Rising costs cheer coal plant foes

Steve Marcus

Michael Yackira, right, president and chief executive of Sierra Pacific Resources, chats with Pat Mulroy, general manager of the Southern Nevada Water Authority, during the June grand opening of a plant that manufactures components for solar thermal power systems. The Sierra chief says the future of a coal project near Ely is uncertain.

By Phoebe Sweet (contact)

Tuesday, Aug. 19, 2008 | 2 a.m.

Nevada’s environmental commission gathered in the fall in Carson City to consider a request from environmental groups to stop granting permits for new coal-fired power plants.

Environmentalists feared what they saw as an unfaltering march toward approval of all three proposed in the state. The enviros mounted a traditional argument: The plants would generate enough power for almost 3 million homes, but would also emit more than 30 million tons of greenhouse gases every year for 50 years.

To date, little evidence exists that those arguments will prevail. But it’s beginning to look as if other realities just might, at least with one plant.

Sierra Pacific Resources, parent company of Nevada Power and Sierra Pacific Power, continues pushing for a 1,500-megawatt, $5 billion coal plant near Ely. The company announced in November that it could meet the surging short-term demands of Southern Nevada by moving up construction of one gas-fired power plant and buying another. Executives referred to delays to the Ely coal plant.

A federal environmental review on the project is 18 months behind schedule. The state’s consumer protection bureau last week asked the Public Utilities Commission, which must authorize funding for the Ely project, to stop the utility from spending more money on the permit process until it produces a solid budget. Cost estimates have risen from $3.8 billion to $5 billion over the past two years, the utility says.

The commission staff suggests the utility analyze other options, such as expanding an existing coal plant in Northern Nevada.

Michael Yackira, president and chief executive of Sierra Pacific Resources, said last week the plant’s future is uncertain, although the company was pushing ahead.

“Construction costs are higher than what we originally expected,” Yackira said. “Coal prices are higher than what we expected for Ely. And there is looming the potential of carbon capture. If it’s not the best alternative we’ll have to ... do something else.”

It’s almost possible to hear environmentalists crossing their fingers.

“There are a lot more uncertainties now about coal plants than when Ely was approved by the Public Utilities Commission two years ago,” said Charles Benjamin of Western Resource Advocates. “That landscape ... has changed so dramatically. The utilities just never saw this.”

Sen. Harry Reid, a friend in high places to the anti-coal movement, will not take credit for slowing the coal train.

Environmentalists won’t either. Instead, they cite factors that include a growing cachet attached to going green, uncertainty over carbon emissions regulation and rising costs of coal and steel.

Coal plant opponents admit their most successful arguments have been economic ones.

“Due to the fact that Ely is so far removed from the population centers in Nevada, I don’t think the environmental arguments have the kind of traction they would if it were going to be built 20 miles from the Strip,” said one anti-coal activist who spoke on condition of anonymity.

“The real impact changing the way folks look at Ely now is that ... (it) would double rates. This appears to be a black hole as far as money goes.”

And do they mind that Nevadans are more persuaded by their pocketbooks than by melting ice caps?

No, says the Sierra Club’s Lydia Ball.

“I’m usually thought of as someone who just speaks for the environment ... but I think that all three of the arguments — economic, health and environmental — are equal reasons why we should not build these coal plants,” she said.

In this case — with costs mounting by the day — postponing a project indefinitely might be just as good as killing it, a strategy that’s worked pretty well at a certain infamous Nevada mountain.