The Moving Target That is the Coal Plant Economic Analysis

The Moving Target That is the Coal Plant Economic Analysis
10 June 2019

The potential to retire old, uneconomic coal plants early is a proposition that Utah Clean Energy can get behind in about a nanosecond.  We reported last month that PacifiCorp’s recent coal plant economic analysis showed that customers would derive significant benefits from coal retirements (mainly plants in Wyoming)—in one case by as much as $248 million.  Needless to say, we were excited by the prospects for accelerating the transition to a cleaner resource mix through the retirement of old uneconomic coal plants.

Fast forward only one month, and our utility experts have gone from excited to bewildered and frustrated. 

First a little background. The coal plant economic analysis informs the utilities’ Integrated Resource Planning Process (IRP).  This is essentially the 20-year plan for what energy resources Rocky Mountain Power will use to keep the power on for its customers.  The IRP also dictates whether or not Rocky Mountain Power will build renewable energy resources moving forward.  The coal plant analysis plays an important part of this process because it analyzes whether customers would see an economic benefit from accelerating the retirement of some of its coal units. These units range from 33 years old today to 68 years old.  According to the coal economic study released in April, the answer was clearly YES. Based on these results, which Utah Clean Energy’s experts reviewed, it looked like we could expect retirement of several uneconomic coal units in the final IRP.

A Dramatic Change in Direction

In a follow-up meeting just one month later, PacifiCorp released further analysis that appeared to move away from the April coal study.  The May version of the analysis largely excludes the findings from the April coal study.  For example, the benefits associated with Rocky Mountain Power’s most cost effective retirement scenario from the April coal study dropped from $248 million to $132 million in the May analysis. Why the difference? Nobody seems to know.

When questioned about the change, Rocky Mountain Power said that it does not fully understand why this change occurred, but that it will investigate it before the next stakeholder meeting.  Assuming they do identify the cause of this change, we will likely hear about only six weeks before RMP plans to file the IRP on August 1, which leaves little time, if any, to digest the new information and determine its validity and or shortfalls before the plan that could shape our energy future is filed with the Utah Public service Commission. 

Red Flags Heading into the Final IRP

Utah Clean Energy is concerned that this new analysis is an indication that Rocky Mountain Power is neither heeding nor incorporating the results from its April coal analysis, which showed significant customer benefits associated with retirement of some of their oldest and most uneconomic coal plants. This is frustrating and worrying to see such a dramatic shift in direction at such a late stage in the IRP process.

Another significant concern is how Rocky Mountain Power is looking at energy efficiency in its energy planning.  In their current planning documents, we think that Rocky Mountain Power has dramatically underestimated the amount of energy efficiency resources available. As our population continues to grow, we need to rely more on energy efficiency to meet energy demand, not less. The cheapest cleanest energy is the energy we do not use.                                                                                                                         

From our perspective, the 2019 IRP process has significant issues, and stakeholders may not have enough time to fully understand or comment on them before RMP finalizes its IRP.  As a result, it may be difficult to say with confidence that the 2019 IRP represents the best path forward for Utahns.