Editors Note: This article was originally published in the Feb. 7, 2024 issue of the Chronicle Progress. Some information may be outdated.
IPP general manager warns state senators bill could put billions of dollars at risk
Government overreach, pollution concerns, exorbitant modernization costs and the potential of billions of dollars in financial risk were all raised as reasons the state Senate should hit the brakes on SB161, a bill designed to speed the sale or state acquisition of Intermountain Power Project’s two coal-fired units, set to be decommissioned in 2025.
Multiple opponents of the legislation were heard during the bill’s first committee meeting last Wednesday, but held little sway over senators, who voted to move a substitute version of the legislation to the Senate floor for further debate—mere days after the bill’s language was first made public.
Sen. Derrin Owens, the Senate District 27 Republican who represents the east side of Millard County, is the bill’s sponsor. He said the proposed legislation’s main goal is to buttress the state’s energy security, but also to keep jobs from disappearing in his district when Intermountain Power Agency’s IPP Renewed natural gas and hydrogen plant opens.
“What’s going to happen, though, in my district is we’re going from at one time 600-plus jobs at the plant down to a hundred or less,” he told fellow committee members, adding his legislation won’t impact the IPP Renewed project at all.
In fact, he said the plant traditionally has supported thousands of jobs in Central Utah, from coal miners to truck drivers.
“If these units are decommissioned and taken off the grid, they’ll never be permitted again,” Owens said.
The bill calls for the state’s Public Service Commission, which regulates utilities, to set a fair market valuation for the coal units, hold a public hearing on the matter and manage a request for proposal (RFP) process that would see the units sold to a private buyer, or, failing that, be purchased by the state. Curiously, the bill also forces IPA to reveal all it knows about the coal units and their operation—or be forced to accept liability for any unforeseen consequences that might occur should the state take control of the units.
Because IPP enjoys status as a political subdivision of the state, Owens argued it’s the state’s responsibility to consider keeping the coal units open.
“If it was private we wouldn’t be sitting here today. As it’s a political subdivision, that puts it under our purview, and something that really I don’t think the state has had a close enough eye on for many years,” he said.
Last year Utah became a net importer of energy for the first time, something the senator said should not be the case ever.
Crucially, however, IPP’s operating and air quality permits are set to transfer to IPP Renewed when it is complete and operating, meaning the coal units would need to seek new permitting under existing state and federal regulations. IPA entered into an agreement with Environmental Protection Agency authorities ahead of construction of IPP Renewed that it would shutter the coal units—otherwise to maintain its operating permit, IPA would be on the hook for hundreds of millions of dollars in upgrades to adhere to current clean air standards and other environmental rules.
That deal could be in jeopardy if SB161 passes and the coal units aren’t shuttered or permitted by 2025, legislators were warned.
This became a sticky point during the committee hearing as Owens’ fellow committee member, Majority Leader Evan Vickers, Senate District 28 Republican who represents the west side of Millard County, said he couldn’t support moving the bill forward.
Vickers said he thought the timeline for being able to sell the plant and obtain the requisite permits was simply too tight.
“I’ll be a no vote on the motion (to move the bill out of committee), but not necessarily because I don’t support the concept and what we’re trying to do,” he said.
Vickers said he questioned the Public Service Commission’s role in setting a fair market value on the coal units and also questioned how much work will be asked of the state’s Department of Environmental Quality to obtain the requisite permitting.
Owens said the state has about 18 months to work with and a pathway was identified that should make the goal attainable within that timeframe.
Sen. Nate Blouin, Senate District 13 Democrat, also asked about the timeline and DEQ work involved. He also questioned whether the bill might impact other utilities in the state, such as Rocky Mountain Power. Owens said he believed the way the bill was written it only impacts IPP.
Blouin later joined Vickers and voted against moving the bill forward.
“It seems like there’s a lot of moving pieces here, a very short timeline a lot of people are going to have problems meeting,” he said.
Three mayors, IPP’s general manager, an environmental activist and at least one private citizen all opposed the bill during a public comment period.
