When an Announcement on Coal is a Good Thing

Yesterday, Portland General Electric (PGE) sent out a news release about a letter they sent to the Oregon Public Utility Commission (PUC) about the coal-fired Boardman power plant. In essence, PGE said they want to work with stakeholders to change their proposed Integrated Resource Plan (IRP) and close Boardman in 2020 rather than upgrade Boardman and operate it until 2040 or longer.

A number of folks in the Northwest have been working to stop PGE from investing $500 million in new pollution controls and operating the plant indefinitely into the future.  Investing that kind of money in a pulverized coal plant makes little sense for the planet. CUB believes that by avoiding this huge investment, shutting the plant down will have a significant financial benefit to customers. However, until yesterday, PGE was holding firm on their position that they be allowed to operate Boardman at least until its expected life span through 2040. The announcement yesterday signals a turning point in the discussion about Boardman.

Because Boardman is the largest single source of greenhouse gas emissions in the State, early action to close it just by itself will significantly reduce Oregon’s carbon pollution.

But reducing carbon pollution isn’t just an Oregon issue. On a national level this is a very big deal. One environmental consultant predicted that this would send shock waves through the utility industry over the next few days. This may be the first baseload coal plant that is being shut down. Some utilities have proposed shutting down some really old coal plants, but those plants don’t operate all that often anyway. Closing down a coal plant like Boardman, a baseload workhorse of a plant that produces electricity reliably around the clock is new. It could be game-changing.

However, this is just the start of a new discussion. Lots of details need to be worked out. By stating that keeping Boardman operating until 2040 is not the least cost/least risk resource option (which is what a utility is required to look for under PUC rules), PGE fundamentally changed the terms of the conversation. We are no longer trying to convince PGE that spending an additional $500 million on a coal plant is costly and risky. Instead we are talking to them about how and when to close the plant.

Part of those discussions will be to look at the date of closure. What are the costs and risks associated with a 2020 closure versus an even earlier date. For example, 2020 is the first benchmark for the state’s greenhouse gas emissions reduction goals. If the plant is closed before 2020, then the state will make significant progress towards that goal. What is the cost of closure before 2020? How long will it take to get replacement resources on line? What closure plan is acceptable to the Oregon Department of Environmental Quality (DEQ), PGE’s environmental regulators? What closure date is acceptable to the Oregon Public Utility Commission (PUC), PGE’s rate regulators? There is a lot to work out, but the dialogue has radically changed due to PGE’s announcement.

One key dynamic to consider is the one between economic and environmental regulation. On the environmental side of the regulatory coin, the DEQ and its Environmental Quality Commission (EQC) has been pushing for the investment in air quality controls if the plant is to continue operating. But even those investments would not lower carbon emissions and if PGE makes those investments DEQ would allow Boardman to operate indefinitely. On the economic side, the PUC is charged with ensuring that any utility action on any plant is in the economic interest of ratepayers. This means the PUC won’t let PGE shut it down in a manner that is too costly to customers. The goal at this point is to figure out how to coordinate both economic and environmental goals.

The DEQ and EQC have never suggested that the plant be shutdown in 2014. They are asking for pollution control investment by then that they believe is cost effective for a plant that will operate until 2040. DEQ has invited PGE to propose a different plan which is not based on operating the plant until 2040. Changing the closing date will change the DEQ rule. The question is by how much.

As ratepayer advocates we strongly support avoiding the $500 million additional investment. Investing hundreds of millions in coal plants today makes little sense when sometime in the future we will likely see coal plants being shut down due to their carbon pollution.

So, whats the upshot on all of this? At the start of the week, we were trying to convince PGE not to invest an additional $500 million on Boardman and keep it open indefinitely. By today, Friday, we are on a path to close Boardman. Again, this is a big deal. It was only a couple years ago that we were fighting PacifiCorp’s proposal to build three new coal plants. We have largely flattened the growth of carbon emissions in the electricity sector, but they are not declining. We now have the possibility of starting to change that.

CUB agrees with Portland Mayor Sam Adams’ take on the situation: “I am encouraged by Portland General Electric’s announcement yesterday that it would seek to end global warming-inducing coal-fired energy production in Oregon by 2020.” This is a big change and it’s happening because grassroots activists from all over the state are putting pressure on PGE to consider different alternatives. Those activists have been working very hard and they have changed the direction in a very positive manner. We thank them and encourage them to keep at it.

And we publicly thank PGE for listening to its customers and being willing to engage in a different conversation that we believe gives both ratepayers and the environment an opportunity for a much better future than we had even a couple of days ago.

Now we start figuring out how to take advantage of this new discussion and new opportunity.

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