State the Issues - October 2005

State the Issues

by Jon Wellinghoff, Michael R. Niggli

Question: Should Sempra Energy be allowed to build the Granite Fox coal-fired power plant in Northern Nevada?

by Jon Wellinghoff

Sempra is proposing to build a 1450-megawatt, pulverized-coal plant in northern Washoe County near Gerlach. Business leaders should instead support wind and geothermal development in Nevada as a better option.

Consider the economics: 1,000 megawatt (MW) wind and 800+ MW geothermal development in Northern Nevada would bring: $3.9 billion in Nevada infrastructure investment; 3,354 construction jobs; 580 operation jobs; $137 million in construction wages and salaries; $182 million in sales tax; $25.8 million in annual property taxes; and $7.5 million in annual royalty payments.

In addition, the Sempra plant will impede other business development. The Clean Air Act limits ambient air pollutants in the Washoe County air shed. Large emitters of pollutants, like Sempra’s coal plant, will consume a significant quantity of these air pollution "increments," limiting additional development in Washoe County. Renewable resource facilities, however, will not limit development in Northern Nevada.

Water used by a coal plant could otherwise serve residential, commercial and industrial development, as well as wildlife and recreation. In Nevada, water rights have sold at $15,000 to $20,000 per acre-foot for development purposes. Sempra will consume water rights on the order of $375 million to $500 million in alternative development uses. Renewable energy has significantly smaller water needs and would leave water resources intact for other development.

If not used by the Sempra plant project, the transmission lines near Gerlach have sufficient excess capacity to deliver Nevada renewable energy to the California markets. The Sempra plant would consume that available capacity, and prevent Northern Nevada’s abundant renewable energy from being economically developed.

Sempra has not received BLM permits for rights of way or air permits, nor the rights to 25,000 acre-feet of water. Sempra has no firm contracts for their power, unlike a number of geothermal developers who do have contracts with California utilities. Sempra has a faulty business plan that depends on selling into an uncertain California market that is considering rejecting power from sources high in greenhouse gas emissions like the Sempra plant.

The bottom line is that it is bad business for Nevada to support the Sempra coal project. The Nevada Clean Energy Coalition urges Nevada business leaders to therefore support the most prudent business choice, development of Nevada’s clean renewable energy resources.

by Michael R. Niggli

The July heat helped shatter energy consumption records across the western U.S, issuing a sweltering reminder of the need for new supplies of stable, affordable and reliable power for air conditioners, refrigerators and other appliances. Sierra Pacific Power, Nevada Power, Utah Power and the California electric grid all experienced record high electric demand during this period. Astute, advance power planning and conservation was crucial to prevent supply problems. We applaud the utilities and customers for their foresight and response.

Sempra Generation recognizes power demands will continue to escalate. Our response includes a proposal to build a two-unit coal-fired power project near Gerlach, called Granite Fox, which could serve Northern Nevada, the Pacific Northwest and Southern California.

Using abundant, low-sulfur coal will help make the cost of the power generated at Granite Fox affordable, while reducing reliance on foreign sources of fuel. Our nation has enough coal that is economically available to last several hundred years.

Granite Fox would employ the Best Available Control Technology for air emissions and is sponsoring a complex and sophisticated water study to ensure it does not negatively impact area water customers.

Some argue that it would hamper the development of solar, wind and geothermal power in the region by displacing power line capacity. That is not the case. We support the development of renewable energy sources as part of our region’s power portfolio. We plan to invest well over $100 million in transmission system upgrades that would help bring these resources to market. Without these upgrades, and a stable energy source that enables connection of solar and wind power onto the grid, renewable power from the area is uneconomic and unsustainable.

Renewable power is an increasingly important part of this nation’s overall energy mix. However, solar and wind generators – because they rely on less available and cyclical resources – cannot provide the stable, reliable power needed to keep our hospitals, businesses, computers and resorts running on a 24/7 schedule.

A "renewable energy vs. coal" debate could result in the construction of neither. We believe there’s room for both. Meeting the power supply challenges of future summers won’t be achieved with false accusations and emotion. The solution rests with the responsible, scientifically grounded development of a diverse blend of energy resources. An energy supply portfolio with a backbone of reliable, lower-cost resources will reduce risk, improve reliability and allow our economy to have the power necessary to meet the needs of future generations.

Jon Wellinghoff, Michael R. Niggli
Jon Wellinghoff, an attorney and energy consultant at the Las Vegas law firm of Beckley Singleton, represents Western Resource Advocates. a member organization of the Nevada Clean Air Coalition. Michael R. Niggli is the president of Sempra Generation.