Idaho Power gets OK for coal plant project, must give quarterly updates in case rules change

BOISE, Idaho – Idaho Power Co. got the green light Monday to spend tens of millions to clean up its Wyoming coal-fired power plant, and regulators want quarterly updates on whether emission-control investments are making sense amid expected changes to federal environmental rules.

The decision by the Idaho Public Utilities Commission aims to ensure the state’s biggest utility isn’t locked into completing the estimated $130 million project if alternatives to coal emerge as better for ratepayers.

Some observers expect the Obama administration to pass new greenhouse gas rules in 2015 that hurt the viability of coal, compared with other forms of electricity generation.

However, if Idaho Power acts in good faith, the utility would likely be allowed to recover its costs from ratepayers, even if upgrades were abandoned before the pollution-control project was completed, PUC spokesman Gene Fadness said.

Monday’s ruling came after protests by environmental groups, including the Sierra Club, demanded Idaho Power invest in renewables and reduce demand rather than prolonging the life of the dirtier coal plant.

However, the commission decided Idaho Power’s proposed investments, at least at this time, were better for ratepayers and trumped alternatives proposed by the environmental groups.

“We don’t have a crystal ball,” Fadness said. “The commission has always felt that if utilities are acting on the best information they had at the time, then the commission doesn’t necessarily feel those costs have to be denied.”

Idaho Power, which owns one-third of the Jim Bridger coal-fired power plant near Rock Springs, Wyo., is under a federal Clean Air Act deadline meant to improve air quality in wilderness areas and national parks such as Yellowstone, located to the north of the plant.

PacifiCorp, which owns two-thirds of the Bridger plant, has already won approval from regulators in Utah and Wyoming for its share of the upgrades, due to be completed by late 2016.

Idaho Power spokesman Bill Shawver said the utility was pleased that regulators gave the company the go-ahead to move forward with the project, over the objections of environmentalists.

Regulators “acknowledged what we feel: That it’s still in the best interests of our customers and the company, from a cost perspective, to install the emissions control equipment,” Shawver said.

In a partial victory for environmental groups, the Idaho regulator declined to approve one request from the utility that would have virtually guaranteed that Idaho Power could recover the full $130 million investment. Allowing the so-called preferred ratemaking would have made it more difficult for Idaho Power to abandon these investments, even if stricter federal greenhouse gas limits made the controls a bad deal for ratepayers, the commission wrote in its 13-page decision.

“A tipping point could be reached making them uneconomic,” regulators wrote. “As the project moves toward completion … we direct Idaho Power to return to the commission if viable alternatives … become available.”

Asked if Idaho Power will ask regulators to reconsider preferred ratemaking, Shawver said the utility was still analyzing the ruling and no decision had been made.

Zack Waterman, director of the Sierra Club in Idaho and a key organizer of opposition to the utility’s investment in the coal plant, didn’t immediately return a phone call seeking comment.

The environmental upgrades are needed to comply with regional haze rules under the Clean Air Act, designed to improve visibility in national parks and wilderness areas. Those rules require controls to limit nitrogen oxide emissions by December 2015 on Jim Bridger Unit 3 and by December 2016 on Unit 4.