Will rely on natural gas, renewables
Faced with the loss of existing customers, a weak market for coal-fueled electricity in the western United States, and environmental regulatory issues that rendered continued operation uneconomical, owners of the
Intermountain Power Project (“IPP”) announced Tuesday that they will cease electricity generation using coal in 2025.
“We are saddened to announce this decision, but factors beyond our control make continued operation of thecoal units unfeasible after their current power purchase agreements expire,” said Ted Olson, Board of Directors Chairman for Intermountain Power Agency (“IPA.”) “We are mindful of the substantial economic contribution IPP makes to rural Utah and we will vigorously continue efforts we began years ago to diversify and provide project benefits for its employees and surrounding communities for as long as feasible.”
IPP participants are already moving forward with plans to develop new natural gas-fueled electricity generation at the project site. Thirty-two municipal power systems and rural electric cooperatives have subscribed to participate in the gas project and engineering has begun.
The project envisions about 1,200 megawatts of new natural gas-fueled electricity generation at the site, to become operational in 2025.
The Intermountain Power Project began commercial operations in 1986. The Project includes a two-unit, 1,800- megawatt coal-fueled generating station located near Delta, Utah, two transmission systems, a microwave communication system and a railcar service center, all built as a joint undertaking by 36 utilities in Utah and California. The Project generates enough electricity to supply the needs of more than 1.5 million homes.
Changes in electricity markets and environmental regulation in recent years have combined to make future operation of the coal units untenable. Specifically:
• Loss of Existing Customers. Since the Intermountain Power Project’s inception, nearly all of the electricity generated has been consumed by six municipal power systems located in southern California. Under California state law, these municipalities are prohibited from purchasing coal-fueled electricity after their existing power purchase agreements expire.
• Weak Market for Coal-fueled Electricity. Persistently low natural gas prices and declining costs for renewable energy have combined to make coal-fueled electricity less competitive across western United States power markets. Utilities in the region are closing other coal-fueled generating stations and shifting resource portfolios away from coal, blocking IPA’s efforts to secure replacement customers for IPP’s coal-fueled electricity.
• Environmental Regulatory Issues. For IPP’s coal units to continue operating beyond 2025, power purchasers would incur significant additional expenses for compliance with new coal combustion residuals regulations and likely additional air emissions controls.
“We are proud of the Intermountain Generating Station’s performance over more than 30 years of continuous operation,” said Olson. “Our focus now will be planning for our dedicated and skilled workforce, as well as the communities they call home. We will use the next eight years to plan a transition that potentially provides new opportunities while recognizing the substantial contributions that these people and the project have made over the last three decades.”
Over the life of the Project, Intermountain Power Agency has contributed more than $620 million in direct tax payments to the State of Utah and local communities. The generating station employs 440 people with an annual payroll exceeding $46 million. Development of the new natural gas-fueled generation at the IPP site is expected to continue some of those same contributions for several more decades.
In addition to the new natural gas project under development, other energy projects have been attracted to the area by IPP’s substantial infrastructure. For instance, 306 megawatts of generating capacity from 165 wind turbines located in Millard and Beaver counties connect to the grid at the Intermountain Power Project’s switchyard. Salt dome caverns have been constructed immediately adjacent to IPP and are currently in operation for storage of natural gas liquids. (Future cavern development can provide storage capacity for other materials, such as natural gas or other fuel products, or for compressed air energy storage.) Solar energy project developers are also pursuing potential projects near the IPP site.