PacifiCorp expects coal generation to drop by 2024

OREANDA-NEWS. June 11, 2015. PacifiCorp plans to cut its reliance on coal generation to meet electricity demand by its 1.8mn customers in six western states as the company shuts coal plants, dispatches natural gas generation more often and deploys energy efficiency measures.

Coal plants account for 50pc of PacifiCorp's generating fleet but should supply 61pc of the projected energy consumption this year, according to the company's proposed 2015 integrated resource plan. Coal's share in the energy mix will drop to 52pc in 2024, when installed coal-fired capacity will account for 44pc of the total.

"One of the ways our industry is changing is a gradual, orderly transition away from coal to produce electricity," Rocky Mountain Power president Cindy Crane said yesterday.

PacifiCorp says economics justify lower coal burn. But the company's proposed plan acknowledges that the massive decline in US coal generation capacity could increase volatility in power markets, noting that "with over 60GW [of coal capacity] expected to retire by 2020, coal's ability to mitigate natural gas volatility will be severely limited."

Argus spark spreads data analysis shows that many coal units in the US northwest and Rockies are competitive with efficient gas plants in 2016-19 but for peak hours only, a disadvantage for baseload generation.

PacifiCorp in April shut the 172MW Carbon plant in Utah and said it plans to convert the 280MW unit 3 of the Naughton plant in Wyoming to run on natural gas in 2018. Naughton unit 3 will stop operations in December 2017. Naughton receives coal from the adjacent Kemmerer mine owned by Westmoreland.

PacifiCorp also plans to either shut or convert the 387MW unit 4 at the Cholla plant in Arizona by 2024. All three units at Naughton, or 650MW in total, will shut in 2029 and the 762MW Dave Johnston plant in Wyoming will retire in 2027, according to the proposal.

PacifiCorp does not plan to build new power plants in the next decade even though peak load across its Rocky Mountain Power and Pacific Power utilities will increase by 8.3pc in that period. The combination of energy efficiency measures and recently build gas and wind resources should be sufficient for meeting that extra demand, Crane said.

The share of natural gas in PacifiCorp's energy mix should increase to 22pc in 2024 from a projected 14pc this year. Energy efficiency and load management measures, which involve rewarding customers not to consume energy, could account for 10pc of energy needs by 2024.

PacifiCorp awaits approval of its integrated resource plan by utility regulators in California, Idaho, Oregon, Utah, Washington and Wyoming.

Berkshire Hathaway-owned PacifiCorp also serves as the balancing area administrator for its utility territory but is weighing membership in the California Independent System Operator's transmission grid and wholesale power market. The two grid operators already participate in an energy imbalance market that allows trading electricity in five- and 15-minute blocks. The imbalance market should not affect the load resource balance in the west, PacifiCorp says.