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Coal Exports Eyed in Western States

President Obama's climate action plan may increase reliance on natural gas as a baseload source of electricity generation, but it is also sparking plans for coal export projects in the West to market U.S. supplies to Asia-Pacific markets.

Officials in Oregon and Washington are urging a full environmental assessment for three proposed export terminals by the U.S. Army Corps of Engineers, which recently indicated to a Congressional subcommittee that it would not conduct a widespread environmental impact statement to calculate the added greenhouse gas emissions the exported coal supplies would produce when burned in various Asian nations.

State officials want the environmental review, but if that doesn't happen, they may conduct studies to assess the impact from facilities on the Columbia River and Puget Sound regions.

Washington state's Utilities and Transportation Commission (UTC) last Tuesday approved an 11-year power purchase agreement that Bellevue, WA-based Puget Sound Energy (PSE) signed with TransAlta Centralia Generation LLC for 346 MW of coal-fired power supplies through the end of 2025 as a prelude to closing the Centralia plant in central Washington. The UTC approved the coal transition agreement on the same day that President Obama unveiled his sweeping climate action plan.

"The UTC found that the long-term contract with the coal-fired plant was the least-cost option for the acquisition of power the utility needs to meet demand, and that the contract would not result in higher costs to PSE's customers than if the company had purchased power from other sources," a spokesperson said.

Under the deal, TransAlta has to contribute nearly $40 million to local economic development, energy efficiency/weatherization and clean energy technology programs, which were mandated by a 2011 state law. The Coal-Transition Energy Bill provides certain deferrals of greenhouse gas emissions performance standards to encourage early closures of coal plants (see NGI, May 9, 2011).

Coal-fired generation also is taking a beating (see related story). PacifiCorp. is warning that it may shutter several coal-fired generation plants it operates in Wyoming if the U.S. Environmental Protection Agency (EPA) regional haze rule is finalized. Gov. Matt Mead urged EPA to allow more time for comments on the plan. New rules may negate PacifiCorp's plans to systematically upgrade and/or retire coal-fired generation on a unit-by-unit basis over a five- to eight-year period.

Meanwhile, the Arizona Public Service Co. (APS) said it may reconsider a deal it made last year to buy Southern California Edison Co.'s (SCE) interest in the coal-fired Four Corners Generating Station. Recent actions by the Arizona Corporation Commission to reintroduce some form of retail electricity competition led APS to question the plant's long-term viability.

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