Rocky Mountain Power is abandoning its plans for early retirement of its coal-fired power plants in Utah, and instead will stick with the original retirement dates of 2036 and 2042, the company announced Monday.
Utah’s largest electricity provider also cancelled its plan to replace the two Emery County coal plants with nuclear power plants. Further, the company significantly reduced its earlier commitment to buy new clean energy sources over the next decade.
Rocky Mountain and its parent company PacifiCorp said the reversal – which comes less than a year after it first announced the early retirement plans – was motivated by developments around the federal government’s Ozone Transport Rule, which is aimed at preventing ozone-causing pollution generated in one state from increasing ozone in neighboring states.
A reprieve on ozone
One development was the U.S. Environmental Protection Agency’s approval of Wyoming’s ozone transfer plan, which allowed the state to keep burning coal. The other development was a federal court’s stay of enforcing the ozone transfer rule in Utah, which could have put limits on how much coal the two Utah plants could burn.
The updated plans “include extensions to the assumed operational life of certain thermal generating resources, as well as adjustments to the company’s energy storage acquisition strategy, customer demand forecasts and general resource pricing updates,” Rocky Mountain said in a press release announcing the update.
The announcement is a stunning but not surprising move after an exceedingly rough year for the company. It puts Utah further behind in any effort to reduce its carbon footprint. Coal is the most climate-damaging fossil fuel, and Utah consumes more coal power than most states.
Rocky Mountain said last May that it was retiring Emery County’s Hunter and Huntington power plants by 2032. But barely a month later, Rocky Mountain’s parent company, PacifiCorp, lost a wildfire liability lawsuit in Oregon that could ultimately cost the company billions of dollars in settlements.
Since then, the company saw its insurance costs rise tenfold, and it has struggled to fund the move to cleaner energy sources. Last fall it suspended its process for buying new energy sources, in part because it has to save cash to pay wildfire claims.
No more nuclear
Monday’s announcement reflects an updated 2023 Integrated Resource Plan the company has filed with the Utah Public Service Commission, or PSC, which sets rates for Rocky Mountain’s Utah customers. Utilities regulated by the PSC must file the 20-year plans every two years.
That earlier plan included what would have been the first nuclear power in Utah. PacifiCorp has partnered with TerraPower, a nuclear company funded by Microsoft founder Bill Gates, on a 500-megawatt “Natrium” nuclear plant in Kemmerer, Wyo., which is expected to break ground soon.
PacifiCorp planned on putting two more Natrium plants – identical to the Kemmerer plant – at the sites of Hunter and Huntington, but that is now off the table.
“Although additional advanced nuclear resources beyond the Natrium Demonstration Project are not included in this 2023 IRP update, PacifiCorp will continue to evaluate all utility-scale, non-carbon-emitting dispatchable resources, including advanced nuclear,” said Rocky Mountain spokesperson Dave Eskelsen.
The update also made permanent its suspended request for proposals for new energy projects.
“There is a material benefit to scaling down and delaying resource acquisition until after 2030,” the update’s executive summary states, adding that it still plans “limited procurement of battery resources” outside an RFP process.
Fewer renewables, more carbon
The original 2023 plan included an aggressive decarbonization timetable in response to mandates from the West Coast states PacifiCorp serves. Oregon, Washington and California all have passed laws with sunset dates for no longer using fossil fuels to generate electricity. Coal is the most climate-damaging fossil fuel.
That original plan included adding more than 17 gigawatts of solar and wind power and more than eight gigawatts of battery storage over the next two decades. (By comparison, the capacity of the two coal plants is about 2.5 gigawatts. One gigawatt is enough to power roughly 750,000 homes.)
But the updated plan reduces by more than 13 gigawatts the amount of renewable energy the company had planned to add by 2034. That includes cutting more than four gigawatts of solar power and another four gigawatts of battery storage, which is needed to store solar power for use when the sun goes down.
“This is a disappointing step backward. What was going to be Utah’s opportunity to lead in the new energy era is being squandered in the updated plan,” said Logan Mitchell, Climate Scientist and Energy Analyst for Utah Clean Energy. “The 2023 IRP Update pumps the brakes on clean energy development, putting massive economic opportunity at risk if PacifiCorp doesn’t change course and get back on track.”
“Rather than lean heavily into low cost, clean renewables and energy storage, the company is instead doubling down on fossil fuels, increasing risk to customers due to the skyrocketing cost of coal,” added Sierra Club staff attorney Rose Monahan. “Hunter and Huntington are some of the last coal plants in the country without modern pollution control, harming our iconic public lands and public health. PacifiCorp’s 2023 IRP Update is a significant regression for customers and the climate, unnecessarily extending reliance on expensive and dirty energy sources.”
“PacifiCorp’s 2023 IRP included a visionary buildout of low-cost, non-emitting resources and an ambitious carbon reduction trajectory,” said Karl Boothman, clean energy senior policy analyst at Western Resource Advocates. “Now the company has walked back its commitment to clean energy, despite knowing for years that climate science calls for rapid emissions reductions.”
The Utah Legislature’s role
In their general session earlier this year, Utah legislators went the opposite way from their West Coast counterparts, passing a bill this year that makes Rocky Mountain’s coal plants the state’s preferred power source.
That bill doesn’t go into effect until May, but it still likely figured into the utility’s decision to keep the coal plants going.
SB224 essentially upended the paradigm that made the utility prove to the PSC it was choosing the least cost/least risk options for providing power. Instead, the PSC must now assume the coal plants are the best option, and it’s up to others to prove they aren’t.
Advocates for both residential and business customers say it likely will raise rates for Utah customers because it transfers the risk of continuing to operate the plants from PacifiCorp’s stockholders to Utah’s ratepayers.
But the legislators pushing SB224 believe the other states are underestimating their power demands and will one day be forced to reverse their clean energy agendas and pay a premium for Utah’s coal power, to the benefit of Utahns. At this point there is no sign of such a reversal.
As part of SB224, the Legislature also set up a self-insurance fund for Rocky Mountain. Under the bill, every Utah customer will pay a surcharge on their bill that will go to a Rocky Mountain fund that can be used to pay wildfire claims in the state. That lowers the company’s exposure.
The past year has been so unnerving for PacifiCorp that even its owner is wondering about the future.
PacifiCorp is 92% owned by Berkshire Hathaway Energy, which is owned by Berkshire Hathaway, the legendary investment firm run by Warren Buffett. Earlier this year, Buffett in his annual letter to stockholders said uncertainty around climate, utility regulation and wildfire liability may be too much risk for investors, and publicly-owned utilities may be a better model.
“When the dust settles, America’s power needs and the consequent capital expenditure will be staggering,” wrote Buffett. “I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so.”
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