Western coal rush

 

The hot hand in coal-fired power plant development is undoubtedly held by Nevada. In a departure from Sin City’s latest marketing slogan, "What happens in Vegas, stays in Vegas," most of the 5,500 MW to be generated by plants proposed for the state is destined for use elsewhere, principally California. Even more megawatt-hours may end up crossing the border if the 1,580-MW Mohave Generating Station in Laughlin, Nev., shut down on New Year’s Eve, remains off-line for long.

If and when

The thirst for power in the West just can’t be slaked. A recent report from Merrill Lynch sums up the situation. "A record hot summer in 2005 awakened concerns that generation capacity shortages are becoming a risk in certain regions of the United States," the report said. "More normal summer weather in 2006 could limit any tightening of reserves in the coming year. New generation could start helping in the West and Texas by late in the decade." This optimistic outlook, however, assumes that the plants and the major transmission interconnects needed to bring their power to market will be built on time.

Another huge "if" is whether California implements a proposed rule that would halt imports of much electricity generated by coal-fired plants. Given the magnitude of the state’s looming power problems, this proposal seems ludicrous; it would decrease reserve margins and increase dependence on natural gas for generating power. Electrons aren’t color-coded by generation type, so I can’t see how such a policy could be enforced. Maybe it’s time to enact a "don’t ask—don’t tell" rule for electricity sources.

Opportunity knocks

Other gunslingers moving into western towns include traditional investor-owned utilities and pure merchant developers. For example, LS Power Equity Partners—a $1.2 billion private fund—has been hard at work for two years developing a 1,600-MW merchant plant near Ely, Nev., and a transmission line from northern Nevada to Las Vegas. The company recently made news by announcing its intent to acquire 6,200 MW of Duke Energy North America’s assets in the western and northeastern U.S.

Other prospective capacity developers include Sierra Pacific Resources, which has unveiled a plan to build two 750-MW coal-fired plants in Ely and a new transmission line to move the power south. Sempra Generation’s proposed 1,450-MW plant in northwestern Nevada also is slowly moving forward, as is Sithe Global Power’s 750-MW coal-fired project in southern Nevada. You can’t tell the players without a scorecard.

Non-native load

Building a new coal plant is tough. If all the announced projects are built, their combined capacity would only keep the West one step ahead of the demand tsunami. In this context, the mothballing of the 35-year-old Mohave plant on December 31—one day before a court-ordered deadline for cleaning it up—must be considered disastrous.

The plant’s owners—four western utilities—decided not to spend a billion on scrubbers and other pollution-control equipment without a new long-term water supply agreement from the Navajo Nation to keep Mohave’s 273-mile coal-slurry pipeline flowing. At the heart of the dispute are the 1.3 billion gallons a year of drinking-quality water used by the pipeline in a region where water is less than scarce. To the Hopi and Navajo, this water is a sacred, living spirit that must be respected.

I’d like to see this impasse dissolved by a quid pro quo. Mohave’s owners should agree to pay retail rates for Indian water under a new supply agreement in exchange for prompt resumption of the pipeline’s operation until a new pipeline can be built to use water from a proposed separate, less-desirable aquifer. After all, the tribes need revenue as much as other westerners need electricity. But with so many stakeholders involved—the utilities, the mine’s owner, regulators, environmentalists, and the tribes—it may take a year or more for a compromise to be reached.

My money is on Mohave rising from the ashes with state-of-the-art emissions controls and a new lease on life. It’s not a sure thing, but the odds are better than the tables in Vegas.

TradeFair Group acquires POWER

As you may have heard, The TradeFair Group Inc. acquired POWER magazine from Platts, a division of The McGraw-Hill Companies, on March 1. Houston-based TradeFair (www.tradefairgroup.com) is an integrated media company serving the U.S. generation industry with publications, trade shows, and online services. For the past eight years, its annual Electric Power Conference & Exhibition (www.electricpowerexpo.com) has attracted industry leaders from every corner of the world. POWER—established in 1882 and a McGraw-Hill property since 1917—has been the conference’s official media sponsor for the past seven years.

TradeFair Group’s acquisition of POWER will strengthen the company’s publishing portfolio and create additional synergies with its online service offerings. According to TradeFair’s president, Sean Guerre, "Our objective is to be the primary source of information—magazines, newsletters, trade shows—for the U.S. generation industry. We’re committed to making POWER—the magazine of record for generating technology—even better, by making it the flagship of a fleet of new print products to be launched next year. I hope you’ll wish POWER and its new publisher, Brian Nessen, success in this endeavor."