CA-Black-Transp

PacifiCorp Defends Its Decision to Burn Coal


PacifiCorp, one of the largest electric utilities in the Western U.S., has mounted a strong defense at the Utah Public Service Commission in support of a long-term contract issued to Kentucky-based Bowie Resources to supply steam coal to the utility's 895-megawatt Huntington power plant in Emery County, Utah.

Bowie has agreed to supply the baseload plant with about 2.8 million tons annually from its Utah mines through 2029. PacifiCorp, based in Portland, Oregon, is buying coal from Bowie to essentially replace coal from its Deer Creek underground mine in Emery County that was shuttered earlier this year. PacifiCorp blamed the closing on high production costs. Deer Creek had an estimated five years of reserves remaining when it closed.

Deer Creek produced 2 million tons of coal in 2014 and 2.8 million tons in 2013, according to the Mine Safety and Health Administration. It had operated for about 40 years and had roughly 140 employees.

In testimony filed with the Utah commission, the Sierra Club is opposing the Bowie contract as not being in the best interests of Rocky Mountain Power customers. Rocky Mountain Power is a PacifiCorp subsidiary that operates in Utah.

According to the environmental group, which is engaged in a national “Beyond Coal” campaign, the Huntington plant could become uneconomical to operate if natural gas prices remain low and if the federal Environmental Protection Agency's proposed Clean Power Plan is implemented in its current form.

But PacifiCorp and Rocky Mountain Power disagree. In rebuttal testimony submitted to the PSC in April, Rocky Mountain Power president and CEO Cindy Crane argued the Bowie agreement is a good deal for consumers.

The arrangement, she pointed out, includes a provision that gives her company broad termination rights “if new or existing environmental laws, regulations or a settlement agreement affect the company's ability to burn coal at Huntington.”

Bowie acquired Canyon Fuel Co. and its three Utah mines, Sufco, Skyline and Dugout Canyon in late 2013 from St. Louis-based Arch Coal for $435 million in cash.