PacifiCorp Is Starting to Get the Message On Coal

CUB and other energy industry observers have known for years that PacifiCorp’s fleet of coal-fired power plants is a liability of sorts for the company. PacifiCorp’s most recent long-term Integrated Resource Plan (IRP) indicates that investments of more than $4 billion will be required in the coming years to bring all of these plants into compliance with federal and state clean air regulations. It is likely that further analysis will indicate that at least some of these investments can be avoided by shortening the life of PacifiCorp’s least-efficient coal plants and investing in replacement generation resources that are cleaner and more efficient.

Until recently, PacifiCorp seemed unwilling to budge on these investments, insisting that it should remain with the status quo of its coal plants rather than consider investing in any other resource options. The robust, plant-level analysis of clean air investments that CUB and other customer and environmental organizations have been advocating for was absent in the initial plan submitted by the company earlier this year. However, on Friday August 19, 2011, PacifiCorp made a formal presentation of its IRP to the Oregon Public Utility Commission and included within that presentation an acknowledgement that the unit-by-unit research which CUB and other stakeholders are seeking is necessary. After PacifiCorp, CUB and other stakeholders spoke directly to the Commission. Each of the stakeholders and CUB reiterated the position that a unit-by-unit analysis is necessary in this IRP and that such analysis cannot be kicked down the road.

Much to our relief, the Commissioners then made it known to PacifiCorp’s regulatory staff, in no uncertain terms, that a full investigation of clean air costs will be required for the 2011 PacifiCorp IRP to be officially acknowledged by the Commission later this year (see the Oregonian’s report on the Commission meeting here).

CUB is pleased that PacifiCorp has finally agreed to move forward with the detailed analysis of costs that CUB has been seeking. This is because PacifiCorp’s total proposed investment in the coming years, over $4.2 billion, is significantly larger than the $500 million investment required of PGE—a $500 million investment that was enough to cause PGE’s Boardman coal plant to shut down 20 years ahead of schedule.

This is important for many reasons, but in particular because it is increasingly likely that regulations governing CO2 emissions from coal plants will be passed in the not-too-distant future, adding significantly to each coal plant’s operating costs. Rather than make clean air investments now and face an early shutdown due to carbon regulations in the 2020s or 2030s, it will be in the best interest of PacifiCorp’s ratepayers and shareholders to reach a solution that minimizes the long-run costs of regulatory compliance.

CUB is diligently researching the various potential future options available to PacifiCorp with regard to its generation fleet. Whatever the final choice, CUB will work hard to make sure that the long-term interests of Oregon ratepayers are protected.

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