CUB Reflections on the Closing of Boardman

It was more than a decade ago that an agreement was reached to close the Boardman coal plant in 2020. It was the first agreement in the United States to close a modern coal plant. With the plant closing today (Thursday October 15), I want to offer some reflections from that experience.

Just Because It Hasn’t Been Done Before… In 2008, CUB and other stakeholders were successful in getting the Oregon Public Utility Commission (PUC) to reject Pacific Power’s proposal to build additional new coal plants. It was clear that climate change was a large problem that the electric industry had to confront, and that investing billions in building new coal plants was the wrong answer. Pacific Power was not unusual: utilities all over the country were proposing to build new coal plants. No one was planning to close a coal plant.

Around that same time, Portland General Electric (PGE) was trying to identify how it would comply with Regional Haze Rules requiring Boardman to reduce its emissions of nitrogen oxides and sulfur dioxide that contribute to regional haze. Regional Haze Rules require plants to retrofit in a manner that reduces haze causing emissions. The retrofit of Boardman was likely to cost around $500 million. We had stopped billions of dollars of ratepayer money from going to new coal plants - would it be possible to stop hundreds of millions of dollars from going into an existing coal plant?

It seemed like a long shot. No utility had previously agreed to close a modern coal plant. But it was clear that such a massive investment to retrofit a coal plant was something that we would all regret.

If It Doesn’t Make Sense, Ask Questions. Oregon Department of Environmental Quality (DEQ) asked if CUB wanted to designate a staff member to serve on its Fiscal Advisory Committee that would examine the impact of the Regional Haze Rule. We saw this as an opportunity to understand the regional haze issues that were driving the need for the retrofit.

At the first meeting, DEQ discussed the requirements for regional haze, starting with the four core factors that must be considered. One of these is the life of the facility. But as DEQ explained their process, it was clear that the life of the plant was always assumed to be 20 years and the required retrofit investment was based on what pollution control measures would be cost effective over 20 years. This made little sense. Why would the law require that the life of the plant be considered and then always assume a 20-year life? There had to be a way to consider alternative timelines. I left that meeting believing that while DEQ could not order PGE to shorten the plant’s life, that if PGE could guarantee a shortened life, then DEQ would have to evaluate the pollution control over that shorter time period. A commitment to phasing out the plant could allow PGE to avoid the pollution control investment.

Work With Your Allies. CUB believed that there might be a path forward that could avoid the expensive retrofit by committing to close the plant at a future date, such as 2020. But there was no precedent. This hadn’t been done before. The plan would need to be approved by the PUC as a “least cost” option and by Oregon DEQ as meeting the Regional Haze requirements, as well as the federal EPA. CUB was familiar with the PUC; we had the ability to discuss the idea with PUC officials and build confidence that the PUC could approve such a plan. However, CUB had little experience with DEQ and EPA. And there is little point in pursuing a path forward that environmental regulators will reject.

We turned to our allies in groups like Oregon Environmental Council and National Resource Defense Council. They helped CUB pitch our idea to state and federal environmental regulators by identifying who to talk to, and even set up meetings and accompanied us to them. These meetings were critically important. While the officials we met with could not commit to supporting a plan that had yet to be developed, they agreed that closing the plant was the best pollution control strategy and understood our aim to find a way to close it that was consistent with utility and environmental regulation. 

We came away from these meetings believing that closing the plant in 2020 was possible.

Talk Truth to Power—Respectfully. While we had a plan, it was dependent on PGE. Regional Haze rules were clear that closing a plant was not something that regulators could impose. It had to be voluntary on the part of the utility, meaning that PGE would have to officially propose this plan. CUB spent a lot of time talking to PGE about the realities of Boardman. A coalition of other organizations joined us.

Once a year, CUB meets with PGE’s Board of Directors. In 2009, this meeting was all about Boardman. I encouraged the Board to think about what would happen if PGE was successful in its plan to invest $500 million in the retrofit. It would need to run the plant until 2040 to recover that investment from customers. But during this time the realities of climate change would begin to be felt. The political need to respond to climate change would grow and there would be a tipping point when political leaders would reach the consensus that coal plants need to be shut down. That might happen in 2015 or 2020, or even 2025, but it would assuredly happen before 2040. And where would that leave PGE? It would still have millions of dollars of investment that had not been recovered. Realistically CUB would challenge recovery of the remaining investment because the utility was aware of climate change when it made the investment. PGE would argue that it deserved recovery of the dollars. Whoever lost the issue at the PUC would likely appeal to Oregon courts. PGE spent decades in litigation with CUB and other groups over its Trojan investment when that plant closed, and the same thing was likely to happen again. In short, there was a great deal of shareholder risk in this investment.

We needed PGE to agree. We tried to impress on them the real benefits to closing Boardman and the real risks of trying to keep it running. The first step was getting PGE to model the economics of shutting the plant in 2020 without a retrofit. They agreed to do so and subsequent modeling showed that the benefits could be worth as much as $200 million.

PGE Deserves a Lot of the Credit. Ultimately, PGE agreed and adopted the 2020 closure as its preferred plan. This was not an easy landing place for the utility. In our discussions, it was clear that Boardman was an important resource. It was the company’s largest power plant - a baseload plant that ran 24 hours a day, 7 days a week. At the time, most utilities saw electric generation as a combination of baseload supply and peaking supply. The idea that baseload generation could be eliminated was a giant leap of faith.

In addition, PGE would be the first utility to agree to shut down a coal plant. Pressure was beginning to build on other plant owners. Closing a coal plant would only increase the pressure on other utilities. This was not a decision that was likely to win PGE friends among its peers.

But it was the right thing to do. For customers, for shareholders, for the environment, and for the US. Someone had to go first. Someone had to begin this country’s retreat from coal.

Why not us?

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