MT. PLEASANT—A visit to the Mt. Pleasant City Council last Tuesday, Jan. 11 by Utah Rep. Steve Lund, (R-Manti), revealed things about the operation of the Intermountain Power Project (IPP) that most in attendance didn’t know.
Lund’s presentation was made after Paul Madsen and Lynn Beesley were sworn in as the newest city council members. Michael Olsen, who was re-elected as mayor last November, was also sworn in.
Lund’s purpose was to brief the city council on the upcoming legislative session, which will begin on Jan. 18.
Lund said the boundaries of his legislative district, District 58, have changed a little as a result of redistricting. Formerly the district included all of Sanpete County except the Axtell area, along with eastern Juab County, primarily Nephi and Levan.
Now, Lund said, the district includes all of Sanpete County, western Juab, along with Eureka in Juab County, and Goshen and Covered Bridge in Utah County. The former three towns are all in remote, unpopulated areas between 1-15 and the Nevada border.
The IPP, located outside Delta, is one of the largest power plants in the United States. It is owned by the Intermountain Power Agency, with offices in South Jordan. All members of the board of directors are Utahns.
But management of the plant has been delegated to the Los Angeles Department of Water and Power (LADWP), which owns rights to just under 50 percent of the power IPP generates. Presently, through lease arrangements with other municipalities who have rights to defined portions of the plant’s generation, LADWP is using 90 percent of power coming out of the plant.
Lund said the state is very concerned with how the IPP managers in California are treating Utah companies. Lund said that recently IPP ordered four trainloads of coal, all of which came from Colorado, not Utah.
Because of legislation passed by the California State Assembly in recent years requiring California power companies to phase out electricity generated from coal, IPP is transitioning to green energy, including hydrogen.
Hydrogen comes from water. IPP claims to have a water right to 40,000-acre feet of water from the Sevier River, a substantial portion of which comes from its Sanpitch River tributary.
IPA claims it will only use 12,000-acre feet to develop hydrogen. Lund, who is an engineer, says that the problem is that electrolysis is only 30% efficient, so to reach its goals, IPP would have to use its entire allotment.
“Given our drought conditions, the state apportions the water right according to water availability. Where are they going to get the water?” Lund asked. He questioned what it would do to upstream water rights if IPP demanded its full share.
Lund noted that IPA, the owner of IPP, is a political subdivision within Utah, which gives it the power to fund operations by floating municipal bonds. That status gives the company a financial advantage over Rocky Mountain Power and other competitors.
Lund says the 2022 Legislature is going to take a hard look at IPP and its extraordinary powers, including the amount of water it claims to have rights to, how it is treating Utah businesses and whether the state needs to intervene in its quasi-municipal powers.
Lund says that IPP generates $1.2 million in revenue per day, and that over 90% of the tax revenue it generates goes to California, not Utah. Lund believes Utah should get more of that tax-revenue stream.
In other business, the council heard a presentation from Michael Ongkiko, managing director of corporate services for National Financial Partners (NFP), the company the Mt. Pleasant Power Department hired to evaluate how Mt. Pleasant’s wages and benefits compare with other municipal power operations.
Ongkiko confirmed that while Mt. Pleasant’s employee benefits package is among the best in the survey, its wages run about 30% below the market.
Power Superintendent Shane Ward stated that present wage levels make it difficult for the Power Department to retain employees. He cited the loss of four employees in the past six years, which cost the city tens of thousands of dollars each to train. The council took note of the information but took no action.
Mayor Mike Olsen raised the issue of the cost of mailing paper utility bills. He said the cost of preparing and mailing bills was in the range of $1.25/apiece. He asked the council to consider how they could encourage people to accept electronic delivery rather than mailed bills.