Editors Note: This article was originally published in the March 27, 2024 issue of the Chronicle Progress. Some information may be outdated.
Cox says may call legislators back into session to tweak bill, vows to 'get this right'
Gov. Spencer Cox signed SB161 into law last Thursday, despite requests from multiple Intermountain Power Agency stakeholders to veto the controversial legislation.
Cox told media outlets during a press conference held the same day that he may call legislators into a special session to tweak the bill, possibly allaying concerns raised by officials from IPA and the 23 municipalities that own the Intermountain Power Project.
“I will be signing the bill. However, we will be working with the legislature on some things that we think can maybe be done better,” Cox said at his monthly news conference last week. “There’s a possibility of a special session to make some tweaks to the law. More than anything, we want to make sure we get this right.”
State legislators passed SB161—along with a slew of other legislation over the past few sessions specifically targeting IPA—hoping to keep the coal-fired power plant open past a July 2025 deadline for its closure.
IPP’s closure is part of a previous agreement between federal environmental authorities and IPA meant to lengthen the lifespan of the coal units until IPA completes its IPP Renewed green hydrogen and natural gas facility.
The coal units are essentially already out of compliance with existing environmental regulations—potentially hundreds of millions of dollars would need to be spent to bring them up to those standards—and agreeing to permanently close the near four-decade old facility allows IPA to continue permitted operations there until the new plant is operational.
“IPA has an enforceable regulatory commitment with EPA (Environmental Protection Agency) to cease operation of the IPP coal units by July 1, 2025. In return for that commitment, federal law allows the storage of coal ash on site for years beyond the deadline for decommissioning the IPP coal units that would have applied without that commitment,” IPA board of directors chair Nick Tatton wrote in a March 8 letter to the governor pleading for him to veto SB161. “If IPA breaks its commitment, IPA will be subject to significant federal penalties, potentially going back to 2021.”
IPA officials’ veto request went far beyond simply addressing regulatory concerns, however. The agency told Cox the legislation could have potentially disastrous effects on IPA’s current, multi-billion-dollar plans.
For example, the letter stated in no uncertain terms that SB161 may force the EPA to file a 135-day shutdown order, effectively forcing the coal units offline by mid-November. This could scramble the agency’s ongoing plans and potentially create a cascade of negative outcomes, from undermining $2 billion in bonds already sold to construct IPP Renewed to forcing a legal showdown over the constitutionality of the state’s plan to acquire IPP outright under a set of convoluted mechanisms outlined under the new law.
The legislation signed by Cox was the bill’s sixth version—it did not get enough votes to survive a veto, however.
No version of the legislation won many proponents or much public support during various committee hearings during the most recent legislative session, which ended Feb. 27. But by the fifth version of the legislation, IPA officials appeared to be on board with language that offered the agency more protections than previous iterations of the bill.
However, about a minute or so before debate commenced on the Utah House floor, a sixth substitute was unveiled that stripped the protective language IPA officials had sought in the previous version.
IPA argued in its plea to Cox to veto the bill that this legislative “ambush” was improper.
“S.B. 161 should be vetoed, at a minimum, to remind the Legislature that process matters and to hold it accountable for not having the Sixth Substitute vetted properly by the public and for not allowing input from those who stand to lose the most by letting S.B. 161 become law,” IPA’s March 8 letter reads.
IPA officials declined to comment further once it was clear last week Cox intended to sign the bill into law.
Federal authorities, responding to questions and concerns raised by IPA in a Feb. 28 letter to the EPA, informed stakeholders that nothing state legislators do allows IPP to skirt existing federal regulations.
“A State law does not relieve a regulated facility from compliance with applicable Federal standards and noncompliance with Federal standards will subject the regulated facility to liability notwithstanding the State law,” the letter, signed by EPA Region 8 Administrator Kathleen Becker, makes clear.
The lengths to which EPA officials will go to enforce the agreement made with IPA remains to be seen.
Becker’s letter acknowledged the complexities of IPA and the state’s situation, but committed to working with the Utah’s Department of Environmental Quality (DEQ) moving forward.
“I would like to acknowledge that SB 161 and the IPA/IPP situation is very complex at both the state and federal level and I hope the above information can provide an understanding of the complexities associated with federal requirements,” she wrote. “Whatever the outcome may be, my staff at EPA Region 8 are committed to early meaningful engagement with DEQ to protect human health and the environment.”
Cox said he, too, understood this was a complex situation that required cooperation among all involved, including regulators.
“We will continue to work closely with IPP, we will continue to work closely with regulators. It’s a very complicated bill…Nothing is set in stone, even with the bill,” Cox told the press last week.
The governor said even if the state acquired IPP, it would not operate the facility itself but look for a third party to purchase it.
A legislative study authored last year provided a number of options should the state wish to see IPP continue operating, including selling it to a third party, who could conceivably convert the plant into a graphite production facility. An unnamed company planning to operate such a facility was noted in the study. IPA later revealed it was in discussions with a company called Omnis exploring that option.
Last August, a California company called Omnis Fuel Technologies announced it had purchased a 1,278 megawatt West Virginia coal plant that had been slated for demolition. Omnis reported it was planning to convert the coal facility to burn hydrogen, a byproduct produced by graphite production.
Another potential purchaser for IPP revealed itself in 2022 when Farmington, New Mexico-based Enchant Energy and Orem-based Fibernet announced it had offered to purchase IPP and use power generated there to operate data centers. The potential buyer also announced it would invest in carbon capture technology to bring the units into compliance.
A month later the entities sought to buy all of IPA, including the plant, transmission assets, water rights, land holdings, power contracts, and bonds. The companies had sought help on the bid from state legislators, IPA confirmed at the time.
It’s not clear whether Omnis or the data center proposal played any role in SB161’s debate and passage. SB161 sponsor, State Sen. Derrin Owens, whose district represents the east half of Millard County, commented during one committee hearing on the bill that he would not have introduced the legislation if a buyer for IPP had not already been identified.
Still, IPA may not allow IPP to be acquired, even by the state, without a fight.
In its letter to the governor, IPA officials questioned the constitutionality of SB161’s framework for valuing and acquiring IPP.
“Not only does S.B. 161 force IPA to accept the impacts of a sale of an IPP coal unit, the bill does so without complying with the constitutional protections to which IPA is entitled in connection with the exercise of eminent domain,” the letter to Cox reads. “The bill excludes IPA from the valuation process except for an obligation to provide information in a timely manner (without any guarantee that IPA will be allowed to provide that information).”
Furthermore, the entity set up through SB161 to value and create the pathway to acquire IPP, the Decommissioned Asset Disposition Authority (DADA), “does not include any representation of IPA or any other stakeholder in IPP.”
“DADA is not even obligated to conduct a hearing or otherwise give IPA the opportunity to present evidence of the IPP coal unit’s value,” IPA’s letter reads. “The bill abandons the traditional notion of fair market value—the price a willing buyer would pay a willing seller— and replaces it with a strange assortment of factors that fail to ensure IPA would actually receive fair market value.”
Ironically, one mechanism DADA could utilize in its assessment of IPP’s value is IPA’s own arguments for a lower taxable valuation with state tax authorities during a multi-year tax dispute with Millard County that saw property tax rates spike year after year for area homeowners and business owners.
