Sierra Nevada Resources executive Walt Higgins talks Monday about a line that would link Northern and Southern Nevada. Photo by Clint Karlsen.
Sierra Pacific Resources on Monday announced plans for the first direct transmission link between its Northern and Southern Nevada electric utilities, a line that would carry power from a new coal-fired power plant complex near Ely.
The Ely Energy Center, which will cost $5 billion, would be the biggest energy project in Nevada since the construction of the Hoover Dam.
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"It will also decrease our dependence overall on purchased power and natural gas," said Walt Higgins, chairman and chief executive officer of Sierra Pacific Resources, the parent of Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno.
The company wants to reduce its reliance on natural gas, because the fuel has become increasingly expensive in recent years and has been the primary reason for higher retail power rates. Almost 75 percent of Nevada Power's electricity comes from gas-fired plants it or another company owns.
"We see again the importance of not having our eggs in one basket," Higgins said.
The first of two 750-megawatt, coal-fired power units would start generating power in the Steptoe Valley near Ely by 2011. The 250-mile transmission line would carry the electricity to Southern and Northern Nevada that same year.
Within a few years, the company proposes to complete a second, 750-megawatt plant. The two generation units would use technology that conserves water and so-called "supercritical" technology to burn coal more efficiently at high temperatures.
Plans call for the Ely Energy Center to use what company officials termed "clean coal" technology to minimize environmental effects, and "hybrid cooling" to reduce the amount of water needed to cool the plants.
The electric utility company is also proposing to build two 500-megawatt, coal gasification plants at the Ely area plant once that technology becomes commercially viable, the company said.
Combined, the four plants could produce up to 2,500 megawatts -- enough to light 1.75 million homes.
In addition to carrying power from the proposed coal plant complex, the transmission line will make it feasible to build wind farms in eastern Nevada for delivering wind power to the two power companies, Higgins said. It also could be used for shipping solar power from Southern Nevada to the Reno utility, he said.
"I think this project holds great potential for the development of renewables (solar, wind and geothermal power) in Nevada," said Jon Wellinghoff, an energy attorney with Beckley Singleton who represents renewable power and environment advocacy groups.
Wellinghoff said he hopes the power company keeps its options open for building an integrated coal gasification plant for the entire project, rather than only part of it.
Integrated coal gasification plants convert coal into a gas and can be adapted to capture carbon dioxide, which environmental groups believe leads to global warming.
"(The Nevada utilities) could be a real poster child in the Western United States for (these) projects," he said.
The company proposes to build a line from the power plant site in Steptoe Valley north of Ely to the Falcon-Gonder transmission line in Northern Nevada and south to the Harry Allen substation near Las Vegas.
The 500-kilovolt line would provide greater reliability to Nevada Power and Sierra Pacific Power, because they could draw power from the other utility in the event of a major outage, Higgins said.
The company discussed plans by LS Power Associates of East Brunswick, N.J., and Sithe Global of New York, two independent power developers who are proposing to build coal-fired power plants in Nevada. Both companies wanted to sell power to the utilities under long-term contracts. But Higgins said bond rating agencies view long-term power contracts as liabilities for utilities, while a company-owned plant would be treated as an asset, although it would involve some debt financing.
Executives with LS Power, which proposed a coal-fired power plant near Ely, could not be reached for comment.
Sithe, which proposes a project near Mesquite, believes its project will be more cost effective than a plant near Ely, which requires a new transmission line.
The Mesquite area project remains viable and could sell power to Nevada municipal utilities, as well as large commercial and industrial customers in Southern Nevada, said Thomas Johns, Sithe vice president. He also said that Sithe may be able to sell power to Nevada Power even if the utility builds a plant at Ely.
Wellinghoff, however, said Sierra Pacific Resources' decision to build its own power plants dooms prospects for the two merchant plants.
"It completely eliminates the market for LS and Sithe in Nevada, which they were requiring for the core of their sales," he said.
California, the biggest power market in the West, has adopted preliminary rules that would prevent investor-owned utilities from entering long-term contracts with conventional coal-fired power plants.
Sierra officials said they plan to file an application with state regulators regarding the project in February and will include the project when it updates its integrated resource plan application this summer.
Construction work is expected to start next year and will provide employment for as many as 2,000 workers. The facility would employ 300 workers permanently, said Roberto Denis, senior vice president.
"It's very exciting," said John Chachas, chairman of the White Pine County Commission.
"Until 7:30 this morning, I had no idea this was even on the drawing board," Chachas said. "Anything to do with economic development in White Pine County always makes one grateful."
The White Pine economy has recovered, however, since Quadra Mining Ltd. of Vancouver, British Columbia, reopened the nearby Robinson copper mine, he said. In addition, Southern Nevadans have started buying second homes in the area, Chachas said.
Sierra Pacific Resources plans to use stock and bonds to finance the project. The utility company hopes to regain its investment-grade rating by the end of 2007, said Michael Yackira, chief financial officer. Investment-grade bond ratings would enable the company to borrow money at lower rates.
