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November 21, 2014

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NV Energy could break promise to close coal plants by 2014

In the midst of a high stakes effort to pass a major piece of energy legislation earlier this year, NV Energy promised Nevadans it would begin eliminating its coal-fired power plants on a tight schedule starting next year.

But now, groups like the Sierra Club are questioning whether the utility really is going to close the controversial Reid Gardner coal-fired plant in Clark County by the end of 2014 as is required under the recently passed state law.

NV Energy claimed in August that it could keep the coal plants open longer.

“Barring an order authorizing the retirement, that facility can operate without certain upgrades until the middle of the summer of 2016,” an NV Energy lawyer said to the state’s Public Utilities Commission last month.

The utility company blitzed the Legislature earlier this year with an intense lobbying effort to pass Senate Bill 123, a proposal that would result in higher consumer power rates in exchange for an exit from the coal market on a strict schedule beginning in 2014.

At the time, consumer advocates and legislators insisted that state regulators have more oversight over the utility’s plan to close coal plants and build replacement power generation.

But in an ironic twist, the utility is now arguing that those very protections could force it to extend the life of its coal plants.

The utility company could keep parts of the coal plant open because state law says that the Public Utilities Commission of Nevada needs to approve an “emissions reduction and capacity replacement” plan for the closures.

No plan? No closures.

“The Company (NV Energy) does not intend to retire that facility outside of a process where it files and obtains approval of an emissions reduction and capacity replacement plan,” wrote NV Energy in an August filing with the Public Utilities Commission.

That possibility doesn’t irk Sen. Kelvin Atkinson, D-Las Vegas, the sponsor of Senate Bill 123.

“Every indication I’ve been given is that it will be done in 2014, and I think the utility has expressed that as well,” he said.

He said the Legislature’s intent was to have most of Reid Gardner closed by the end of next year.

“Obviously, folks are going to have some concerns and express those, but it is the utility’s job and the PUC’s job to make sure that it’s done,” he said, noting that he’s so far been satisfied with the progress the utility and Public Utilities Commission have made.

Assemblyman David Bobzien, D-Reno, echoed Atkinson’s remarks in saying that he has faith that the utility will keep its word and close 75 percent of Reid Gardner by the end of 2014.

“The expectation is that the plan goes through so that these (coal) assets are retired,” he said.

Sen. Harry Reid, D-Nev., a major proponent of eliminating coal-fired energy production and a backer of the law, "has reminded NV Energy of their commitment to shut the coal plants as promised," his spokeswoman Kristen Orthman said.

"He is confident they will abide by SB123 and do so," she said.

If the utility moves through the regulatory at a tortoise pace, however, the first three units of the coal plant could stay open, Sierra Club officials said.

“The Commission cannot allow NV Energy to forgo the retirement of Reid Gardner (units) 1-3 merely because NV Energy is unable or unwilling to craft an acceptable plan,” wrote Derek Nelson, legal assistant for the Sierra Club in a filing with the Public Utilities Commission.

NV Energy says it’s “overall goal” continues to be closing three-quarters of Reid Gardner by the end of 2014 and the last quarter by the end of 2017.

But, the utility says the “simplest” way to avoid such a scenario is to adopt the utility’s preferred regulations about how the company will exit the coal market and what they’ll do to replace the coal with other power-generation capacity.

The commission may not agree with the utility’s regulations, however, queuing up the possibility that the two sides could bicker well beyond the 2014 closure deadline.

How the utility is allowed to go about building new plants to replace the coal-fired plants could directly affect consumer prices, which is one reason lawmakers insisted on more regulatory oversight of the process.

That “ongoing ping-pong game between the commission and the utility” was not what the law intends, said Barbara Boyle, a Beyond Coal campaign representative for the Sierra Club who is monitoring the closure of Reid Gardner.

“We would like to see the retirement on time,” she said. “That’s going to be the difficult part of this whole process is to come to a meeting of the minds between what the utility wants to do and the commission’s analysis and input from the public.”

NV Energy does not typically comment on matters before the Public Utilities Commission. When asked for comment, a spokesman from the company referred the Sun to public documents it filed with the commission.

Another wrinkle, though, could allow a portion of the coal plant to stay open past its mandated closure date.

NV Energy doesn’t fully own one of four units at the Reid Gardner plant. The company is trying to buy out the California Department of Water Resource’s share of the unit, but if that fails, all bets are off.

If the purchase falls through, state law would allow for the California-- or another entity-- the purchase the plant and continue to operate it.

The Sierra Club said such a move would “undermine” the intent of the law.

But the utility assured concerned parties in testimony filed Wednesday that if it buys out the California interest in the unit, then it will “remove the facility from service.”

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