Munis Pull Plugs on Utah Coal Deals

By Published On: November 27, 2006

A coalition of Southern California public power agencies are evaluating less polluting energy technologies after their coal-fired power contract renewals with a facility in Utah were left in limbo. The shift in policy occurred when the key California contractor, the Los Angeles Department of Water & Power, decided not to renew its long-term agreement with the Intermountain Power Project. Consequently, the munis’ power supplies are expected to meet the requirements of California’s law setting emissions limits on major baseload power, which goes into effect in January. The public power agencies’ deal, however, does not close the door on imported coal-fired electricity from Intermountain. Under a November 20 agreement, the cities of Burbank, Pasadena, Riverside, Anaheim, and Glendale agreed to explore methods of slashing carbon dioxide emissions, or substituting for the electricity currently imported from Intermountain in Utah. Potential strategies range from replacing the coal with biofuels to capturing and sequestering the Utah plant’s greenhouse gas emissions. “This is a big victory in moving California, and the West, away from conventional coal,” said V. John White, Center for Energy Efficiency and Renewable Technologies executive director. “There are a lot of different options, and we are going to compare them to see how best to proceed,” said Fred Fletcher, Burbank’s assistant general manager. The munis get between 20 percent and 65 percent of their energy supplies from Intermountain. The city of Burbank extended its 67 MW contract with Intermountain October 24. The existing contract did not expire until 2027, and the early renewal would have circumvented SB 1368 by Senate president pro tem Don Perata (D-Oakland). That law limits CO2 emissions on in- and out-of-state power supplies beginning January 1, 2007. The contract extension infuriated plies beginning January 1, 2007. The contract extension infuriated the bill’s author, clean-air advocates, and Senator Dianne Feinstein (Circuit, Nov. 17, 2006). However, the muni now will ask the Burbank City Council to void its approval of the coal deal December 5, according to Fletcher. Pasadena Water & Power and Riverside were also moving to renew their coal deals before the end of this year. “We are recommending that our council defer the issue until we get further information on greenhouse gas reductions,” said Robert Sherick, Pasadena’s director of power supply. It receives 108 MW from the Utah facility. He added that Pasadena is waiting to see what the California Energy Commission will do to implement SB 1368. The new law bars utilities from entering power supply contracts for five years or longer with any facility that emits more greenhouse gases than a comparable gas-fired combined- cycle generating plant. The deal leaves the door open for California utilities to renew baseload power supply contracts with coal plants that don’t meet the new California emissions standard that have a term of less than five years, Sherick acknowledged. Should munis find that they need more time to replace the coal power with less polluting sources because of technological or financial limits, short-term extensions of the power-purchase agreements with the Utah facility are conceivable, he said. Both Anaheim, which receives 300 MW from Intermountain, and Glendale, which receives 40 MW, have put on hold their plans to extend their contracts. The contract with Intermountain required California munis to renew their deals before May 7, 2007, to ensure financing for the construction of another coal-fired unit. The renewals went awry, however, because they were valid only if Los Angeles, which takes the lion’s share of the project, renewed its contract. LADWP decided earlier this month not to renew its coal agreements (Circuit, Nov. 10, 2006). Subsequently, Intermountain’s general manager Reed Searle agreed to extend the renewal deadline for Intermountain’s output by 16 years, to 2023. During a meeting held this week in Burbank between the affected munis and Searle, Fletcher proposed setting aside funds to study greenhouse gas reduction strategies and creating a subcommittee to present less polluting technology strategies to the affected parties next March. His resolution, which aims to develop strategies for cutting Intermountain’s CO2 gases from today’s 2,000 pounds/MWh to about half that level, was unanimously adopted. However, cleaning up the facility “will be a challenge,” Fletcher said. Power supply costs are a major issue. He dismissed the notion of “clean coal,” saying it was a “market approach” and not “meaningful change.” – Elizabeth McCarthy & William J. Kelly Editor’s note: The original version of this article appeared as breaking news on the Circuit Web site Nov. 23.

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