ENVIRONMENT:

Up in smoke: Future of 3 proposed Nevada coal plants in jeopardy

Sam Morris

Nevada Power reached a settlement with the Environmental Protection Department on pollution from its Reid-Gardner coal-fired plant, shown in 2007, near Moapa.

By Phoebe Sweet (contact)

Saturday, Nov. 15, 2008 | 2 a.m.

Coal Power Plant Debate

The Environmental Protection Agency’s rejection of a permit for a Utah coal plant this week spells trouble for three coal-fired power plants proposed in Nevada.

Environmentalists are hailing the decision, released Thursday by the EPA’s Environmental Appeals Board, as the final straw for new traditional coal plants. Utah’s permit was denied because it did not limit greenhouse gas emissions — and every new coal plant will emit millions of tons of the climate-change-causing carbon dioxide each year for 50 to 75 years.

The three Nevada plants, including one proposed by the state’s major utility company, Sierra Pacific Resources, are all waiting for final permits similar to the one denied this week by the EPA. Executives of two of the three developers said they expect those permits to be issued by state regulators by the end of the year.

Environmental attorneys say even if that happens, they expect the permits would subsequently be squelched by the national board.

This is only the latest bad news for the coal power industry, which has endured delays in permitting and environmental reviews, an uncertain economy, fluctuating prices of steel and other commodities and a constricting credit market.

To top it off, with Barack Obama headed for the White House and Democratic majorities in both houses of Congress, carbon legislation that would increase costs for heavy emitters such as coal plants is likely to be near the top of the legislative agenda in 2009.

This week’s EPA decision was the result of a Sierra Club lawsuit challenging the air permit for a 110-megawatt Utah plant that would burn waste coal.

The EPA’s position had been that the agency didn’t need to, and in fact didn’t have the authority to, set carbon emissions limits despite a Supreme Court ruling that the greenhouse gas is a pollutant. Environmentalists say the appeals board’s decision contradicts that.

“These three (proposed) Nevada plants and the rest of the plants around the country ... ignore carbon dioxide emissions and claim they can’t do anything about it,” said Sanjay Narayan, a senior staff attorney with the Sierra Club.

Local permitting agencies, such as the Nevada Environmental Protection Division, which issues permits on behalf of the EPA, have taken the same stance.

They said “they didn’t have the authority to impose carbon dioxide limits. The review board said they do have the authority. It’s on the table,” Narayan said. So Thursday’s decision means “if they are going to refuse to regulate carbon dioxide, they need to come up with a better reason” for that refusal.

However, the board also said the decision to limit greenhouse gas emission from new power plants shouldn’t be made on a permit-by-permit or region-by-region basis, but rather on a national scale.

Guidance from the EPA isn’t likely to come until the new administration is in the White House, observers say. That means the fate of Nevada’s three permits is unclear.

Narayan said it would be prudent for the state environmental agency to wait for clarification from the EPA before issuing final permits, which do not regulate carbon, for any of the plants.

“Right now if they issue the permits they’re operating in the dark,” he said, adding that if Nevada does issue the permits, the Sierra Club is sure to sue, likely with the same effect.

“The reality is that the permits in Nevada ... rely on the same legal rationale that the appeals board found deficient in reviewing the permit for the Utah coal plant,” said Vickie Patton, an senior attorney with Environmental Defense. “This is really quite important because the EPA Environmental Appeals Board is headed by very experienced, long-standing environmental law and policy experts ... who are not looking at these issues through a political lens.”

Dante Pistone, Nevada Division of Environmental Protection spokesman, said his agency doesn’t know what the effect will be and is continuing to work on the three final permits while reviewing the board’s decision.

“We will certainly factor this decision into our process before any final decision is made on the permits,” Pistone said.

He said Nevada Division of Environmental Protection administrator Leo Druzdoff doesn’t know whether the state agency will have to wait for guidance from the national EPA on the issue before issuing permits, but that it is analyzing the ruling.

Starla Lacy, a Sierra Pacific environmental health and safety executive, said it is too early for the utility company, too, to tell what effect the decision might have.

Delays and cost increases

This week’s ruling from EPA’s Environmental Review Board is the latest issue in the long permitting process for all three Nevada proposals.