Bountiful City Mayor Kendalyn Harris was the first to speak. Her city, along with 22 other Utah municipalities, currently own IPP, benefiting from either using it’s electricity or selling it to Southern California utilities.
“We have reaped the benefits,” she told legislators. “To me it feels off that Utah cities banded together to create this asset and now essentially the state legislature is wanting to take it away.”
She urged legislators to work more closely with stakeholders before moving forward on the bill.
Kaysville Mayor Tami Tran and Logan Mayor Holly Daines agreed.
Daines said she felt like the state was embarking on an overreach similar to the types of moves legislators balk at when the federal government does it.
“This bill really is a bit troubling that it contemplates a forced sale of our assets and potentially doesn’t provide due process,” she said, adding she was in favor of holding the bill for more discussion.
Cameron Cowan, IPP’s general manager, said he was unable to thoroughly explore the language in the bill before the committee hearing. But just a cursory review showed that legislators may be on the verge of putting billions of dollars at risk for IPA’s power purchasers and member cities.
He also said it would be nearly impossible to sell the coal units until after they had received new permits, both an air permit from the state and approvals from the EPA.
“No one would be willing to entertain an investment in coal units that are required to be shut down without a pathway for permitting,” he told the committee.
He urged lawmakers to hold off on moving the bill forward as well.
Environmental activist Maria Archibald, Lands and Water Programs Senior Coordinator for Sierra Club’s Utah chapter, opposed the bill as well. She said legislators were jeopardizing the transition plan in place for IPP Renewed as well as potentially burdening ratepayers with the cost of bringing the coal units into state and federal compliance.
“There is simply no reality where IPP, the state’s largest single contributor to (air pollutants) nitrogen oxide, sulphur dioxide, and carbon pollution, can continue to operate under modern clean air regulations without a major overhaul that renders the plant completely uneconomic,” she said. “The regulatory hurdles proposed by this bill will not change that fact.”
Bryce Bird, director of the Utah Division of Air Quality, spoke briefly about the bill.
He acknowledged the compressed permitting timeline, but said it could be done if the application were completed successfully—and quickly.
He noted, as some legislators also did, that part of a regional air quality plan currently under review by the EPA utilizes a data model based on IPP’s coal units closing. If the units remained open, then the state’s inputs for that plan would require the work be thrown out and a new plan created. The EPA was expected to act on the current plan this year.
“It is something that would need to be redone because we did (the plan) based on the assumptions of the original permit that was issued, which included the closure,” Bird told the committee.
John Harvey, a commissioner on the state’s Public Service Commission, said he was not there to speak for or against the bill, but just to communicate that the state would take on additional, unknown costs from the framework outlined in the bill.
He said, for example, that outside experts would be required to determine a fair market value for the coal units.
“To do the type of fair market evaluation, hold that hearing and then to possibly oversee a sale of the asset, that that would entail hiring people that are outside of the commission,” he told legislators, adding that it could cost several hundred thousand dollars.
Once public comment was closed, Owens made a motion to move the bill forward. He reminded the committee he had worked toward the bill for at least four years, often unable to get the information from IPA that he required.
Sen. Scott Sandall, Senate District 1 Republican, who has sponsored at least two other bills this session with the potential to impact IPA’s future, said he understood the bill was still a work in progress and required more tinkering. But he supported moving it along nonetheless.
“I’m not sure that we’ll ever get to a Kumbaya moment on this bill and what we’re going to do with it, but I for one would like to see it continue to move in the process here in week three,” he said.
Sen. Ronald Winterton, Senate District 20 Republican, who also chairs the Senate’s natural resources committee, said he was prepared to move forward since the legislature began working on the issue so long ago with little progress to show for it. He said he was worried about the state’s energy reliability, economic development and jobs.
“I am one I don’t think we have rushed through this at all. And I’m in favor to see the bill move along,” he said. “We’re committed to find a solution to this in the state.”
The motion to move the bill to the Senate floor passed 4-2, with two absent.
