The Changing Path of a Three-Year Conversation

Back in 2007, you would have heard the following (paraphrased) conversation in the CUB office:

“PGE is going to ask to spend $500 million to improve air quality at the Boardman coal plant.”

“Yeah, it’s not a good idea to spend a bunch of money on a coal plant but we’re having enough trouble trying to stop new coal plants (note: something PacifiCorp was proposing at the time). I’m not sure we can make a case that would lead to an early closure of a modern baseload coal plant.”

“You’re probably right. But let’s keep thinking about it. Maybe we’ll get a chance to talk about investing that half a billion dollars in better ways to move away from coal.”

In the three years since that (semi-fictitious) conversation happened, to combine the words of both the Grateful Dead and the Beatles, “what a long, strange trip it’s been” on a “long and winding road.” Months and months and months of meetings, hearings, negotiations and workshops dealing with a utility once committed to decades of coal, two state regulatory agencies and a federal regulatory agency led to an outcome yesterday that three years ago seemed near impossible: the Boardman coal plant, Oregon’s largest emitter of greenhouse gases, will close at least 20 years early…and that is now in rule as state policy and practice. This means that customers are no longer being asked to invest hundreds of millions of dollars in order to allow the plant to keep running.

A little more than two weeks ago, the Oregon Public Utility Commission (PUC) acknowledged Portland General Electric’s (PGE) Integrated Resource Plan (IRP), which included a proposed plan to close Boardman by 2020. But to ensure that that early closure date actually changed investment and operation decisions, we needed that closure date in rule.  That was the job of the Environmental Quality Commission (EQC), which oversees the Oregon Department of Environmental Quality (DEQ). And yesterday, the EQC voted unanimously to adopt a rule that puts the closure date at 2020 (at the latest).

So how did we get here and where do we go next?

The main challenge was to formulate an economic argument that could be accepted by the PUC but that could also pass environmental muster at DEQ and the federal Environmental Protection Agency (EPA). As part of PGE’s IRP process, CUB, along with the Renewable Northwest Project (RNP) and the Northwest Energy Coalition (NWEC), asked PGE in 2009 to analyze a planning model that included shutting down Boardman completely in 2020. We were surprised but pleased when PGE agreed to do that analysis.

We were even more surprised when PGE came back and stated that a 2020 closure appeared to be the least-cost, least risk option for customers. That became their public position in January 2010. Of course, PGE still wanted a “backstop” of operating the plant until 2040 - the expected life of the plant - if things didn’t go as expected.  But that backstop was not something that CUB and its allies were willing to accept.

Other organizations wanted an earlier closure date than 2020, arguing that PGE shouldn’t be able to continue to operate without making the needed clean air investments.  While CUB agreed that some clean air investment needed to be made, investing hundreds of millions of dollars would force the plant to operate beyond 2020 in order to allow time to recover those investments from customers. In addition, those investments would do nothing to reduce greenhouse gas emissions which affect climate change. Finally, we need to have time to plan for the replacement power and bring it online in a way that balances both the ratepayer interests and the environment.

As we’ve written before, CUB’s goals in this process were three-fold: 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 agreement that was acknowledged by the PUC and approved by the EQC accomplishes all of those goals. We will avoid the massive investment in a coal plant. We will make a reasonable level of investment to ensure that air pollutants are significantly reduced over the next decade. PGE has committed to a process in the next IRP to determine how we can replace Boardman with a cleaner energy mix than just replacing Boardman with a gas plant. And we needed to do so in a way that the PUC could find to be the “least cost option,” and DEQ could find make reasonable progress towards reducing air emissions that contribute to haze.

And, best of all, 2020 is now the latest the plant can operate,not2040.

What does that really mean? It means that any investment decision is now made with a 2020 closure date in mind. What if the federal government issues rules that requires investments to comply with more stringent clean air requirements? We would have to examine whether that investment made sense in the context of the fact that the plant is now closing by 2020. What if something breaks down at the plant? We would have to examine whether the investment needed to fix whatever went wrong made sense in light of a 2020 closure date. And if that means closing the plant earlier than 2020? If that’s what makes economic sense, knowing that 2020 is a firm closure date, that’s what we’ll have to do.

What about that goal of providing a path for other utilities to follow in shutting down other coal plants? Boardman began producing power in 1980. It is a relatively young plant and no one in the country has closed a comparable plant. This decision is generating a great deal of attention with other utilities and climate activists. We’ll have to see how that plays out. But if Oregon can do this with Boardman, other states can do it with other coal plants.

There are lots of thanks to go around. In addition to RNP and NWEC, the Oregon Environmental Council worked tirelessly to craft a final agreement that would satisfy the environmental regulators. And Angus Duncan, a very experienced energy and climate policy expert was deeply involved in providing options that kept the discussions going to a successful conclusion. And, of course, CUB members played a key role in helping us keep the process on track. A little grassroots pressure helped to show that Oregonians were closely watching the discussions. You really made a big difference with your phone calls and e-mails. So many thanks and congratulations all around on a job well done. And now we’ll have to work to make Boardman’s early closure a workable reality.

Oh, by the way…those coal plants proposed by PacifiCorp back in 2007? We beat those back.

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