LS Power’s 1,590-megawatt White Pine Energy Station, which would be located outside Ely, is the only one of the three proposed plants that has received a final environmental review from the Bureau of Land Management. The plant, however, is still waiting for a “record of decision” from the BLM. The official decision has yet to be published in the Federal Register.

And, like all three proposed plants, White Pine is awaiting a final permit from the Nevada Division of Environmental Protection.

Sithe Global’s 750-megawatt Toquop power plant proposed outside Mesquite, just over the Lincoln County line, however, let a contract with its water supplier lapse and without a water source, the plant cannot get a final air permit because its pollution controls use water. Even if the plant finds a new water source, environmentalists say Sithe will have to start its environmental review over, which could take years.

Spokesman Frank Maisano said permitting for the plant is moving forward as expected and that the plant will “have water when we need it.”

Both the LS and Sithe plants must also get the approval of Nevada’s Public Utilities Commission, which will rule on whether the environmental harm the plants would cause is balanced out by the need for the electricity.

But Charles Benjamin, Nevada director for Western Resource Advocates, said because LS and Toquop are likely to sell the power from their plants to out-of-state utilities, the commission will have to decide whether environmental harm to Nevada is worth providing California or other neighboring states with power.

Sierra Pacific Resources, which owns the northern and southern branches of NV Energy and has proposed a 1,500-megawatt coal plant outside Ely, was originally behind LS and Sithe in line for all its permits. But its Ely Energy Center may now actually receive a final permit before Toquop because of that plant’s water troubles.

Sierra Pacific spokesman Mark Severts said Thursday the company expects its permit by the end of this year.

The company is also still awaiting its preliminary environmental review from the BLM. That review was expected to be released last week. No one at BLM was available this week to comment on why the agency did not release the draft review.

Sierra Pacific has told the state utilities commission its time line is at least 18 months behind, and it accelerated construction of one gas-fired power plant and purchase of another to meet demand in the meantime. Next year the company is set to release a fresh analysis of the project – including an updated price tag that could top $5 billion – by the end of June.

Environmentalists and the state’s consumer advocate, Eric Witkoski, have said the plant will be so expensive it will mean much higher electric rates for customers, because the cost of the plant is passed on to consumers. The company has already been authorized by the PUC to spend $130 million on permitting and early stages of development.

“It could have a substantial impact on rates,” Witkoski said, adding that the company only owns $8 billion in total assets right now, including several power plants. The $5 billion coal plant would be much more expensive than any other single plant the company owns.

Utility executives say that continuing to rely on natural gas for so much of the state’s power could actually cost ratepayers more, since its price is so volatile.

The national landscape affects all three plants

The high price of new coal plants has proved to be environmentalists’ most effective argument against them. That high price is passed on to consumers, whether the plant is owned by a utility company like Sierra Pacific or private power producers like LS and Sithe.

Still, since the economy slumped commodity prices have, too, which could bring down the overall cost of all three projects. But along with demand for steel and concrete, demand for energy has also declined with the economy, which could erode developers’ arguments that the region badly needs the power from these plants.

And no matter where final price estimates land, all three developers may have trouble borrowing the money to build them thanks to a tight credit market, says Tim Hay, an environmental consultant and former utilities commissioner and consumer advocate.

But it’s not only the price of construction that’s making coal-fired power look so expensive. Looming legislation to carbon cap emissions from all sources will hit the power industry hard, since it’s one of the largest sources of greenhouse gas emissions. And coal plants, which produce half the nation’s electricity, emit more carbon than any other type.

Coal industry lobbyist Joe Lucas, of the American Coalition for Clean Coal Energy, said the uncertainty over carbon regulation may be harming the industry more than the regulation itself would. His group supports limiting carbon emissions, although he supports lowering the limits very gradually.

“Assuming we can adopt the right policy, the sooner we do that the better,” he said.

And most power developers say new coal plants are coming wether carbon legislation passes or not, especially in the Southwest.

“We see an increasing demand for electricity and a shortage of resources to supply (it),” said Mark Mulburn, director of project development for LS Power’s White Pine Energy Station project. “The long-term need is there.”

But even if developers clear the hurdles of cost and regulation, they are still likely to face lawsuits challenging their air permits and environmental reviews like the one from the Sierra Club that prompted this week’s EPA ruling.

