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PacifiCorp favors closing Naughton coal-fired unit by 2017 in resource update


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PacifiCorp favors closing Naughton coal-fired unit by 2017 in resource update

Undercurrent market conditions, closing unit 3 of the Naughton coal-fueled plant inWyoming at the end of 2017 would be more economical than converting it tonatural gas as previously planned, PacifiCorpsaid March 31 as it announced the filing of its 2015 integrated resource planupdate with publicutility commissions in the six states it serves.

Duringthe 2015 IRP development process, analysis of near-term regional hazecompliance requirements supported converting Naughton unit 3 to burn naturalgas in 2018, the BerkshireHathaway Energy subsidiary said. However, in thejust-issued IRP update, PacifiCorp said more recent cost analysis no longersupports continued operation of the plant unit with a gas conversion.

"Withreduced load, lower market prices, and increased costs for gas conversion, therefreshed analysis shows that retiring Naughton Unit 3 at the end of 2017 is alower cost alternative than the assessed gas conversion approach,"PacifiCorp said in its update. "As such, the capacity of the convertedUnit 3 is no longer included in the 2015 IRP Update resource portfolio afteryear-end 2017."

PacifiCorphedged a little by saying it recognized that Naughton unit 3 is an importantgeneration resource to Wyoming and PacifiCorp's customers, so the company willcontinue to review emerging technologies, reassess traditional gas conversiontechnologies and costs, and consider other alternatives that would allowcontinued operation of Naughton unit 3 beyond 2017.

Thethree-unit, 687-MW steam turbine plant can also burn some natural gas. Unit 1went online in 1963, unit 2 went online in 1968, and unit 3 started up in 1971.While older than unit 3, the smaller units, units 1 and 2, are not slated forretirement until 2030, according to the update.

Alsoin the IRP update, PacifiCorp projected a load and resource balance positionthat is shorter beginning in 2018, relative to the 2015 IRP, primarily due tothe assumed early retirement of Naughton unit 3 at the end of 2017 and Chollaunit 4 in Navajo County, Ariz., at the end of 2024. At 380 MW, Cholla unit 4 isthe largest of that plant's three operating units. Unit 2 has been retired.

Energy efficiency viewed asvital

For2016, PacifiCorp has total resources of 10,131 MW to meet a load obligation of9,878 MW, plus a 13% reserves requirement of 1,309 MW, the update said. Thatleaves an open system position of 1,056, MW, but the utility has availablefront-office transactions of 1,670 MW that it can call upon.

However,by 2025, absent any future actions, the total resources would shrink to 9,668MW, while the load obligation would grow to 10,961 MW, plus a reserverequirement of 1,450 MW. That would leave an open position projected at 2,743MW.

PacifiCorp'sprojected short position will be partially offset by the addition of new windand solar qualifying facility contracts. However, PacifiCorp saidit continues to plan to meet its customers' needs largely through theacquisition of cost-effective energy efficiency resources and front-officetransactions over the next 10 years.

PacifiCorpsaid energy efficiency remains a key for managing future energy demands. About87% of expected growth in power usage will be met by customers usingelectricity more efficiently, the company said.

The2015 IRP update also addresses increases in renewable portfolio standards to50% by 2030 in California and 50% by 2040 in Oregon. Though the RPS pace inOregon allows 10 more years, the utility has more than 12 times as manycustomers in Oregon than in California.

PacifiCorphas updated its action plan to issue requests for proposals this year seekingboth renewable energy credit purchases and resource procurement alternatives.

Wires, renewables,retirements intertwined

"Notwithstandingthe near-term renewable resource value incentives and opportunities, PacifiCorpwill also consider longer term opportunities to take advantage of retiring coalfacilities on its network that will free up transmission in renewable resourcerich areas and provide access to low cost resources which today are constrainedby lack of transmission," the IRP update said.

PacifiCorpis exploring joining the CaliforniaISO and becoming a full participating transmission owner as the ISOexplores expansion into a regional grid operator. This could reduce PacifiCorp'sneed for firm market purchases over the near- to mid-term and displace the needfor resources to meet load in the long term, the utility said.

Thelatest IRP filing also included updates for the Energy Gateway andWallula-to-McNary transmission projects. Permitting for Energy Gateway willcontinue on several segments of the project, and construction is to beconducted for the Wallula-McNary 230-kV line to be in service in 2017.

Tohelp the company remain prepared to support state compliance with potentialgreenhouse gas regulations, the update addresses the U.S. EPA's Clean PowerPlan, though the rule is currently held up by litigation. On Feb. 9, the U.S.Supreme Court issued a stay of the plan, suspending implementation of the rulepending the outcome of litigation before the U.S. Court of Appeals for theDistrict of Columbia Circuit.

Theupdate also included discussion of EPA's final regional haze federalimplementation plan requirements for installing selective catalytic reductionat Dave Johnston unit 3 and Wyoming's appeal to the U.S. Court of Appeals forthe 10th Circuit. If EPA's plan is upheld, PacifiCorp said it will shut downthe unit by the end of 2027.

Meanwhile,PacifiCorp said it will continue to pursue its own appeal of the EPA's plan asit pertains to installation of similar pollution controls at the Wyodak plantin Campbell County, Wyo.

PacifiCorpsaid its IRP is the company's best current view of what resources are needed tomeet the future power needs of its customers. A full IRP is developed every twoyears, and an update is filed in the off years. The IRPs andupdates are filed with regulators in Utah, Oregon, Wyoming, Washington, Idahoand California across which the utility has more than 1.75 million customers ofwhich nearly 1.37 million are in Utah and Oregon.