Truckee Utility Plans Half-Century Coal Import Deal

By Published On: December 1, 2006

The public utility district in Truckee, north of Lake Tahoe, hopes to sign a 50-year contract for coal-fired power from Utah before the end of this year to avoid emissions limits that kick in January 1. “The goal is to beat [SB 1368 by Senate president pro tem Don Perata] because if I don’t, electricity rates will go up 25 percent,” Peter Holzmeister, the Truckee Donner Public Utility District general manager, told Circuit. “The end run about the law will give the city the biggest black eye in California,” warned V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies. Half a dozen public power agencies in Southern California recently moved to finalize multiyear coal deal renewals with the same Utah project but faced a barrage of opposition from environmental groups and politicians. The agencies pulled the plugs on the contract extensions last week, after the key contractor, the Los Angles Department of Water & Power, declined to pursue early renewal. Unlike Truckee, the group of munis have existing contracts with Intermountain Power Project, which do not expire until 2027 (Circuit, Nov. 17, 2006). The Truckee PUD’s five-member board decided this week to vote on the matter at a special meeting scheduled for December 13. During public hearings held November 15 and 29, the district faced significant public opposition to its proposed 15-20 MW contract with Intermountain, owned by the Utah Association of Municipal Power Systems. Truckee wants to replace its more expensive power contract with Constellation Energy – about 90 percent coal-fueled and set to expire in April 2009 – with power from a new unit at Intermountain. The Utah unit is anticipated to come on line in 2012. It is expected to be less polluting than the current units and to cost $35/MW, compared to $65/MW with Constellation. “It is either cheap coal or expensive coal,” Holzmeister said. “I’m in a Catch-22.” White said there are alternative resources for Truckee, including geothermal and wind power in Nevada. Truckee informed its ratepayers that it was mulling over signing a contract to receive coal power from Intermountain. “The price for this power is approximately one-half the price of our alternative sources of electric power,” states a November 17 letter. The Intermountain power would be at the muni association’s cost, compared to a higher market price. “Money matters,” Holzmeister said. He acknowledged that costs will likely be imposed on coal’s greenhouse gas emissions given the growing push to curb global warming. But with a carbon tax, everyone, not a select few, will be affected, he said. Entering the half-century deal will, he added, give Truckee “the possibility of bringing in wind power from Wyoming.” The problem, however, is that that supply would need to be backed by natural gas-fired resources. Up to 10 percent of the district’s supply initially could be wind, and that level could grow in the future. “We want renewable and coal power, to be able to keep the lights on and not have our rates go all wacky,” Holzmeister said. – Elizabeth McCarthy

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