Officials urge utility to back off Ely plant

State officials are recommending that Nevada Power Co. back off development of a giant coal-fired power plant at Ely and consider building a smaller coal-fired power plant in Northern Nevada.

Analysts with an environmental group, the staff of the Public Utilities Commission and the attorney general's Bureau of Consumer Protection on Tuesday filed written testimony on planned amendments to Nevada Power's integrated resource plan.

The written testimony follows delays in regulatory review of the 1,500-megawatt Ely Energy Center, projections that the cost of the project had increased to $5 billion from $3.8 billion two years ago and talk of federal carbon dioxide regulations that may make coal-fired plants more expensive.

Jon Davis, an electrical engineer with the commission staff, suggested that the Las Vegas utility and its affiliate, Sierra Pacific Power Co. of Reno, build another unit at the Valmy Power Station, located in Northern Nevada between Battle Mountain and Winnemucca. Davis left open the possibility of building the Ely center later.

Davis also advocates a smaller plant because it is difficult to predict power demand growth during economic downturns.

Charles Benjamin, president of Nevadans for Clean Affordable Reliable Energy, rejected the idea of building a smaller coal-fired plant.

"It still doesn't belie the fact that the cost of building a coal plant has gone up 40 percent (in the last few years)," Benjamin said.

Coal plants also may be more costly because of expected federal regulation on carbon dioxide emissions, which are believed to contribute to global warming.

"All this uncertainty weighs against coal plants regardless of how big they are," Benjamin said.

To deliver Valmy power to Las Vegas, Davis recommended the company build a transmission line linking Nevada Power and Sierra Pacific Power for the first time.

Under Davis' proposal, Nevada Power and Sierra Pacific would be authorized to spend $13 million reviewing the prospect of other coal-fired power plant projects, including a possible 500- to 700-megawatt plant at the existing Valmy generation site.

Davis argued that coal prices are not as volatile as those for natural gas. The engineer said that solar and wind power are not steady enough to replace coal- or natural gas-fired plants. Yet, Davis said that geothermal power, which is abundant in Northern Nevada, could be available before the Ely plant is built in 2016.

The Bureau of Consumer Protection recommended that the commission cap Nevada Power's spending on the Ely coal plant at $106 million temporarily, rather than the $155 million the utility is asking to spend.

Bureau chief Eric Witkoski said the commission should require Nevada Power to prepare a new resource plan and submit it next year, rather than attempt to deal with issues in an amendment now.

"The costs have increased dramatically (for the Ely project), and it could increase even more substantially if carbon becomes an issue," Witkoski said.

"There may be other (energy) alternatives out there that are more viable," given changes since the Ely project was approved a couple of years ago, he said.

Benjamin agreed.

The utilities commission, Benjamin said, should require the staff to prepare realistic estimates of the cost of various types of conventional and renewable energy, including the potential cost of federal regulations on carbon dioxide.

Nevada Power spokesman Adam Grant declined immediate comment, saying the company would address the issues in written testimony later.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.