March 22, 2024 - Utah Gov. Spencer Cox signed a bill that would extend the life of the coal-fired Intermountain Power Plant, but amid pushback from the facility owner and the possibility of conflict with a federal agency, there’s a strong possibility the bill will need to be tweaked in a special session, Cox said.

SB161 would prevent a plan to close out two coal-fired generators, part of the Intermountain Power Plant located near Delta, which have a 1,900 MW rated capacity at the Intermountain Power Project by July 1, 2025. The bill would require IPA to allow the state to buy the coal generators. Utah’s ultimate goal is to find a third party that would be interested in purchasing them.

Utah Gov. Spencer Cox speaks at his monthly news conference in Salt Lake City on Thursday, March 21, 2024.

Pool photo by Trent Nelson, The Salt Lake Tribune

“If there are opportunities to keep those facilities running, we’re going to want to exhaust every potential, every possibility out there, making sure that we’re complying with environmental regulations that are in place and seeing if we could thread that needle,” Cox said in his March PBS news conference. “We’ll continue working very closely with IPP, we’ll be continuing to work closely with regulators.”

The bill is “very complicated” and there are opportunities to reevaluate steps moving forward, Cox said. However, he doesn’t expect any “monumental” changes.

The governor has been working with legislators to address the issues, he said. 

When asked whether he would support a special session, Senate President Stuart Adams said in a statement, “We are open to having further discussions to ensure the best possible outcome for our state’s long-term energy prosperity that will benefit all Utahns and keep our energy sector strong.” 

The Intermountain Power Agency asked Cox to veto SB161, Energy Security Amendments, citing a “rushed” process in the House and Senate, risks for the construction of a multi-billion natural gas facility, and the potential of heavier federal regulations.

Nick Tatton, board chair at the Intermountain Power Agency, an interlocal entity owned by 23 Utah Municipalities, called the last changes of the bill introduced in the House an “eleventh-hour ambush approach that has characterized legislation targeting IPA over the last few years,” and detailed the agency’s concerns in a letter to the governor, first obtained by The Salt Lake Tribune.

“If Congress imposed an unfunded mandate on the State of Utah, we would be hearing the hue and cry of the same legislators that have now done so to IPA,” Tatton wrote. “SB161 should be vetoed, at a minimum, to remind the Legislature that process matters and to hold it accountable for not having the Sixth Substitute (the latest version of the bill) vetted properly by the public and for not allowing input from those who stand to lose the most by letting SB161 become law.”

Following market demands, Tatton wrote, IPA is in the process of building gas-fueled facilities, also known as IPP Renewed. 

“After years spent by IPA management and other interested parties, including members of the coal industry, searching for credible parties with the potential to purchase power from the IPP coal units, IPA and its advisors concluded that no such purchasers existed,” Tatton wrote.

As California moves away from fossil fuels, costs would move from IPP’s largest client, Los Angeles Department of Water and Power, to Utah municipalities and ratepayers.

Rocky Mountain Power has also declined legislative invites to enter negotiations to purchase power from IPP.

Bill sponsors have said the state must protect its energy resources to achieve energy security. 

“Now they want to close that plant because of California’s energy policy and you take 1,900 megawatts down to 800 megawatts for the new facility they’re building,” he said. “That’s 1,000 megawatts net decrease into our grid,” Rep. Carl Albrecht, R-Richfield, the bill’s House sponsor, said in a debate.

But, it would be “impossible” to pursue IPP Renewed without retiring the coal operations, Tatton said. Besides that, extending the life of the coal plants would require the acquisition and construction of support facilities, which would interfere with IPP Renewed’s construction.

Permits for the retirement of the coal generators were approved by the Legislature in 2012. Since then, IPA has issued nearly $2 billion in bonds and has committed to spending more in construction, service and sales contracts. All of those financial commitments would be at risk with the bill, the letter reads. 

Besides threatening IPP Renewed, Tatton said, SB161 “interferes with municipal control of assets that have been developed and operated without any public funds,” conflicts with environmental permit commitments made to the Environmental Protection Agency, which “most certainly lead to EPA intervention and litigation that will frustrate the goals of the legislation and cost Utah and IPA millions of dollars in legal fees.”

Not complying with commitments made to the EPA may result in an earlier closure of the coal generators and a “more stringent oversight of air permitting in Utah,” which would also translate to other industrial operators having to install more costly pollution controls.

“IPA is still eager to come to an arrangement that avoids the negative impacts of S.B. 161 while preserving the State’s ability to benefit from further development at IPP,” the letter reads.

Additionally, IPA stores coal ash from its combustion process in large ponds, which after a 2015 change of federal regulations would no longer be permitted to use without expensive upgrades. 

The EPA allows the IPA to continue using the impoundments taking into consideration its coal generation closure. EPA said in a letter to IPA, “IPP must cease operations and complete closure no later than October 17, 2028,” to comply with the regulations.

The EPA also oversees the Utah Division of Environmental Quality in its capacity to issue Clean Air Act permits, which could also be compromised under the bill.

“If Utah fails to implement the federally delegated CAA permitting program in accordance with the CAA, the EPA could rescind program authorization and administer the permitting program itself,” KC Becker, EPA’s Region 8 administrator, wrote in the letter.