Idaho Power could completely exit the North Valmy coal-fired plant by the end of 2022, three years earlier than previously planned, according to the latest amendment of its integrated resource plan.
The utility retired its 127 MW share of Unit 1 in 2019, so exiting Valmy Unit 2—the utility's last stake in the plant—by the end of 2022 could save the company $3 million by reducing costs associated with running the plant. That is enough money to consider leaving earlier than planned, but not enough to make the decision a no-brainer.
The utility has to figure out if it can purchase enough power to meet its summer peak loads until the 500 kV Boardman-to-Hemingway (B2H) transmission line opens, which will make up losing the company's 133 MW stake in Unit 2.
Idaho Power notified utility regulators in Idaho [IPC-E-19-19] and Oregon [LC 74] in early October when it filed an amended 2019 IRP in both states. It is the third version of the plan filed.
At the same time, the utility withdrew its application asking the Idaho PUC to sign off on the previous 2025 exit date for Valmy Unit 2 [IPC-E-19-18]. The company told the Idaho commissioners in its notice of withdrawal that it expects to file a revised application to set an exit date "within the coming months."
Idaho Power's ownership agreement with Valmy co-owner NV Energy requires either party give at least 15 months' notice that it plans to exit from either unit. To get out by the end of 2022, the Idaho PUC would have to approve Idaho Power's withdrawal application by Sept. 30, 2021. Idaho Power exited Unit 1 at the end of 2019. NV Energy plans to operate that unit through 2021.
Idaho Power plans to complete the study by spring 2021, Jared Ellsworth, Idaho Power's transmission, distribution and resource planning director, told Clearing Up.
The $3 million savings in net present value from leaving early would be due to avoided capital costs and lower operating and maintenance expenses.
But "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," the company said in the latest version of its IRP. "The objective of this near-term analysis would be to identify any tradeoffs between an earlier exit date and the ability to provide reliable, affordable power."
The utility hopes to cover Unit 2's capacity with a power purchase agreement from one of the Desert Southwest markets—Palo Verde, Mead or Four Corners—and use its 345 kV transmission line to North Valmy to help wheel the power north to its distribution grid in Idaho, Ellsworth told Clearing Up.
The PPA's primary requirement is to provide capacity to meet summer peak loads, which make up Idaho Power's seasonal peak. Valmy primarily operates as a summer peaking resource. If B2H stays on track to open in early- to mid-summer 2026, the PPA would have to cover summer demand through 2025.
"Absent such long-term purchase, it may not be feasible to exit the unit prior to the completion of B2H," the updated IRP says.
The study's outcome is not a foregone conclusion.
"We do have some concerns about us going down to the south," he said. "We feel like we'll be able to acquire a resource, but we need to make sure that it is economically competitive with Valmy" and provides equivalent reliability.
Like the Northwest, the Southwest is not an organized market, and power purchases can come with a side stack of pancaked wheeling charges. Idaho Power has little surplus transmission capacity elsewhere. That reality is a big reason the utility wants to build B2H.
"The analysis will consider customer reliability, more current operating budgets and economics to inform a decision that will minimize costs for customers while ensuring Idaho Power can maintain system reliability," the latest IRP says.
Idaho Power discovered the potential $3 million upside to closing Unit 2 early while reviewing and refining the modeling used in the IRP. For the first time in an IRP, the utility used a long-term capacity expansion model that relied on computer-generated portfolios, rather than hand-crafted ones (CU No. 1910 ).
Since the initial filing, though, Idaho Power has twice amended the plan and conducted a months-long review of its methodology (CU No. 1965 )}.
The only major change between the three IRP versions is coal plant retirement dates. They have steadily grown earlier with each iteration.
Idaho Power's latest preferred portfolio envisions retiring its share in Valmy Unit 2 in 2022. The utility will exit its share of Jim Bridger's four units in 2022, 2026, 2028 and 2030. The order of unit retirements has not been set, according to the IRP.
B2H is "the linchpin" to retiring Jim Bridger on schedule, Ellsworth said.
Without the new transmission capacity, Idaho Power would operate the last two units until 2028 and 2034, according to the preferred portfolio without B2H.
In July, Idaho Power told regulators in Oregon and Idaho that BPA likely would drop out as a partner in the B2H line, which is projected to cost about $1.1 billion. Idaho Power would pick up Bonneville's 24 percent share of the project, giving the utility 45 percent ownership. PacifiCorp's 55 percent stake would not change.
Despite the hiccups, Idaho Power plans to use long-term capacity expansion modeling and other methodological changes in its 2021 IRP.
"The takeaway on the process is we learned a lot about long-term capacity expansion modeling," he said. "We also learned a lot about the complexities of coal exits and modeling of coal."