed plant, which is already under construction, will have less than half the power capacity of the coal plant. That again is because California customers don’t need as much power as they used to, but it also means less employment and tax revenue in Utah. And the natural gas for the new plant will come from Wyoming. IPA officials have maintained that without IPP renewed, the plant would simply shut down and be removed because its largest customer no longer wants coal power, and that would leave the state with no employment or tax revenue.

Rep. Joel Briscoe, D-Salt Lake City, said the bill “looks like a decapitation” of the cities who currently manage IPA. He also wondered if the reorganization plan would constitute a “taking” because the coal plant could possibly be separated from the rest of IPA.

Sandall said his bill was only aimed at governance and no transfer of assets is required, although that possibility could be studied by the new board.

Much of Wednesday’s meeting was spent hearing from Mike Nasi, an attorney from Jackson Walker, a Dallas law firm that was hired by the state to look at possibilities for continuing the coal operations. Nasi presented Jackson Walker’s report to legislators.

Power demand in the Western United States is getting tight as older fossil fuel plants are retired to counter climate change, Nasi said, and “any facility that is on the ground is precious.”

But he said the state needs to move fast to alter IPP Renewed’s state air quality permit since it currently is tied to closing the coal plant. He thought that since it’s a state permit legislators have the power to do that.

He also said there could be legal challenges, but he believes it can be done in a way to survive those challenges.

Billion-dollar alternatives

Nasi also outlined the challenges with trying to keep IPP’s coal units running. Both federal regulation and market forces essentially make it impossible to keep running the coal plant as is after 2025. Adding carbon capture and sequestration would reduce the climate effect, but the report noted that estimates for carbon capture and sequestration at a New Mexico coal plant were estimated at $1.4 billion. That project did not move forward.

Extending the life for more than a couple of years also would require an overhaul of coal-ash management, another multi-million-dollar challenge. IPP will soon be out of compliance with federal coal-ash requirements, and closing the coal plant was their solution.

The report also mentioned the possibility of connecting with the Southwest Power Pool, which delivers electricity to the Midwest and is looking for more power resources. But that would require millions of dollars in new transmission lines. Nasi said there are data centers and other power customers that could be willing to locate near IPP to use the power without having to build out transmission. He also said those customers would expect carbon-free power so carbon capture would be required.

Craft said the state’s efforts should be focused on encouraging and developing most sustainable energy sources and building out the transmission infrastructure to meet growing demand. Of saving the coal units, he said, “It’s going to be expensive, and it seems like a very narrow path to move forward in general. "

Coal to graphite?

The option of converting coal to graphite and hydrogen is also a $1 billion proposition, the report said. That technology doesn’t burn the coal. Instead, it uses high heat to produce hydrogen and graphite. The graphite comes from the carbon in the coal, meaning the carbon is not released as carbon dioxide. That avoids having to store the carbon to reduce climate change. What’s more, graphite is a major component in lithium batteries and is in demand. Most of the graphite used in batteries currently comes from China. And the hydrogen produced is used to power the process.

“The company proposing the coal to graphite option has demonstrated commercial viability, albeit at a smaller scale than would be necessary for continued operations at IPP,” the report said.

If Utah were to pursue coal-to-graphite technology to extend the life of its coal resources, it’s not clear whether that would need to happen at IPP. In general, locating such a project closer to the coal resources would be more economical. Since it’s an entirely different technology, much of the old coal power plant would still need to be retired.

Nasi cautioned that more study is needed before any decision is made with regard to coal. He also said commitments from customers to buy the coal power would be needed before investing in the upgrades. “You could not make a decision based on this report.”