Closing a Coal Plant is Good for the Environment, Right?

Then Why Does DEQ Want to Provide an Option to Keep Boardman Open until 2040?

We’ve written before about the effort to close Boardman, Oregon’s only coal plant. CUB has been actively engaged in the process to find a solution that meets three specific goals: 1) protect ratepayers by keeping the costs of closure and replacement power under control; 2) protect the environment and reduce greenhouse gas emissions by shuttering a coal plant early and developing a clean energy solution for replacement power; and 3) perhaps provide a path for other, more heavily coal-dependent utilities to follow in shutting down their coal plants early.

The process has taken a twist that has CUB very concerned. Frankly, we need your help to get it back on the right track. We explain how you can help at the end of this article. But first, let’s start with some background.

Last year, the Oregon Department of Environmental Quality (DEQ) put a rule in place which required Portland General Electric, Boardman’s owner, to make very expensive clean air investments (more than $500 million worth) in the Boardman coal plant. In order to make that investment pay off, PGE said that they would have to run the plant through its expected life of 2040. With what is known today about global warming, CUB questioned the wisdom of assuming a coal plant could be operated until 2040. There are certainly better ways to spend $500 million of customers’ money than to invest in a coal plant.

CUB and its allies at Renewable NW Project and the NW Energy Coalition asked PGE to study the possible closure of Boardman in 2020 to see if there was solid economic reasoning for doing so while getting the benefits of closing a coal plant 20 years early. PGE finally agreed to do the modeling for possible closure in 2020 and, lo and behold, discovered that there was a very strong argument for shutting down Boardman as a coal plant by 2020.

PGE filed its new 2020 plan with both the Oregon Public Utility Commission (PUC) and DEQ. PGE asked DEQ to replace the current rule which allowed the plant to run indefinitely with one that would require it to close in 2020. CUB thought this was a positive development.

Once a closure date was placed in state rules, the plant would be on a path to shutting down. Oregonians would be guaranteed that Oregon would make progress towards its greenhouse gas reduction targets, and customers could be sure that their dollars were being invested in clean energy solutions rather than dirty coal facilities.

That process, while convoluted, was going along relatively well despite the challenges of trying to get economic regulations (through the PUC) and environmental regulations (through the DEQ) to work together. However, things have hit a major snag at DEQ and, unbelievably, DEQ is willing to leave the option open to keep the plant operating until 2040 and is making it difficult to close the plant early!

WHAT?!? Several weeks ago, DEQ staff rejected PGE’s 2020 plan (which is to make about $50 million in clear air investment and guarantee shutdown by 2020), saying they wanted to provide PGE and the PUC a broader range of options. However, because two of DEQ’s current options are not feasible, PGE is left with running the plant until 2040 or closing it in 2015 and probably replacing it with natural gas.

Here are DEQ’s four options:

• Make the $50 million in clean air investments by 2011 but then close the plant by 2015. This is problematic because PGE raises concerns about reliability if it is forced to close the plant so soon. And the PUC is likely to be wary of those concerns. In addition, if the plant is closed this early it will likely be replaced with a natural gas fired power plant, which means we’ll be living with a fossil fuel plant for the next 30 years rather than a cleaner option that makes more sense as we deal with climate change in the long-term.
• Make about $100 million in clean air investments but then close the plant by 2018. On its face this option seems pretty reasonable, but it is not technically feasible. The pollution control technology that goes along with this has never been done at a plant of Boardman’s size and will likely cause Boardman to violate other pollution permits.
• Make $350 million in clean air investments and close the plant by 2020. This is not cost effective. Spending $350 million for an extra 5 years makes little sense and pushes PGE’s rates even higher.
• Make the full clean air investment ($500 million) and run the plant until 2040. Under the circumstances, this would be PGE’s choice of the 4, but it is a big risk for consumers. Ratepayers would be forced to pay for this option, but due to climate change, it is doubtful that Boardman will be able to operate until 2040, making this a waste of ratepayer money.

In the end, the only two choices that are technically feasible and cost effective are the same options that existed with the last DEQ rule. Make expensive pollution control investments and run the plant until 2040 or close it down in the next 5 years. Rather than accept PGE’s proposal to require by rule that the plant close in 2020, DEQ is proposing a rule that could allow the plant to run until 2040.

So, DEQ staff is apparently willing to run the risk that a coal plant operates in Oregon until 2040 rather than guarantee it would close by 2020? This is what is most frustrating. DEQ’s concern is that PGE’s plan would allow a bit more pollution between 2015 and 2020. But DEQ’s alternative would allow a great deal more pollution between 2020 and 2040. The cleanest pollution control of a coal plant is to close it. And because the pollution control requirements do nothing to reduce greenhouse gas emissions, the only way to deal with climate change concerns is to close the plant early.

DEQ seems to ignore the pollution reduction benefits associated with closing the plant.

CUB believes that there is a better solution. First, we need to focus not just on closing Boardman, but also finding a replacement resource. Those two factors together will create the stream of costs that will be placed into rates, and how we address those factors will determine how much pollution could pour into our environment.

Closing Boardman in 2015 and replacing it with a natural gas generator is one choice - and it is one the PUC would have to seriously consider. Investing $500 million in Boardman and trying to run it to 2040 is another alternative, but is CUB’s last choice.

What is missing is a closure alternative that would allow the plant to run a bit longer, which would allow it to be replaced with cleaner technology than a gas plant. Such an alternative would be both cleaner for the environment and cheaper for customers.

What needs to happen now? At the very least, we need to remove 2040 as a viable option. Then we need to have the DEQ present some realistic options that might actually get approved at the PUC. Right now, they are making it very likely that Boardman will stay open much longer than 2020 at a higher cost to ratepayers.

So here’s what you can do. Please take a moment to send an e-mail to the DEQ staff with two messages:

1. Take 2040 off the table as a possible option for operating the Boardman coal plant.
2. Work with all stakeholders - PGE, ratepayers, environmentalists, other regulators - to find a workable solution which sets a realistic deadline for Boardman’s closure while replacing it with clean energy.

You can send your e-mail to .(JavaScript must be enabled to view this email address).

CUB is confident that we can find a way to close Boardman early, invest ratepayer money wisely and have a cleaner replacement power solution that we can live with for the next 30-40 years. Taking just a few minutes to e-mail DEQ will make a big difference in making that happen.

Thanks for your help. Feel free to .(JavaScript must be enabled to view this email address) with questions.

PS. It’s very important that we remove 2040 as a viable option. We cannot let the opportunity to responsibly close a coal plant 20 years early to slip away.

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