Council Votes to Terminate Coal Energy Contract

Utah power plant contract no longer meets City, State clean air goals

Published : Tuesday, October 30, 2018 | 4:48 AM

[Updated] “This is a green letter day,” said Mayor Terry Tornek happily Monday as the Pasadena City Council unanimously agreed to terminate Pasadena Water and Power’s forty-year contract with the Intermountain Power Agency for energy from its coal-fired Intermountain Power Project in Delta, Utah.

With the Council vote, Pasadena’s participation in the IPP will terminate when the existing contract expires on June 15, 2027.

The plant no longer meets the City’s clean air goals, according to a staff report presented to the Council.

The contract termination supports the City Council Strategic Planning Goals, Pasadena’s Climate Action Plan, the Urban Environmental Accords, and the General Plan, in reducing greenhouse gas emissions, by reducing the City’s commitment to the future use of fossil fuel powered electric generation resources, the report noted.

The recent passage of Senate Bill 100 on September 10, also establishes a statewide policy goal of a 100% carbon-free power resource supply for California by 2045. Although Intermountain Power Agency’s shift to natural gas is an improvement over coal from an environmental point of view, continued participation in the Renewal Project through 2077 would be inconsistent with the goal of SB-100, the report noted.

While the coal plants are to be replaced with new natural gas fired plants, known as the “IPP Renewal Project”, by 2025, all current project participants (including PWP) will be obligated to take energy from the Renewal Project through the 2027 expiration of the Agreement. Participants in the IPP Renewal Project will be entitled to generation from the new power plants and the associated transmission rights for 50 years starting June 16, 2027.

However, as Eric Klinkner of Pasadena Water and Power, told the Council, “This is not a good energy choice.”

The City Council had previously authorized the City Manager to execute a new agreement with IPA in 2015 that provided rights to energy up to 40 MW from the IPP Renewal Project and associated transmission rights, which also provided broad authority for the City Manager to execute terms of the Contract, including termination.

PWP currently has a 14 MW (1 .667%) contractual share of the IPP Renewal Project and an equivalent percentage share of rights to the Southern Transmission System (STS) that delivers energy from the IPP generator bus to Southern California.

However, as noted Monday, the City, as a participant in the California Independent System Operator (CAISO), has access to the vast majority of the grid that serves California. PWP has only committed to one new resource—5 MW of Milford Wind in Utah—that is connected to a transmission entitlement owned by PWP, since joining the CAISO as a”Participating Transmission Owner” in 2004.

Also, while PWP staff noted in their report that the STS rights relinquished after June 2027 as a result of the contract termination would otherwise have some tangible future value to PWP customers, “this potential value pales in comparison to the stranded cost commitment and additional greenhouse gas emissions associated with remaining in the IPP Renewal Project.”

While Vice-mayor John Kennedy essentially asked three times, Klinger told him, as noted in the report, there is no near-term fiscal impact as a result of this action and it will not have any indirect or support cost requirement to the City.

As the staff report noted, “This action is expected to save PWP customers money after June 2027 by eliminating a commitment to a higher-cost energy resource than would be otherwise available from other sources.”