Report Questions Ely Energy Center Benefits; Need for Coal

By: Sandra Chereb AP
By: Sandra Chereb AP

RENO, Nev. (AP) - Sierra Pacific Resources' plan to build a coal-fired energy complex in eastern Nevada fails to consider rising construction costs or future carbon emission levies that would make the project financially risky for shareholders and utility customers, an investment research firm said Tuesday.

But a spokesman for the Reno-based utility and others said the report by Innovest Strategic Value Advisors was misleading and failed to consider other key components of the Ely Energy Center plan.

The report concludes that Sierra Pacific's "strategy does not address recent regulatory and economic trends that continue to shift the competitive balance away from coal-fired generation.

"The company's decision to pursue the Ely Energy Center will therefore likely have negative long-term financial implications for the company's shareholders and ratepayers," the New York-based firm said.

During a conference call with reporters, Eric Kane, a senior analyst at Innovest on Wall Street who wrote the report, said, higher electric rates for consumers and decreased shareholder value "are real possibilities" if the project is built.

Others invited to participate in the call included a representative from the conservation group Natural Resources Defense Council and a former Nevada consumer advocate and state utility regulator.

Sierra Pacific spokesman Mark Severts questioned the integrity of the report and its findings.

"No one at this company has heard of Innovest," Severts said. "We work with many investment companies and investment analysts, but have never been in contact with them."

When Sierra Pacific announced the project in January 2006, plans called for two, 750-megawatt coal-fire plants to be built, followed eventually by two 500-megawatt coal gasification units as technology evolved and a 250-mile transmission line.

Initially estimated at $3 billion, the projected cost has since grown to more than $5 billion, and the utility has said it will delay its request for final regulatory approval before construction until 2009 or 2010.

"The key here is Sierra Pacific is proposing this as a way to keep electricity rates stable," Kane said. "Looking at construction cost increases basically argues against it."

But Joe Lucas, with the Virginia-based Americans for Balanced Energy Choices, said the analogy is unfair because costs for all large construction projects - power plants included - have increased.

"All boats have risen with the sea," he said.

Sen. Harry Reid, D-Nev., has opposed the plant, arguing Nevada needs to move toward renewable energy sources such as solar, wind and geothermal.

Severts said renewable energy is important, "but it cannot be our sole solution."

"Customers need energy when the sun isn't shining and the wind isn't blowing," he said.

Coal plants provide just over half of the nation's electricity. They also are the largest domestic source of the greenhouse gas carbon dioxide, emitting 2 billion tons annually, about a third of the country's total.

The first two units, if built, would increase Sierra Pacific's reliance on coal-fired power from 18 percent of owned capacity to 38 percent, the report said, and raise the annual carbon dioxide emissions - the main culprit of global warming - by 11.5 million tons.

"There's no such thing as clean coal," said Theo Spencer, senior project manager at the Natural Resources Defense Council. "Smart utilities are moving away from coal power in droves."

He added that there are several proposals in Congress to impose fees for carbon emissions. The report estimated annual costs for carbon pollutants at the Ely center could range from $115 million to more than $600 million, based on fees of $10 to $55 a ton.

But Severts said the calculation doesn't factor three decades-old plants that Sierra Pacific plans to shut down once the cleaner, more efficient plants are operable.

"We will have five times more energy, and a similar carbon footprint as exists today," Severts said.

He said another key component of the project is the transmission line that will link northern and southern Nevada for the first time, and allow the sharing of power between the two regions for the first time.

The line, with 500-megawatt capacity reserved for renewable sources, will help spur wind energy development in eastern Nevada,
he said.

Without the line, he said, "the wind can't make it to the market."

Last week, Sen. John Ensign, R-Nev., said he's trying to get the U.S. Energy Department to consider adding the Ely Energy Center to a list of possible locations for a demonstration project on ways to capture carbon dioxide produced by such plants and store it underground.

Tim Hay, a former Nevada consumer advocate and state public utility commissioner, said studies have shown the site is unsuitable.

The geology "in the Ely area is not of a nature that you could store either compressed gaseous ... or liquefied carbon dioxide," Hay said.

"I think our site would not rank highly among the DOE selection criteria."

(Copyright 2008 by The Associated Press. All Rights Reserved.)


Comments are posted from viewers like you and do not always reflect the views of this station.
powered by Disqus
KOLO-TV 4850 Ampere Drive Reno, NV 89502
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 17202096 - kolotv.com/a?a=17202096