Regulators and developers are stopping development of coal-fired power plants around the country as plans for three separate billion-dollar projects are being pursued in Nevada.
The National Resource Defense Council counts 26 projects "scrapped" since March 2006.
Charles Benjamin, director of the Nevada office of Western Resource Advocates, argued that other utilities around the country are dropping coal plants because of uncertainty over how much it will cost to comply with expected federal regulations on carbon emissions, which scientists say leads to global warming. Coal plants throw off twice the carbon dioxide coming from gas-fired plants for each unit of electricity.
In addition, Benjamin said utilities see costs of coal plant construction escalating.
Yet, Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno continue pursuing development of the $3.8 billion, 1,500-megawatt Ely Energy Center and a related transmission line.
Roberto Denis, senior vice president of Sierra Pacific Resources, said he is less concerned about the unknown future cost of carbon dioxide emissions from a coal-fired power plant than the risk of remaining dependent on natural gas.
"In my opinion, (the risk of costly carbon dioxide regulations) is no greater in significance than the volatility in natural gas prices can have on our consumers," Denis said.
A large portion of the Nevada Power rate increases in the last few years stemmed from spikes in natural gas prices.
Nevada utilities face a unique situation, Denis said, because the power companies in Nevada depend on natural gas for 75 percent of their power. Building a coal plant would provide some diversity in the fuel mix at Nevada utilities, lowering the size of rate increases that result when gas prices soar, Denis said.
Utilities in other states, such as Utah, already have diversified their fuel mix by building coal plants, Denis said.
State consumer advocate Eric Witkoski said he is worried the cost of power from the Ely plant could skyrocket, causing a similar increase in power rates: "We do need to take a fresh look (at the Ely coal project) to see if the landscape has changed and the risks."
The Public Utilities Commission authorized Nevada Power and Sierra Pacific Power to spend up to $150 million developing the project, plus another $150 million after the utilities obtain an air quality permit from the Nevada Division of Environmental Protection.
However, the utilities must return to the commission next year for approval to spend more than $300 million. In addition, the commission has ordered the utilities to get an independent review of costs.
The $300 million approved budget is relatively small, Witkoski said, when compared with total project costs that could soar to $4 billion or $5 billion.
In addition to the regulated utilities, two independent power producers propose coal-fired power plants in Nevada. LS Power Group is developing the 1,600-megawatt, $2.5 billion White Pine Energy Station also near Ely. Sithe Global Power proposes to build a 750-megawatt, $1.3 billion plant northwest of Mesquite. The independent companies are taking the risk that they will be able to make a profit through wholesale sales of generation from their power plants. As regulated utilities, Sierra and Nevada Power will look to customers to pay for costs of power from the Ely center.
PacifiCorp, which operates as Rocky Mountain Power in Utah, recently underlined concerns about building more coal plants, given the move in Congress to regulate carbon dioxide gas emissions.
"Within the last few months," PacifiCorp told the Utah Public Service Commission, "it has become apparent that Congress will enact some restriction on carbon emissions, but the projected cost impact on new coal generation is within such a wide range as to make meaningful risk assessment futile."
Because of concerns about carbon dioxide regulation, PacifiCorp suspended plans for two additions to the Jim Bridger generating facility near Rock Springs, Wyo. It previously planned a 527-megawatt pulverized-coal plant and a 500-megawatt coal-gasification demonstration project.
The company also set aside plans for a 340-megawatt share of a new 900-megawatt coal unit proposed at the Intermountain Power Project near Delta, Utah.
The company said it continues to consider coal generation a potential option in the next 20 years, but not for the next 10 years.
The company built projects were "benchmark options" for its 2012 request for proposals. The benchmarks projects enable PacifiCorp to evaluate the economics of proposals from other companies. In addition, PacifiCorp could build the benchmark plants if utility development appeared most attractive.
The decision to shelve coal projects for now is "'not a wholesale statement on whether coal power is good, bad or indifferent," PacifiCorp spokesman David Eskelsen said.
PacifiCorp sees wind power and gas-fired plants as better options for Utah now.
In another venue, PacifiCorp last month told the Oregon Public Utilities Commission that 550-megawatt and 600-megawatt coal plants were "no longer viable options," according to NRDC.
Benjamin said costs of coal-fired power plants are escalating, as India and China build coal projects and drive up demand for coal plant components.
"The cost of natural gas facilities clearly is moving up faster than the cost of coal equipment," Denis said. "The cost of coal equipment may be going down because of all the cancellations."
Contact reporter John G. Edwards at firstname.lastname@example.org or (702) 383-0420.