Access Utah 12-17-03

Clark Mower and Rick Sprott

Thanks for joining us for our first half of our Wednesday edition of Access Utah. We have heard in the news over the past several years of such things as a large blackout on the East Coast even affecting portions of Canada and earlier rolling blackouts in California and an electrical shortage. There have been suggestions of re-strengthening the infrastructure and building new electrical generating capacity it’s not surprising then to learn that there are developers of new energy projects out there and we are going to talk about one that may be arriving in central Utah. This was brought to our attention a while back in an article in the Deseret News dated September 26, the reporter Donna Kemp Spangler the headline was “Pollution vs. Jobs at Heart of Battle.” Well, is it really a case of jobs vs. the environment? In this case it is a 270-megawatt power plant located in Sigurd which is in Sevier County, it’s a small community many of us drive through on the way to Capitol Reef National Park and the company that has started submitting applications doing the initial investigative work is Nevco. They have put in an application with the state although I have only seen one article in either of the statewide newspapers; apparently this has generated fairly lively debate in Sevier County and surrounding areas of central Utah. So, we are very pleased to have with us two guests who can address what is proposed, what may be happening, how it may or may not affect the environment. Rick Sprott is the Director of the State Division of Air Quality and is familiar with the initial applications from the company. Also with us is Clark Mower who is the managing director of Nevco Energy. Gentlemen, thank you for joining us.

Thank you.

Q:        Let me just go first to Clark Mower and tell me in the abbreviated fashion exactly what the company is looking at in terms of size, dimensions, where it would be located, who would buy the power, the sort of overview of the project if you could.

A:        Okay, thank you Lee, I appreciate the opportunity of being on the radio and giving some information about the project. The project actually has been in the works for several years. The development process for a project of this size or any substantial size is fairly significant involving anywhere from 3 to 5 years in the preliminary stages and then another 3 to 5 years in the permitting stages. So we are 3 years into the project. As you indicated the project is a 270 megawatt gross, 250-megawatt net, electrical generating plant to be located in Sigurd, Utah. There is an existing Utah Power and Light substation and major transmission lines that flow into that area and the project will be located adjacent to the Utah, PacifiCorp/ Utah Power and Light substation. As you probably know, there is a growing energy demand in the United States and PacifiCorp has put out an RFP for power for the 2005 and 2007, 2009 range. We hope to be one of the individuals providing power for that. We also have talked to additional major power users. We would sell directly to a distributive company and then allow them to distribute it directly. The best way to build a plant is to locate it close to the fuel source and when you are talking about a significant amount of power, that is anything over 100 megawatts, the only three competent sources of power would be either a gas fired facility, a coal fired facility or a nuclear fired/ powered facility. Coal is the cheapest and the most stable form of fuel. As you know natural gas is also a viable alternative but natural gas prices are widely fluctuating and fairly explosive. Nuclear power in the United States is not an acceptable form. So really the only viable alternative is a coal fired power plant in the central Utah area. There are no major gas lines in that particular vicinity and coal, a very competent clean coal source is available very near to the plant. That’s why the location and who we hope to sell the power to.

Q:        Where would the coal come from?

A:        It would be high quality Utah coal; there are coal deposits within the immediate vicinity or semi- immediate vicinity within a 50-mile range.

Q:        When we are talking about 270 megawatts the number to those not in the power business may not mean a lot. That’s quite a bit of electricity?

A:        That’s a significant amount of electricity.

Q:        Can you put that in numbers that might, numbers of homes?

A:         About 25,000 to 30,000 homes.

Q:        And another plant that some people may be familiar with, a little bit to the west is the Intermountain Power Project, which is a large fairly recent coal burning plant. How big is that one?

A:        That’s about 1,600 megawatts net, so you can get a fairly easy comparison of size. That’s about 6 to 7 times larger than the plant proposed in Sigurd.

Q:        Rick Sprott as I mentioned is also with us, Director of the Utah Air Quality Division, Rick I guess the company Nevco has been putting in applications and the state has been looking at the project?

A:         Yes, as Clark said this is a very long process. They spent over a year collecting information, modeling, monitoring for pollution there in the area prior to even submitting an application in the first part of this year and we’ve been undergoing a very rigorous review of what they have given us. Gone through two or three major revisions, and so forth… they have done a good job. The design of this particular plan is a fluidized bed combustion design which is inherently cleaner than standard boiler designs. So that’s a plus environmentally for this. And so it has and is required to have the very latest state of the art pollution control devices. There will be pollution but on a basis of the power produced and everything else it’ll be probably the cleanest permit, the cleanest coal fire permit we’ve ever permitted in Utah.

Q:        What kind of time line are you looking at before there is an approval or non-approval or whatever is going to happen?

