Allocation of Coal to Utah Under Negotiations in the MSP

Allocation of Coal to Utah Under Negotiations in the MSP
21 August 2018

Rocky Mountain Power is a subsidiary of PacifiCorp, a utility providing electricity to six states: Utah, Idaho, Wyoming, Washington, Oregon, and California.  As part of this regional power system, PacifiCorp is subject to regulation by each of the six states individually. To deal with the challenges that come with differing regulation from six states, the Multi-State Protocol (MSP) was initiated.

Most recently, Utah Clean Energy and other clean energy advocate stakeholders in the MSP process are working to ensure that Utah doesn’t get saddled with additional coal resources that other states within our regional system no longer want. 

The Latest

The MSP has focused on numerous issues since its formal inception in Utah in 2002. Today, however, the process is focused on PacifiCorp’s coal plants.  Specifically, which state or states will take a larger ownership share of PacifiCorp’s coal plants now that Oregon law prohibits PacifiCorp from charging Oregon ratepayers for its coal plants after 2030. 

How Coal is Allocated Amongst Different States

To better understand the issues with Oregon’s new law, a brief explanation of how PacifiCorp’s customers pay for its coal plants may be helpful.  PacifiCorp utilizes 22 coal units to help meet its customers’ electricity needs.  A percentage of each of these units is allocated to each of the six states in PacifiCorp’s system.  Each state is responsible for costs associated with each unit proportional to the amount of electricity that each state uses.  For example, Utah makes up about 42% of PacifiCorp’s electricity demand hence we currently get about 42 % of the electricity from the 22 coal plants and are responsible for about 42% of the costs associated of the coal units. 

How Oregon Law Impacts Utahquote 1

Oregon passed a law in 2016 that prohibits Oregon ratepayers from purchasing energy from PacifiCorp’s coal fleet after 2030.  Since this law passed, the MSP process and PacifiCorp’s proposal is focused on negotiating a solution that reallocates Oregon’s share in PacifiCorp’s coal units and associated costs to the other states in the system. 

                                                  

PacifiCorp presented a solution called the Coal Life Evaluation, Allocation and Realignment (CLEAR) plan.  The CLEAR plan proposes reallocating a portion of Oregon’s percentage in coal units to Utah, but does not reduce the overall amount of coal in its system.  Oregon would get out of coal, but there would be no net decrease in carbon emissions from PacifiCorp’s system. This shift would increase not only Utah’s allocation of the coal-fired electricity, but also the pollution, costs, and risks associated with these coal plants at a time when increased energy efficiency and renewable energy would be a much better bet.

Finding a Better Solution

quote2v2The current MSP process is an opportunity to expedite the de-carbonization of PacifiCorp’s system.  Utah Clean Energy wants PacifiCorp to comply with Oregon’s law, but in a way that actually reduces the amount of coal in the system, and to prevent Utah from accepting the additional risk associated with PacifiCorp’s coal fleet.  The challenge is getting all six states, their respective regulators and stakeholders, and PacifiCorp to agree on how to retire coal units early. 

The next MSP stakeholder meeting is on August 22 and 23 in Denver.  Utah Clean Energy and other parties will continue discussing the options for reallocating PacifiCorp’s coal fleet.