Discussion: 21 comments so far…

By jfnance32

11/15/08 at 3:53 a.m.

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There will be another energy crises in our country 10 to 15 years from now with crap like this happening.

Solar and wind generate power, like the brand new Solar One plant, at 2 to 3 times the cost of current energy.

Expect energy prices to double and triple in today's dollars ----10 to 15 years from now.

There could brown and black outs during peak energy demands during the summer, too.

I am sure Democrats then will say, "Who me?"
By jldour

11/15/08 at 6:07 a.m.

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Will the last one to leave turn out the lights. Nevermind, they'll already be off.
By KDR81

11/15/08 at 8:14 a.m.

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The EPA needs to go. They are one of the most destructive government agencies in this country. They have sweeping powers that are unconstitutionally broad.

Congress gave them a mandate to "protect the public health" with "an adequate margin of safety"

Imagine if Congress gave that same sweeping mandate to Homeland Security?

Think about that. Good bye civil rights, good by Muslims, good bye free speech.

Liberals would be up in arms about that...but when it comes to protecting the environment...good bye civil rights, good bye free speech, good bye property rights.
By coalboy

11/15/08 at 8:16 a.m.

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Dear jfnance32,

The Sierra Club is saving you money. Note that the consumer advocate opposes these plants because they are too expensive. In a carbon-constrained economy the cost of power from the proposed coal plants will easily exceed 13 cents per kilowatt hour. The new Solar One plant is expected to produce energy around 9 - 13 cents per kilowatt hour. Larger solar thermal plants could see costs around the 7 cents per kilowatt hour range. Wind power in a good area is less than 10 cents per kilowatt hour.

Energy efficiency can deliver savings at a cost of 2-3 cents per kilowatt hour. Want to keep energy costs from spiraling out of control? Choose efficiency, wind, geothermal, and concentrating solar, not coal. I recommend searching the web for a levelized cost chart prepared by Lazard Investment Bank for NARUC.
By jdubya

11/15/08 at 8:58 a.m.

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Hey all of you in Nevada,
I live in Utah and I don't give a rats crap about your coal plants as long as you keep the smoke and CO2 you generate on your side of the border. We already got dumped on with the radioactivity you guys generated a few decades ago, and our fish are now full of mercury from the air pollution of your silver mines. So fine, mine, drill, burn, explode all you want, but keep it in Nevada instead of just dumping over on our side of the border. Take responsibility for your own actions, conservatives. Isn't that the Ronald Reagan way??
By azsk8fan

11/15/08 at 9:07 a.m.

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blah blah blah - go find another wife
By jdubya

11/15/08 at 9:11 a.m.

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azsk8fan, that the best you got? come on now, i am sure you have at least one neuron that can fire and come up with something better than blah blah,blah ?? weak crap, fur sure.
By sunreader

11/15/08 at 9:58 a.m.

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I'm a Democrat, I've been labelled a "liberal" by many.

I support ALL forms of energy generation sources. It only makes good sense to balance it all out and not get all your energy eggs from one or two baskets.

Casinos are not going to turn to major forms of energy conservation - they will continue to build, add lights, slot machines, and all the myriad things they want that require electricity. That stuff requires large sources of constant, reliable power which you can't get from solar panels alone. With the military uses in this state, especially in southern NV, I doubt we will ever see a wind farm here in southern NV. The absolute green folks talk about solar plants, because they think they're so clean. they ignore the hazardous air pollutants, CO2 emissions (albeit probably quite low)and in some cases large quantities of water that are used. solar wind and geothermal are not "clean" or innocuous either. We can't afford to continue the argument for one source over the other (fossil vs renewable) because we simply gotta balance and use them all, responsibly. Cost will always be the major factor, sure, but that argument is tiring. C'mon.....how many of us actually have implemented efficiency and conservation measures in our homes for near 100% efficiency to absolutely level the cost factor of power? Until we do so, we cannot argue about price of electricity. Our individual bottom line utility bills reflect the efficiency of our homes and the uses of power we consume.
By jfnance32

11/15/08 at 10:11 a.m.

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Coalboy.....sorry to inform you but Solar One Plant sells energy to the grid at around 2.45 times the current cost of energy.

