Coal-fired power at IPP is not dead

SALT LAKE CITY—The coal-fire units at Intermountain Power Plant near Delta, whose demise once appeared to be imminent, will continue to operate into the foreseeable future.

And with changes to how those units operate, such a scenario should be favorable to Sanpete County residents who make their livings from the region’s coal mines.

Things were already headed that way because of a bill passed and signed into law in last year’s Legislature. The measure was sponsored by Sen. Derrin Owens (R-Fountain Green), who represents Sanpete as part of Senate District. 27.

But despite the bill’s passage, there were things that needed to be done in order for it to be considered final. During the first week of this year’s session, those tweaks were completed
“We did it,” Sen. Owens wrote in an email on Jan. 25, after receiving word that the final “t” had been crossed.

“Utah keeps its energy generation plants with 950 megawatts staying connected and 950 megawatts on standby for future energy needs. The state and Millard County [have] invested in these facilities for over 35 years. This is the best solution for Utah rate payers going forward.”

Owens’ 2024 bill allowed the state to take over the coal-fired units at IPP through a newly created agency, the Decommissioned Asset Disposition Authority (under the Office of Energy Development within the Utah Department of Natural Resources). There are two such coal-fired units, and they were indeed scheduled to go out of service permanently (be “decommissioned”) by July, 2025. At the same time, new, natural gas-fired units were set to go online as part of a cleaner, no-coal operation called “IPP Renewed.”

That decommissioning is what necessitated Owens’ bill—that is, for those who wanted to see the coal units remain in operation.

IPP’s owner, the Intermountain Power Agency (IPA), wanted to transfer IPP’s current operational permits and licensing with the Environmental Protection Agency over to IPP Renewed.

The EPA agreed to that, but only on the condition that the coal units be shut down by the time the new ones went online in 2025. Otherwise, IPA would be liable for millions of dollars in upgrades, as well as new permitting. For IPA, avoiding that took precedence over keeping the coal units.

But Owens would have none of it. In response, he sponsored the bill to allow the State of Utah to purchase the coal units if no other company did, which would have taken the onus for them off of IPAs hands, clearing the way for IPP Renewed operate the new units, while another entity operated the coal units.

On the surface, it sounds like a win-win and a boon to IPA/IPP. But it’s really only the latest jab, although a big one, in a tug-of-war between IPA and the Legislature that has been going on for several years.

“IPP’s not that shining star” everyone thinks it is, Owens said. The Legislature and IPA, he said, have been at odds for years.

IPA was created about 35 years ago as a political subdivision of the State of Utah, a tool the Legislature used to allow IPA certain benefits as a utility producer.

The biggest benefit was the ability to get financing through tax-exempt bonds and use Utah’s triple-A bond rating to do it. But that came with another side to the bargain.

Owens said that the law that gave IPA political-subdivision status required it to get all of the resources it used at its generating plants — in other words, coal — from Utah. That was 100%. And IPA was directed to create jobs.

At one point, during a fire at one of Utah’s coal mines, IPA began getting coal from Colorado to fill the supply-chain gap.

After that, “They decided that would be their common practice,” he said, adding that it has already contracted to get its natural gas for the new units from Wyoming.

Over time, IPP began delivering more and more of the power it generated to California.

Indeed, as of now, the Los Angeles Department of Water and Power is the single largest purchaser of power from IPP, and is also the plant’s operating agent and project manager (according to the IPA website) despite IPA being a consortium of cities in Utah who initially got together to provide power for Utah.

California’s politics began to play a role. Eventually California “passed a bill banning fossil fuel energy from being used in the state,” Owens said.” That’s what led to the push for a new gas-powered unit.

But, Owens also said, “California told them to start cutting back on employees,” which at that time numbered about 600, the senator said. IPP cut down to 400.

“With IPP Renewed, it will be less than 100. That’s not economic development.”

And in the last several years, Owens said IPA has played games at the Utah Legislature. Bills that became laws that were supported by IPA included measures that exempted IPA—even though it was a political subdivision—from Utah’s open meetings and government records laws, exempted the agency from state procurement rules, and gave any spin-off operation from IPP the same privileges and exemptions as IPP itself.

All of those laws have since been rolled back, Owens said. But still, he said, “the only thing that’s been followed through 100% is that Utah’s gotten 100% of the pollution for the last 35 years. The rest of it has been breached in one way or another.”

A point of contention now is IPP’s switchyard. Owens said there are two places where both the coal units and the new gas units enter the power grid, and IPP could shut the coal units off, which would remove them from the grid forever, Owens said.

So now the state and IPP are haggling over locations at the switchyard “that we can agree to be together on,” Owens said.

Owens vision is that the state will continue to play a role in the coal units under the Office of Energy Development —even after another operator is found to purchase them, which he says ought not be a problem, given Utah’s trajectory as a data-processing and artificial-intelligence capital, and the amount of power such enterprises require.

He isn’t at liberty yet to name interested parties, he says. “But they’re numerous and they’re big, and they have Utah’s interest at heart. They come with funding from all over the world to make it happen.
“This location out there is every country’s desire. The state that lands this is going to lead out in the AI development, because of all the energy it needs. That’s who the purchasers will be; they’ll be tied to AI. I have three sets of them that call me weekly.”

And this time, he says, all the energy will stay in Utah.

Sanpete residents would benefit in a couple of ways.

First, says Owens, “The preservation of 1900 megawatts inside the state that’s already being produced, and we don’t need to wait 10 years, which keeps your energy rates low.” That will benefit everyone, he says.
And, Owens says, 100% of the coal coming from Utah — as it should have all along — will help the individuals and families who depend for a living on the coal mines and supporting industries like trucking.