Recent News for the Utah Coal Fired Electricity Market

PacifiCorp has just released its 2017 Integrated Resource Plan (IRP). The IRP “presents the company’s plans to provide reliable and reasonably priced service to its customers. The analysis supporting this plan helps PacifiCorp, its customers, and its regulators understand the effect of both near-term and long term resource decisions on customer bills, the reliability of electric service PacifiCorp customers receive, and changes to emissions from the generation sources used to serve customers.”

The IRP has a 20-year forecast horizon and encompasses their entire service area, including Utah.

From a Castle Country labor market perspective, the IRP is particularly useful for deriving the utilities’ outlook toward the local coal-fired power plants. Not only would closure of the generating stations result in a job loss at the plants, it would also cause losses in the mining sector. The vast majority of Utah coal is used for electricity generation.

Newspaper accounts have emphasized that the majority of power expansion is from renewable energy sources in Wyoming. However, the biggest news in the document is the downward revision in prior forecasts for demand. On average, forecasted system load is down 5.3 percent when compared to the last IRP. Utah demand is anticipated to increase at less than 1 percent annually due to decreased industrial demand and retail consumer efficiencies.

The plan does not anticipate the installation of catalytic reduction equipment in Utah. Avoiding installation of this equipment will save customers hundreds of millions of dollars. It also notes that the EPA requirement to have this equipment installed is currently under appeal in the U.S. Tenth Circuit Court of Appeals. The IRP presents the requirement being upheld as a downside risk to the forecast and economic viability of coal generated power in Utah.

Currently, coal accounts for around 50 percent of PacifiCorp’s generating capacity. While the plan does not contemplate the early retirement of Utah coal-fired capacity, it also does not envision an expansion. Coal is currently at a competitive disadvantage to natural gas. Further, there are renewable fuel mandates in the Pacific coast states. The end-of-life dates for Utah capacity are given in following table.

Plant	County	Assumed End-of-Life Year
Hunter 2	Emery	2042
Hunter 3	Emery	2042
Huntington 1	Emery	2036
Huntington 2	Emery	2036

 Note that PacifiCorp does not own the Intermountain Power Project (IPP) in Millard County. This plant is owned by the Intermountain Power Agency and exports roughly 75 percent of its electricity to Southern California, principally Los Angeles. That contract was set to expire in 2017. However, the Los Angeles Department of Water and Power (LADWP) modified this contract in 2013, to enable the city to stop relying on coal-fired power no later than 2025. The modifications to the contract require permitting and construction of a natural gas plant at the IPP site to begin no later than 2020. However, there has been no recent news on the permitting process. In a 2016 compliance filing with the California Energy Commission, the City of Los Angeles noted that “The ability to meet this date is contingent upon several factors, including permitting, material procurement and final concurrence of all participants. The commercial operation date may be delayed due to circumstances beyond LADWP’s control.”