What is Utah’s plan for the Intermountain Power Agency’s coal fired units?

Cody Stewart warned members of the Utah Legislature’s Public Utilities, Energy and Technology interim committee this week about the complexities and challenges of Utah or a third party taking ownership and control of the soon-to-be retired coal units at a Delta power plant.
“This is not easy. I mean, this is a complex, nuanced, difficult, challenging situation. There aren’t any easy answers here,” said Stewart, chair of the Decommissioned Asset Disposition Authority. “And so I just wanted to be blunt about that — that this is another one of these issues that will take some time to figure out, and hopefully the information we provide you will help you and assist you to do that.”
Or maybe a word is missing.
The Intermountain Power Agency, which owns the Intermountain Power Plant in Millard County, is shuttering its two coal-fired units next year after a mandate passed by California prohibited the use of coal to meet its energy needs. About 98% of the power generated at the 1,900 megawatt plant goes to California. There is a coalition of some municipalities that also take some of the power.
The plant is switching to natural gas with a 30% blend of hydrogen as part of its IPP Renewed transformation. It is slated to deliver a much smaller amount of power — 840 megawatts — to the Southern Transmission System serving southern California.
Los Angeles Power and Water, the largest purchaser of power from the plant, is the operator.
But the fact that the plant sits in Utah, has rights to Utah water, operates as a political subdivision of the state and has been in several fights with Millard County over the years over tax payments grates on lawmakers.
In the legislative session earlier this year, lawmakers moved to preserve the operation of the coal-fired power units due to a power grid that is increasingly strained. The authority which Stewart chairs was created with an eye to examining the feasibility — including benefits and pitfalls — of continuing the operation of those coal-fired units.
While retaining the units is a huge undertaking amid a regulatory crackdown on carbon emissions, Stewart said there is room for optimism with the incoming Trump administration.
“I do think that the playing field has changed dramatically in terms of maybe there are some enhanced flexibilities that we were not expecting a few months ago that may be available now. So that may change a little bit in terms of what the state could look at going forward — and this is speculation on my part — but based on some potential enhanced flexibilities that the new administration may be willing to grant to the state of Utah.”
Stewart said in this exploratory phase, the IPA board has been helpful in providing information. The state also tapped the resources of a law firm, Jackson Walker, to do an analysis.
“Where we stand is we have a preliminary draft report. This is a no excuses zone,” said Michael Nassi, a partner in the firm.
The state is in the process of revising its pollution plan to be in compliance with the U.S. Environmental Protection Agency’s regional haze rule, and Nassi said the modeling by consultants does not show that continued operation of the coal units puts Utah at risk.
“The big question was can we actually retain these units without upsetting the apple cart,” Nassi said.
“The preliminary analysis shows that the continued operation of the IPP units will not undermine, will not adversely affect the demonstration that Utah is going to stay below what we call the glide path for achieving natural visibility,” Nassi said. “It’s not a huge surprise to me in my 31 years of experience doing this, but I know it’s a surprise to some. The modeling is complex. It takes a lot of verification, but it’s in process. And of course, what this means is that it’s good news for Utah.”
Nassi stressed that the preliminary analysis shows the continued operation of the coal-fired power units can be achieved without violating EPA standards, especially if state permitting does not cross the threshold of a “major source” of pollutants but is regarded as as a minor source of emissions.
But his report acknowledged that the plant’s “significant” deferred maintenance on the units will require investment.
IPA in its correspondence says repairs to the coal units will cost $125 million and there is not a sufficient supply of coal, or even sufficient interest by producers.
The 2015 regulations put in place by the U.S. Environmental Protection Agency are even a greater hurdle than the costs, it said.
The agency says it has not done anything to impede use of the coal-fired units and has even communicated its objection to the EPA over its disapproval of Utah’s plan to combat regional haze.
Still, the agency said it does not have solutions to the “impediments” for the continued operation of the coal plants because those solutions do not exist.
The Wednesday presentation before lawmakers presented a more optimistic scenario, but did stress the need for transmission of energy from the plant with its coal units that are relatively new.
Lawmakers have reasoned that to shutter the coal-fired units completely would be unwise and the state’s options should be kept flexible given the growing strain on the grid.