Utah wants to keep IPP’s coal burning — but who will buy the electricity?

During a special legislative session, the Utah Legislature slowed down, but didn’t abandon, a plan to purchase the Delta-area power plant.

The Utah Legislature pumped the brakes on a plan that could have Utah taxpayers assume ownership of a coal-fired Intermountain Power Plant in the west-central part of the state that is in the process of being shut down.

With very little debate during a special legislative session, lawmakers passed HB3004, which makes a few key changes to the process that legislators set up in this year’s SB161 — which was passed on the second to last day of regular session.

That law required the Intermountain Power Agency, which operates a power plant near Delta, to submit a new application for an air quality permit by July 1 that would allow for operating the coal plant while still keeping IPA’s next generation power plant, IPP Renewed.

SB161 also had language allowing the state to take over IPA and the power plant if it doesn’t comply with the request.

IPA’s leadership and officials from more than 15 local governments objected to that approach and tried to get Gov. Spencer Cox to veto the bill, warning it would put existing agreements with the Environmental Protection Agency in jeopardy and could prompt federal regulators to order the plant to be shut down before next summer. Cox brushed off those concerns and signed the bill.

Like the current IPP, IPP Renewed will send nearly all of its power to southern California, with a small percentage going to two dozen Utah cities when they need it. But unlike the current plant, IPP Renewed runs on natural gas and, in time, “green” hydrogen produced without greenhouse gas emissions. The update was required to keep supplying power to California, which has banned coal power after next year.

The IPP Renewed plan was announced back in 2015, and there was little or no concern voiced by legislators about the loss of the coal plant at the time. But preserving coal power became a central motivation for this year’s Legislature, which also passed legislation intended to extend the life of Rocky Mountain Power’s Emery County coal plants.

The law created an entity called the “Decommissioned Asset Disposition Authority,” with members appointed by the governor and legislative leadership. That group will take on the process of seeing if the state can meet its federal air quality requirements while still keeping even half of the coal plant open. (The plant has two equal-sized units, and most scenarios involve keeping only one of the two operating.)

Wednesday’s special session bill removes the threat of a state takeover of IPA, which could have led to a long and expensive legal fight.

Cameron Cowan, CEO of IPA, told a legislative committee Wednesday that his agency has no objections to the new bill, and they appreciated the changes.

“HB3004 does make some important adjustments and definitely moves things in the right direction,” he said.

The new bill still allows the state to buy the coal plant and/or facilitate a sale to someone who would operate it. Sen. Derrin Owens, R-Fountain Green, who sponsored the original SB161, reiterated his concern keeping the coal plant running is imperative, saying, “It’s a point of national security and state security.”

Rep. Colin Jack, R-St. George, agreed, and noted that the nation has to add dozens of gigawatts of power in the coming year.

“Keeping IPP functioning is important to the mix,” said Jack, who works in the electric power industry for Dixie Power. “There’s no room for error. We’re already on the knife’s edge.”

Owens also acknowledged that regulatory issues around air quality must be addressed, and keeping the coal plant running can’t come at the expense of other industries or power producers.

Rep. Joel Briscoe, D-Salt Lake City, asked if the state would buy the plant before it had identified a customer to buy the power and then try to market the plant to potential buyers.

“That’s way down the road,” Owens replied, and that it was too early to even consider that before the air quality issues have been studied.

Addressing air quality

Notably, the new bill also pushes back the deadline for addressing the air quality issues from the original July 1 to the end of this year. That means the decommissioning authority can wait to see if a more coal-friendly Trump administration will be coming in officer in January.

House Speaker Mike Schultz, R-Hooper, denied that moving the deadline past the 2024 presidential election was part of their calculations.

“We want to make sure we’re making the right decisions. Sitting down with the executive branch and with IPP, everyone felt like that was a rush decision,” Schultz said.

Ultimately, the biggest challenge may be finding someone to use the power. Even in a world where demand for electricity is skyrocketing, coal power continues to fall out of favor because it is getting more expensive and produces more greenhouse gases than alternatives. Last year, coal produced 16.2% of the nation’s electricity, down from 19.7% the previous year and about half of what it produced a decade ago.

There also isn’t adequate transmission capacity connected to IPP to get the power to market. The existing transmission line connects to California, which is swearing off coal power, and adding more lines would take millions of dollars and several years to build out.

And even if all the regulatory and environmental issues could be addressed, it’s still a nearly 40-year-old plant that would be approaching end of life anyway. That also could discourage potential customers. Still, Owens said it would be folly for the state not to attempt to keep the plant running.

“We can’t sustain blackouts and brownouts, especially in areas like St. George and Washington County. With the climate there, it would be devastating. Even a five hour blackout caused 600 deaths in Phoenix, Arizona last year,” Owens said.

Power for tech?

One alternative would be to attract a power-consuming industry near the plant so it doesn’t need long transmission lines. Artificial intelligence has drastically increased demand for data center power, but tech companies have leaned into clean energy. There isn’t much interest in a coal-powered data center.

Legislative leaders say keeping the power plant open is crucial to meeting the growing demand for power, especially from data centers in the age of artificial intelligence.

“The United States has a real problem. We do not have enough power for our data centers,” Senate President Stuart Adams, R-Layton, said. “AI development is technology that we have to embrace, and power is the key to it.”

“There’s one (data center) project in Utah County that’s requesting three times the amount of power that all of Wyoming uses. That’s one project asking Rocky Mountain Power right now for three times the amount of power,” Schultz added. “We do not have enough power to meet the current demands.”

Despite the confidence that data centers and other power-hungry entities will be beating down Utah’s door to drink deep from the IPP power plant, Adams admits there has been nary a sniff from potential customers.

“We feel they’ll be so challenged trying to find power that they’ll do anything temporarily to be able to find the power they need,” Adams said.