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Idaho Power is Pulling Out of Coal, with Plan
to Exit 50-Year-Old Wyoming Plant

by Ian Max Stevenson
Times West Virginia, June 20, 2022

Idaho Power says it will purchase local solar energy at a price that's among the lowest on record
Initially, the company would pay $21.75 per megawatt-hour; less than 2.2 cents per kilowatt-hour.

Graphic: Photovoltaic Solar Resource of the United States. BOISE, Idaho -- As it proceeds toward a clean-energy future, Idaho Power plans to exit a nearly 50-year-old Wyoming coal plant sooner rather than later, in part by converting parts of the coal plant to natural gas.

On June 1, the Idaho Public Utilities Commission approved the next steps in a planned exit from the Jim Bridger Power Plant, near Rock Springs, Wyoming. Idaho Power is a part-owner of the plant, which opened in 1974 and which is assumed to reach the end of its useful life in 2034, according to the company.

But Idaho Power hopes to exit its share early, as a 2021 analysis by the company indicated that leaving coal behind sooner would be more economical.

The company plans to cease coal operations at the plant by the end of 2028, and to convert two of the plant's four boilers to natural gas. Another utility, PacifiCorp, owns two-thirds of the plant and plans to continue burning coal for longer.

Burning natural gas generally produces fewer emissions than burning coal.

Studies show that carbon emissions are rapidly heating the planet, causing hotter heat waves and the loss of sea and glacial ice, and shifting plant and animal ranges. Without major reductions in global emissions, scientists expect to see intensifying extreme weather events, wildfires and floods.

Idaho Power has committed to providing customers with fully clean energy by 2045. Its exit from the Bridger plant would mark an end to the company's engagement with producing coal.

Over 32% of its energy production is based in hydroelectric dams along the Snake River and its tributaries, which the company's vice president of power supply, Ryan Adelman, told the Statesman puts the company in a good position to meet its clean-energy goal.

He added that federal clean-energy goals are helping to drive down the costs of wind and solar energy production.

Close to 12% of Idaho Power's energy comes from wind and over 4% from solar, according to its website. Over 15% comes from natural gas, and close to 17% from coal.

This month, the Public Utilities Commission approved a 1.5% increase in customer rates to allow Idaho Power to recoup its investment and to acquire a return on its spending through 2030. The commission also approved the creation of a balancing account, which Idaho Power can use to track the costs and benefits of exiting the plant, in case the project ends up costing more or less than expected.

But the commission has not yet approved a final exit date from the Bridger plant, said Donn English, the manager of audit.

In its initial filing, Idaho Power asked for a 2.5% increase in customer rates to cover the expected costs, which was later amended to 2.1%.

The Public Utilities Commission sets the rate of return that Idaho Power can profit from its power-generating investments, which is now 7.8%.

How will Idaho Power meet its clean-energy goal?

While climate change is a component of its calculations, it isn't the only driving factor in Idaho Power's decision-making, Adelman said.

"It's hard to make exact decisions based 100% on climate change," he said. "Being able to reliably serve our customers at all hours of the day, I mean, that's the most important obligation that we have."

In addition to planned increases in solar capacity and the Bridger conversions, Idaho Power is involved in plans to build a transmission line between Oregon and Idaho that will add capacity as the region grows.

Called Boardman to Hemingway, the 500-kilovolt transmission line will stretch 290 miles across the two states, connecting a planned Oregon substation to the company's extant substation in Owyhee County, according to the company's website. It is expected to deliver up to 1,000 megawatts of power in both directions and to come online in the summer of 2026.

Adelman said investments in energy transmission are vital to the nationwide effort to transition to clean power.

"We need to be able to move those variable resources from where it makes sense to generate at," he said. "The way to move energy is transmission -- it's the most cost-effective means."

Adelman also noted that some of the clean-energy technology will need to improve before a full transition is possible, saying that doing a full transition now would be "awfully difficult."

"We need to have the transmission out there and available. We need to have long-term battery storage," he said.

Over the last half decade, battery costs have "dropped significantly," Adelman said, although the market has faced some challenges in recent months as supply chains struggle to connect, and demand is expected to increase. Russia's war with Ukraine has also pushed up the price of natural gas, he noted.

The batteries available today mostly deploy over a couple of hours, which could be an issue on cloudy days or during stretches with high electricity demand overnight, particularly during the hot summer, he said.

"We really need those multi-day, long-term type resources out there," he said.

Idaho Power plans to put in a large-scale battery project in the summer of 2023.

Recent executive orders by President Joe Biden's administration could bolster battery production by pressing companies to increase production of the raw materials and minerals used in batteries.

Are there options besides raising customer rates?

Multiple environmental groups pushed the commission to consider allowing Idaho Power to use bonding to pay for its Bridger exit rather than increasing customer rates.

A proposal by the Idaho Conservation League was, "Why don't you do the whole thing with bonds at bond interest rates?" said Ben Otto, a former energy associate with the group. "So a bond interest rate is 2 or 3% instead of 7.8%," meaning customers would pay less in higher customer rates and Idaho Power would make less in interest.

"That's where our savings come from. It's just paying less interest," Otto said. "There's a lot of opportunity for Idaho Power's shareholders to make money, and this is an opportunity for us customers to save a little bit."

The Conservation League and the Sierra Club asked Idaho Power to request authorization from the commission to use bonding and securitization -- or the pooling of assets -- to pay off the exit, which a review found could save ratepayers $63.7 million. The Industrial Customers of Idaho, an association, also supported exploring that option.

In response, the company said such a course would cause "subsequent financial harm," according to comments it filed with the commission.

The company's agreement with the commission allows Idaho Power "to earn a reasonable return by investing capital into the resources and systems necessary to perform its service obligation," the comments said. "Idaho Power and its shareholders should not be penalized after the fact for not seeking to securitize costs associated with Bridger investments solely with debt."

In its June 1 order, the commission denied the groups' request, noting that "there are too many uncertainties involving the cost and date of the Bridger closure to allow securitization to be a viable option at this time."

In an emailed statement, the Idaho Conservation League said it was pleased the commission agrees that exiting coal quickly is the best strategy, but added that "we need to see a firm exit agreement from the utility. In addition, we continue to advocate for the utility to securitize its exit and transition costs as securitization will save customers millions of dollars over the coming years."

In a separate statement, the Sierra Club said it would also like to see firm exit agreements between Idaho Power and PacifiCorp, given the "high environmental impact" of coal.

Related Pages:
California Will Require Solar Power for New Homes by Ivan Penn, New York Times, 5/9/18
Solar Power Growth Expected to Accelerate in 2016, Companies to Add 16 GW of New Panels by Avaneesh Pandey, International Business Times, 3/9/16

Ian Max Stevenson
Idaho Power is Pulling Out of Coal, with Plan to Exit 50-Year-Old Wyoming Plant
Times West Virginia, June 20, 2022

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