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More Clouds for Coal: Oregon PUC Questions PacifiCorp Expenditures on Coal Fleet

March 24, 2014 posted by Eric Christensen

March 17 was not a happy St. Patrick's Day for PacifiCorp's coal fleet. Echoing recent actions by the Washington Utilities & Transportation Commission ("WUTC"), the Oregon Public Utility Commission ("OPUC") expressed serious reservations about the assumptions embedded in PacifiCorp's Integrated Resource Plan ("IRP") concerning anticipated expenditures for pollution control equipment at its fleet of coal-fired generators. While the OPUC did not take any specific action, it made clear that PacifiCorp will be required to engage in a substantially more robust modeling of the costs of pollution control and other upgrades for its coal generators. The stakes for PacifiCorp's coal fleet, which consists of 26 units scattered across five Western states, are substantial. According to current estimates, PacifiCorp will be required to invest more than $4.2 billion for pollution control retrofits before 2023, not including any upgrades that may be required to comply with limits on greenhouse gas emissions. Based on a report from the Commission's staff, as well as comments from interest groups ranging from the Oregon Department of Energy to the Sierra Club, the OPUC raised a number of serious questions about the IRP's economic modeling, baseline assumptions, and timing of proposals for coal-related upgrades embedded in PacifiCorp's 2013 IRP update. Although the OPUC took its staff's proposed order under advisement rather than adopting it, PacifiCorp has indicated it will comply with the proposed order. Hence, the proposed order provides the best guidance currently available on what will happen next. It recommends a number of steps to improve modeling of coal plant upgrades, including, for example, modeling the potential range of carbon costs, and requires a series of workshops to address specific modeling questions. The results of these improvements in modeling will be incorporated into future IRP upgrades, although the OPUC staff singled out PacifiCorp's Cholla Unit 4 for special treatment because construction of upgrades at that plant will need to start before PacifiCorp's next IRP is issued. The OPUC's course is far from settled, but last week's actions signal, at a minimum, that the investments in pollution control equipment required to maintain PacifiCorp's coal fleet will receive intense regulatory scrutiny. The OPUC's action also suggests that the agency may align itself with the larger trend in the West Coast states to move away from coal-fired electricity, including "coal by wires" that is transmitted from mine-mouth plants scattered across the interior West to load centers along the coast. If you have any questions about the OPUC, integrated resource planning, air quality regulation, or other matters related to energy, natural resources, or the environment, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group or Environment & Natural Resources practice group. We're proud that our partner Jim Waldo was recently named 2013 Lawyer of the Year for Energy and Natural Resources Law, and practice group members Don Cohen, Bill Lynn, and Brad Jones were all named among Seattle's Best Lawyers.