A:        There are some important milestones until we get to the point where we are satisfied that all of the regulations have been met and so forth, and we provide… then basically we have a proposed permit that the company needs to review and make sure that they can and are willing to live with the limits and restrictions that are in the permit. If they are, then we can go forward and do a public proposal for public comment and we certainly look at the inputs we get from the public very seriously. The process is a little different than is commonly understood, in that there are often many people for good reasons who object to various kinds of projects, not just power plants, various kinds of development. While those may be legitimate, our requirement is that the company satisfies the Clean Air Act and state regulations. If they meet those, unless there’s objections on those grounds, we cannot under law stop the permit. Those are the issues that we will be anxious to get public comment on. We also are planning on a hearing probably in Richfield. We would anticipate probably sometime shortly after the first of the year in early January we’d be prepared to go to public comment and that’s a 30 day public comment period we will advertise and make the folks in Sigurd and Sevier County and Richfield area very aware, communicate with folks so they have every possible opportunity to make inputs.

Q:        So that’s the very early part of next year probably?

A:        Yes, that’s when we anticipate at this point although until the company has a chance to take a look at what we are proposing and that sort of thing that may have some affect on the schedule but I anticipate that we are very close to being complete.

A:        Lee, I think it is also fair to indicate that there also would be a local permitting and sighting process that would continue after that. So, the Sevier County and local governmental agencies will have approval rights and sighting rights on the location of the facility and also on the facility itself.

Q:        By the way, Clark Mower, does the facility have name, shorthand name so we can refer to it as?

A:        Sevier Power Company, SPC.

Q:        SPC, sort of like IPP. We’ll call it SPP?

A:         SPC, Sevier Power Company.

Q:        Well, we’ve outlined basic parameters; if you are listening and have a question for either of our guests feel free to join our conversation. The toll free number anywhere you are listening is 1-800-826-1495. Clark Mower to you also need to find a fairly significant amount of water for this project?  I recall one of the interesting developments in the Delta area when the IPP was going in. As they went out to acquire water contracts there was a fair amount of dissention in the community about selling water rights and there were a few individuals who got very wealthy.

A:        Lee, thank you for the question, that’s actually a very good question. The developers of this project have been very acutely aware of the problems that that generates and especially in a rural community in a time of fairly significant drought and water shortage. The facility itself was designed so that it uses, instead of water cooling which is used at the IPP or Delta facility, air cooling which uses significantly less water than would be required of a conventional water cooled facility. It costs more in construction but it is significantly lower water usage. The entire water for the plant, for the cooling of the facility is estimated to be less than the water that would be required to irrigate 50 acres of ground. That’s significantly less.

Q:        Yes, and tell me about this technology Rick Strott referenced as to how you burn the coal and keep the releases down?

A:        There are basically two types of technology that are used in coal fired plants, one is called pulverized coal or a PC facility, that’s the type that you have at both the IPP and the Huntington Plants, very common technology, very effective technology but it burns at significantly higher temperature, than the temperature required for the circulating fluidized bed facilities which burn at about half the firing temperature as the pulverized coal facilities. It’s the heat and burning temperatures that generate the (knox) that is one of the what you’d call an undesirable pollutant from coal fired facilities and so because of the lower temperatures the production of (knox) is significantly lower from the circulating fluidized bed facilities.

Q:        Still, though, when you are burning that much coal the numbers at least as they were reported in The Deseret News in the article I referenced look fairly dramatic, 1,066 tons of (knox)?

A:        Just for a reference, just so you realize automobiles in the area would produce 20 times that amount of (knox) in a year. Just in the specific area of the facility or the county of the facility itself.

Q:        Let’s take a call from Logan, Tom is on the line. Hi Tom.

Caller: Hi, good morning, this is a really interesting discussion you’re having this morning and I appreciate it. I need a little education from the promoters of the project. Or the permittees, I guess it would be anyhow…. This is a private production facility, private electricity I’m assuming you contract the fuel from local sources and then you produce the electrical power and then you sell that to basically a wholesaler is that how that…?

A:        You know you actually sell that to an electrical distributive company.  One of the typical utilities in electrical companies. It’s not unlike the situation; in fact it is exactly the situation that has been in existence with independent power producers for the past 20 years.

Caller: Most electrical power then is created by independent organizations and then they just sell it off?

A:        I wouldn’t say most. A fairly significant portion of power is produced. There are company owned power production facilities like the Hunter units that are a part of PacifiCorp. There also are a number of independent generators who have contracts with each of the different utilities. Those are all a result of the Energy Policy Act when we were going through energy shortage back in the 70s and 80s the country put in an energy policy act that allowed, actually mandated, purchase from independents so that you didn’t have energy companies putting significant resources into the construction of facilities that could be better produced by independents and following good old capital development.

Caller: Yes, just market based.

A:         Exactly.

Caller: Do you plan on having a.... you compared the Delta production facility with your own and it was like what 6 times more?

A:        Correct, 1,600 to 250.

Lee:     This one is much smaller

Caller: Yes, does this allow for, or do your plans allow for enhancement in the future for higher production?

