PacifiCorp’s reliance on coal scrutinized

Oregon officials, watchdogs question electric utility

By Joseph Ditzler / The Bulletin


Published Apr 13, 2014 at 12:01AM / Updated Apr 15, 2014 at 11:22AM

The state Public Utility Commission, flanked by consumer and environmental groups, in March criticized PacifiCorp for its continued reliance on coal-fired plants in its long-range plans to supply Oregonians with electric power at the lowest cost.

The scrutiny comes in the wake of renewed federal government efforts to reduce greenhouse gases, a push severely diminished when cap-and-trade legislation died in the U.S. Senate at the end of 2010.

PacifiCorp executives say the company works collaboratively with interest groups to draft its plans. They point out the U.S. Environmental Protection Agency has yet to identify targets for reducing carbon emissions from coal plants, a fact the PUC recognizes.

Coal is still the cheapest source of fuel for generating electricity at power plants, and PacifiCorp generates more than 60 percent of its power by burning coal. In Oregon, PacifiCorp residential rates grew by 60 percent, or nearly 4 cents per kilowatt hour, from 2005 to 2012, according to a survey by Synapse Energy Economics Inc., a consultant firm. Only PacifiCorp rates in Idaho surpassed that rate, at 147 percent, or 6 cents per kilowatt hour, according to Synapse.

Juliet Johnson, the PUC staff member who reviewed the latest PacifiCorp 20-year plan, known as the Integrated Resource Plan, said the utility should be more transparent with its data, and its managers need to think outside the box in terms of reducing its reliance on coal.

“I think we’re looking for more alternatives,” she said in an interview. “Could they negotiate with EPA or state air quality regulators? How about we don’t install SCRs (smokestack emission scrubbers) in 2015 and 2016 and instead we agree to shut down the plant in 2025 or 2024, and so we save the very expensive costs up front and close them down early?”

Commissioner John Savage likewise upbraided the PacifiCorp executives present at a March 17 hearing on the IRP. Spending millions to extend the useful lives of its coal-fired plants without advance notice and expecting its ratepayers to foot a portion of the bill may no longer be considered acceptable, Savage said.

“I want an early warning system if you begin construction on anything,” Savage said. “And also, I would ask that timelines and key decision points be part of your updates.”

None of PacifiCorp‘s coal plants operate in Oregon, but the company, which operates Pacific Power and Rocky Mountain Power, seeks to recover a portion of its costs across the six states it serves.

PacifiCorp operates 11 coal-fired plants and six natural-gas-fired plants, along with 13 wind-power and five hydropower facilities, according to the company website. It also operates several coal mines.

PacifiCorp owns more renewable power plants than any other utility in the West, its executives say. They responded to Johnson’s critique by pointing to the long process of public meetings and workshops that go into producing the IRP.

“We’ve opened the door to a lot broader audience,” said Rick Link, PacifiCorp director of origination. Paul Vogel, PacifiCorp vice president of communications and public affairs, added: “It’s a pretty complex, long-term, two-year process in the IRP. There was a time not too long ago that nobody bothered to notice that we even filed an IRP. That’s obviously changed.”

PacifiCorp every two years updates its 20-year plans for generating power at the least cost to its Oregon ratepayers. The plan, required by the PUC, typically describes new transmission lines and improvements to the company’s fleet of power plants: whether to retire, retrofit or convert to gas, for example. The PUC must approve the plan with an order, which is under review for the 2013 version.

Once, those filings and the subsequent round of public hearings and commission meetings passed with little notice outside a handful of state bureaucrats, corporate executives and interest groups. Then came global warming, carbon footprints and Section 111(d) of the Clean Air Act, a federal mandate to reduce carbon emissions.

In June, President Barack Obama directed the EPA to write within three years new regulations on carbon dioxide emissions from fossil-fuel plants.

PacifiCorp argued to the PUC that Obama’s memo came too late to factor into the company calculations. PacifiCorp told the commission it would factor in the cost of reducing carbon emissions in its 2015 long-range plan.

PacifiCorp, a subsidiary of MidAmerican Energy Holdings Co., itself a subsidiary of Berkshire Hathaway, plans to retire one coal plant in 2015 and convert another to natural gas in the next four years, Vogel said.

PacifiCorp asked the commission to acknowledge work already underway or planned at a handful of coal-fired plants, none in Oregon but which generate electricity for Oregon consumers. By asking the PUC to acknowledge those investments, the utility builds its case for passing the cost on to ratepayers at a later date.

Critics say PacifiCorp doesn’t do enough to address carbon emissions and its aging coal fleet, and doesn’t get the message the commission is sending. Oregon’s other investor-owned utility, Portland General Electric, has agreed to shut down its coal-burning power plant by 2020.

“We’re still at a point where the company’s approach to coal is this piecemeal approach that I don’t think complies with IRP guideline 8,” said Bob Jenks, executive director of the Oregon Citizen’s Utility Board, at the March 17 hearing. Guideline 8 asks utilities to anticipate the cost to comply with coming regulations on carbon dioxide and other emissions.

Jenks said he believed PacifiCorp understood in December 2012, when the PUC disallowed $17 million the company invested in coal plants, that Oregon expected the utility to rethink its approach to burning coal in power plants. Instead, MidAmerican Energy Holdings Co. re-assigned key personnel involved in coal analysis to other tasks and moved on.

Representatives of the Sierra Club, which also weighed in on PacifiCorp’s long-range plan, said the utility counts its investments in coal-fired plants as a kind of guaranteed revenue, a model it’s reluctant to change. The Oregon PUC tolerance for “spend now, ask later” by utilities is coming to an end, they said.

“Do you invest hundreds of millions of dollars in retrofitting old, outdated, often heavily polluting coal plants to meet current and coming regulatory standards for pollution control and public health?” asked Bill Arthur, deputy regional manager for the Sierra Club Beyond Coal campaign. “Or is it time to actually retire those plants and retire them earlier, and pursue an investment strategy that can have alternative energy replacing the old coal plants?”

Vogel, of PacifiCorp, said the Sierra Club takes a stand to fit its agenda.

“The reality is these investments don’t extend the life of these coal plants. … What all this analysis does, if it can be done, is look at the alternatives, and when it doesn’t pencil out, we look at retiring (those plants). When it does pencil out, we look at making the investments,” he said. “That’s the point of the IRP.”

— Reporter: 541-617-7815, jditzler@bendbulletin.com

Editor’s note: This story has been corrected. In the original version, the amount of increase in residential rates from 2005 to 2012 was incorrect.

The Bulletin regrets the error.