PROGRESS (AT A PRICE)

Phoebe Sweet, Las Vegas Sun

Friday, Dec. 7, 2007 | 7:28 a.m.

As debate over construction of coal-fired power plants in Nevada rages on and new costs pile up, it remains unclear to regulators, environmentalists and even utility executives how expensive new coal power ultimately will be.

What is clear is that whatever the cost, consumers, not investors, will foot the bill.

Still unknown are construction costs, the price Congress will put on greenhouse gases and the financial effect of installing pollution controls.

Officials at Sierra Pacific Resources, Nevada Power's parent company, say coal - even with those additional costs - will be good for consumers.

"We can't just wait until the lights go out to decide," said Senior Vice President Roberto Denis. "We have to believe that Congress will use reason" when attaching a price to carbon emissions.

In addition, Denis said, coal power from Ely Energy Center - which the utility estimates will cost almost $4 billion to build - will still be cheaper than power from natural gas.

Natural gas is now used to produce more than 70 percent of the state's energy. It is a fuel whose price can fluctuate wildly, he said. A $1 increase in the wholesale price of natural gas costs Nevada Power customers an extra $100 million a year, he said.

But consumer advocates and environmentalists are not buying any of it. They say Denis has no idea what coal will cost, because no one does.

"There seem to be a lot of unknown quantities at this time," said Eric Witkoski, state consumer advocate. "Maybe we'll have better visibility in the coming year on what the impact would be."

Lydia Ball of the Sierra Club believes construction costs "are just going to increase," and questions why Denis is focusing on comparing coal and natural gas when he should be looking to renewable resources and efficiency to meet the state's energy needs.

An expert on carbon capture from the California Energy Commission is scheduled to brief members of the Public Utilities Commission today on the potential costs and challenges associated with using the technology at Nevada power plants.

One of the big fiscal unknowns is the price of trapping carbon and storing it underground, the method for disposing of it.

Denis contends carbon won't make energy from Ely unaffordable because, by his calculation, the plant will emit only 2 million more tons of carbon dioxide per year. He arrives at that figure by subtracting the emissions from heavier polluting plants that will be retired and natural gas plants that will not have to be built because of the Ely facility. (Nevertheless, Sierra Pacific plans to build a 500 megawatt gas-fired power plant north of Las Vegas to supply power to the valley until the Ely Energy Center is complete.)

By his logic, he says, paying to emit carbon at $50 per ton - his cost estimate for capture - increases the price tag of electricity by the same amount as a $1 increase in the price of natural gas to Nevada Power customers. But, he said, natural gas prices have risen as much as $6 to $7 in a single year, making coal a surer bet than natural gas.

But environmentalists - and even the Energy Department - disagree with Denis' numbers.

The Energy Department's Web site says estimates of carbon capture and storage costs are between $100 and $300 per ton. That means the cost of trapping the plant's emissions - 10 million tons per year - would be between $1 billion and $3 billion a year. Natural gas prices would have to rise by $10 to $30 to have the same cost effect.

Using his figure of 2 million tons, carbon capture would cost between $200 million and $600 million, equivalent to a $2 to $6 increase in natural gas.

Larry Myer, of the California Energy Commission's carbon-reduction partnership, - the technical director who is scheduled to brief the Nevada PUC today - raises another potential problem. Because it is unknown whether Nevada's geology is conducive to storing carbon underground in oil wells or aquifers, it might be necessary to pipe the stuff out of state. Coal burned in Nevada would make quite a round trip in that case, traveling from Wyoming or Montana, being used here and then being shipped back out of state again to be injected in defunct oil wells or other geological formations.

Denis said the utility has every intention of retrofitting the Ely center with the technology for carbon capture and storage when it is economical and available.

Some scientists say that it is available today.

George Peridas, a science fellow with Natural Resources Defense Council's Climate Center, said the holdup is that no utility wants to be the first to pioneer it commercially. But they should, he said, because it is significantly more expensive to retrofit existing power plants with carbon capture technology than to build it into the design.

And although fines for falling short of existing environmental regulations are not passed on to consumers, the cost of plant construction and improvements is.

For example, when the EPA required Sierra Pacific Resources to make $85 million in pollution control improvements at the Reid Gardner power plant in Moapa, it passed the cost on to consumers, who will see it reflected in their bills in 2009. Related costs totalling $5 million were borne by investors.

The price of complying with the law is typically included in customers' bills. Likewise, the cost of any national climate change legislation would be passed on to consumers.

And although no one knows just how much utility bills will go up, it seems inevitable that they will if Sierra Pacific builds its coal plant.

When asked whether the utility plans to pass on the cost of retrofitting the Ely Energy Center, Denis said, "The simple answer is yes."

Executives at Sierra Pacific Resources have signed an agreement with the state Environmental Protection Department to install carbon capture and storage technology at the Ely Energy Center once it's commercially available.

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