Ledes from the Land of Enchantment

IPA Board rejects unsolicited bid to buy out assets, keep coal units open past 2025

Members of Intermountain Power Agency’s board of directors voted last week to reject an unsolicited bid by two companies that wished to keep the Delta area’s two coal-fired units open past their scheduled closure in 2025, according to a resolution made public as part of IPA’s Nov 22 board meeting.

IPA was approached in September by Farmington, New Mexico-based Enchant Energy and Orem-based Fibernet with an idea to extend the life of the coal burning portions of the plant by using carbon capture and sequestration technology.

The companies proposed also using electricity generated by the older units to operate high density data centers to be built on IPA property. At least one of the companies also sought to become a member entity of IPA, which is comprised of 23 Utah municipalities, as part of the proposal.

The two companies, however, returned to IPA in October with a revised proposal that included the companies buying out all of IPA and its assets—its land and water rights, outstanding bonds and power contracts, as well as its transmission systems and generating station.

The revised proposal called for leasing back the assets to IPA to operate.

The resolution rejecting the proposal explicitly states the September and October proposals “were not in response to any formal or informal solicitation by IPA, but rather were submitted by (the companies) on its own initiative.”

Rumors had been swirling locally for months that a movement was afoot by leaders at the state level to somehow orchestrate keeping the coal fired units at IPP from closing.

John Ward, an IPA spokesman, confirmed Monday the rumors were likely based on Enchant and Fibernet’s proposal.

“They approached the legislature before they approached us,” he said.

IPA’s resolution rejecting the solicitation spells out a number of risks associated with even entertaining such deals to keep the coal units open—by agreement with the Environmental Protection Agency, IPA is allowed to operate the coal units until 2025, otherwise IPA would have to spend hundreds of millions of dollars building new coal ash disposal facilities in order to comply with federal regulations.

“The show stopper, absent all the other risks outlined in that resolution, is the residual coal combustion piece,” Ward said. “In 2014, EPA came up with a new coal ash disposal regulation. The regulation said if you’ve got a disposal unit that is leaching something into the groundwater you have to close and build new disposal facilities. But if you commit to close the plant by a certain date, we’ll let you keep using those facilities…that’s the option IPA took. It didn’t make sense to go in there and spend a couple hundred million dollars to build new ash disposal facilities that were only going to be used for four or five years.”

But if EPA believed IPA was set to diverge from the approved closure timeline tied to the ash disposal agreement, an unrealistic 135-day deadline could kick in whereby IPA would need to open new ash disposal facilities or face imminent shut down.

“So they (IPA) committed to that. EPA is expecting us to shut those units down when we said we would in 2025,” Ward described. “If we announce that we are entertaining keeping them open beyond that, then that throws us back into the other section of the law and EPA could come in and say, okay, that’s it, you’re back under the other section of the law and you’ve got 135 days to build new disposal facilities, which is obviously impossible.”

Another risk outlined in IPA’s rejection resolution involved the power plant’s air quality permit.

IPA received an approval order from the Utah Division of Air Quality in 2021 that allowed work to commence on IPP’s gas plant. Provisions of the order contain language about the closure of the plant’s coal-burning units. Reopening that order to delay the closure of the coal units would likely trigger an 18-month delay in construction of the gas plant and could add costs of up to $50 million to the IPP Renewed effort, according to the resolution.

Ward was asked whether IPA believes there will be other such offers in the future. He said there could be. He also said IPA expects another legislative session spent beating back similar attempts to hamper development of the gas and hydrogen plant—state legislators this year and last stripped a number of benefits IPA enjoyed previously as a subdivision of the state in an effort to exert more control over the power generator.

“We made a big effort several years ago to find credible buyers for the coal units,” Ward said. “And could not find them…we have no illusions that this may come up in the legislature. There’s probably certain legislators not happy with the decision to reject this offer. There may be another chapter to play out in the legislature this year.”

Enchant Energy, it should be noted, is also a party to a similar takeover bid involving the now shuttered San Juan Generating Station outside Farmington, NM, operated by Public Service Company of New Mexico.

Enchant similarly pitched keeping that generator’s coal units open, utilizing carbon capture technology as a selling point to do so.

A legal dispute eventually erupted and the entities on both sides chose to enter into arbitration in October to settle their issues, according to coverage in the Farmington Daily Times.

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