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Idaho Power considering 2022 exit from Valmy coal plant


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Idaho Power considering 2022 exit from Valmy coal plant

Recently filed documents show that Idaho Power Co. may decide to exit its holdings in Unit 2 of the coal-fired North Valmy Station "as early as year-end 2022" instead of by 2025 as the utility previously specified in its integrated resource plan.

Idaho Power's early exit would not guarantee the early retirement of that generating unit; company spokesperson Brad Bowlin said Oct. 19 that NV Energy Inc. subsidiary Sierra Pacific Power Co., the facility's operator and co-owner, "has the option of continuing to operate the plant within their ownership share."

Sierra Pacific and Idaho Power equally co-own the 268-MW North Valmy Unit 2, according to S&P Global Market Intelligence data. Jennifer Schuricht, spokesperson for Berkshire Hathaway Energy subsidiary NV Energy, wrote in an Oct. 19 email that the company "expects to retire or divest 100% of its coal generation with the closure of Valmy 2 by the end of 2025."

The possibility of an earlier Idaho Power exit was first reported by NewsData. The Idacorp Inc. subsidiary could avoid roughly $3 million in operating expenses and capital investments if it runs the coal unit for about three fewer years, according to calculations included in the utility's recently amended integrated resource plan, or IRP, application.

Despite the modeled cost savings, Idaho Power may not exit the unit earlier than planned. Although the potential savings are attractive, they should not be the "sole consideration," Idaho Power said. "Near-term economic and reliability impacts of an earlier exit must also be evaluated using data points such as forward market hub price forecasts, planned unit outages, Idaho Power's customer risk management processes, and recent market conditions, among other items."

Additionally, the utility said it will have to evaluate whether it can fulfill any power generation deficit stemming from an early exit through "a long-term firm purchase of transmission and energy," which may not be feasible before the Boardman-to-Hemingway transmission line is operational. That 300-mile, 500-kV transmission line between Idaho and Oregon is expected to come online in 2026 to connect to Pacific Northwest markets, improve reliability and help integrate renewables.

Idaho Power will conduct further assessments "to identify optimal unit exit timing that carefully weighs customer economics and reliability concerns and ensures adequate capacity," the company said in its Oct. 2 amended IRP. Bowlin said the additional analysis will start in 2020 but wrap up sometime in 2021 during preparation for the company's next IRP.

"Under our current agreement with NV Energy ... we have until September 2021 to determine if we will exit the plant by the end of 2022," Bowlin said. Specifically, Idaho Power must provide 15 months advance notice of any such move.

In mid-2017, the Idaho Public Utilities Commission authorized Idaho Power to increase its electric rates by $13.3 million, or 1.2%, to recover costs associated with the accelerated depreciation of the North Valmy Station. Under the approved settlement, the parties decided to assume a 2028 shutdown of Unit 1, which Idaho Power exited in 2019, and Unit 2 for ratemaking purposes.