Nevada Utilities are required to purchase that expensive energy and past the cost to the consumers.
By KeepNVStrong

11/15/08 at 11:55 a.m.

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jfnance, your figures are misleading. The marginal cost of energy on summer days is within 30% of the price of what SolarOne's power output costs; sometimes it's higher. SolarOne's power displaces the highest cost power, as it only delivers during peak periods. It's misleading and irrelevant to compare it to average costs.

The next big solar plants being built will be the same cost or cheaper than the gas-fired generation they replace. Arizona Public Service picked their Solana project in an all-source RFP, not driven by mandates.

Nevada and Arizona share a key characteristic: the fastest growing portion of electricity use is summertime peak load. That's also the most expensive portion. And it's growing 2x faster than average load.

Putting in solar plants will have a stabilizing impact on our electricity prices. Coal plants are the wrong way to go; coal prices are showing tremendous volatility, with bigger increases than gas over the last year.
By jfnance32

11/15/08 at 12:59 p.m.

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I have no clue where you are getting your numbers from.

The Solana project will cost at least $1 billion.

The plant will generate 284 megawatts per year.

The expectant life of the life before a total re-built is 30 years.

Do the math and you see that it is extremely expensive energy source.
By jfnance32

11/15/08 at 1:07 p.m.

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And the above numbers do not include the cost to operate the plant, too.
By jfnance32

11/15/08 at 1:36 p.m.

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Solar and wind will cause our powers bills to at least double and will add billions in debt to be paid by our children and their children.
By jdubya

11/15/08 at 4:20 p.m.

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And you are forgetting, jfinance, the value of Las Vegas real estate when it becomes a coastal town thanks to global warming!

But Vegas will get it's own. The CO2 released to keep all of the casinos firing will drive global warming, which will dry up the Colorado and you suckers will run out of water (especially once us utahns really get serious about taking our share). Better learn how to take a dirt bath like the birds do.
By nkls3713

11/15/08 at 7:14 p.m.

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Wow Utah now wants us to keep our CO2 emissions out of their state? Did Utah oppose Yucca Mountain in support of Nevada? I don't think so.

It's quid pro quo Utah, you want coooperation from us, you better support our fight against Yucca Mountain.

By the way, the nuclear waste shipments from the EAST will be travelling right thru the highways and railways of UTAH. Just think of the disaster if a spill occurs near Salt Lake.
By Socrates

11/16/08 at 9:57 a.m.

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Thank you Phoebe for keeping us informed on these crucial issues. Your reports are greatly appreciated!

I think there is a very basic assumption that we, as Americans, have a fundamental right to unlimited cheap energy. That should be examined.

Much of the energy we use is wasted on trivial, unnecessary or excessive consumption. Building's lights left on around the clock, streets lit ridiculously bright all night, three televisions per home, electric appliances for every conceivable task, even exercise machines that need to be plugged in. Obviously, the list could go on almost indefinitely.

The waste from all the ipod and cell phone chargers plugged in around the clock for "convenience" is staggering.

What are we doing?

Why are we so convinced that we can risk destroying our world simply to perpetuate our consumptive lifestyles? It is not our right.

If we need energy, let's make it clean. But first, let's transform our wasteful ways.

As far as renewable energy goes, I know from personal experience that solar pays for itself many times over. Even PV, the most expensive form of solar, is a good, stable investment that has certainly out-performed "the market." My system is providing a solid, reliable return that is impervious to the manipulations of unscrupulous Wall Street insiders. Plus, it produces no CO2, uses no water and has been 100% reliable with zero maintenance. It's the best investment I ever made!
By Scott

11/16/08 at 10:42 a.m.

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I always come here when I need a laugh, but energy needs isn't funny.

Where is this 7 cent/khw hour coming from? Some Greens pipe dream?

Wake up, we need to build power plants, any kind of power plants, now.

You greens go ahead and freeze in the dark.
By WaterSource

11/18/08 at 3:59 a.m.

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I don't suppose any of you would be interested in maintaining a FULL Lake Mead and the 1800 megawatts of renewable energy it produces PLUS the 25 million acre feet in storage to insure adequate water supplies for the region AND Lake Mead already exists ....

What did NV, CA and UT have before candles ... electricty !

WaterSource waterrdw@yahoo.com

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