A:         Obviously, I think …

Caller: I would think you could sell every kilowatt you could put out on the line that’s the state of the energy issues today. I’m just trying to figure out why you are making it so small, when evidently there’s this big power shortage evidently?

A:        It’s all relative too. There are several facilities that are in the 80 to 100 megawatts so this is 2-and-a- half times larger than that. But it is smaller than the IPP. First of all you don’t build a plant of this size if you don’t have need for power and you don’t overbuild, significantly overbuild the facility, because of the costs involved and the fact that you would have a significant asset that you weren’t utilizing. It’s planned for 250 megawatts. We believe that’s a size that is needed in this point in time and we certainly have not precluded the chance of an expansion but there are no plans for an immediate expansion or for expansion, of the facility until the need arises and then you would have to go through the same permitting and development process that we had previously discussed.

Caller: Great, thanks Lee, bye.

Q:        Something that I briefly referenced in the introduction. The location of Capitol Reef National Park to the southeast of the location. Does that create any special concerns or requirements? We’ll go to Rick Sprott again. You are with the state not the National Park Service but there are some who have expressed a concern about the air shed over Capitol Reef.

A:        Actually there are very significant standards and requirements with respect to our National Parks. All 5 of the National Parks in southern Utah are what is known as class one or the most important and stringent in terms of environmental requirements of the parks in the country. That’s one of the reasons this has taken a long time, is the rigor at which we did this. In terms of the pollution and visibility down there, this plant is less than 4% of the threshold criteria that it would have to meet. We are very satisfied that it will have no impact. In fact the Park Services as you know they’re required to be involved in the review and so forth and they have been in this one. I believe I am correct in saying they are comfortable with this project because of that.

Q:        So if the plant is up and operating, you look at the stacks, you don’t see visible smoke coming out and drifting perhaps with prevailing winds to the southeast and actually being visible over Capitol Reef?

A:        I would expect there would be some visible emissions coming from the plant. It won’t be something that is totally benign because there is certain pollutions. There are thresholds and criteria and this is, this particular plant, by the time it reaches Capitol Reef even under the most severe conditions of meteorology and so forth, would not be expected to have any noticeable impact and it would certainly be well below any health standards or anything like that. And it will not deteriorate the health standards.

Q:        Clark Mower did you want to add anything on the issue of Capitol Reef National Park? 

A:         Well, again, as Rick indicated we have gone through very stringent modeling and design criteria to make sure that that doesn’t happen. Again the National Ambulant Air Quality Standards have been put in place to ensure the health and safety of facilities like this and other types of facilities and so there is a very rigorous modeling and review process that has been undergone up to this point in time to ensure that there is no significant impact to the environment locally or from the park standpoint and I can’t emphasize that enough.

Q:        Rick mentioned earlier probably the public hearing process starts next year, probably early next year. There have been, I’ve seen a few references to reports in the local newspapers in Sevier County and reference to people going to speak to the Sevier County Commission. You have found local opponents who say…?

A:        There is no question, there is a well-organized group of local opposition, but it is fair to say also a fairly strong support base in the area. You started the program by saying that there seemed to be a choice between jobs and economic growth.

Q:        Well, that was the headline from The Deseret News that I was quoting.

A:        I wanted to say, I wanted to comment we honestly don’t believe that those are mutually exclusive we believe that we can produce power and produce jobs and do it in a manner that is acceptable and beneficial to both parties.

Q:        I don’t know, Sigurd as I’ve driven through there it seems there were two large plants that mined?

A:        Gypsum

Q:        Yes, gypsum. And one of them is closed. So I’m not sure, perhaps some will look favorably on this because of employment opportunities?

A:        That closed a couple of years ago, three years ago, several years ago, and took with it about 100 jobs. So it does have a fairly significant impact on the local economy.

Q:        I guess, and I’m a little surprised we haven’t had a call from Sevier County, but if you could address the concerns that you do hear from those who are, as you say, are very well organized who oppose this, and I hate to ask you Clark to state the position of your opponents, but what do you hear and what is the company response?

A:        I think fairly stated there are health and safety concerns. The largest items that we see are quoting articles and Harvard studies that talk about how many deaths from coal fired facilities will be resulting or expected in each of the areas. I think it is fair to say that all of the statistics that I have seen would indicate that is not the case and the studies that are referenced are studies of facilities that were constructed prior to 1970 and don’t meet the, 1977 when the Clean Air Act came in and they don’t meet the Clean Air Act criteria. They continue to operate and certainly facilities that have been developed under the 1977 and later the 1990 amendment to the Clean Air Act will not create the potential for pollution that they are referencing from those facilities.

Q:        Well, I appreciate your providing that and joining us. We have reached the end of our time and I’m sure when we get into the public hearing process we’ll want to come back and visit again and see how the project is going. Clark Mower, the managing director for Nevco Energy the company that is proposing I guess, what we’re going to call SPC, Sevier Power Company. The project in Sigurd, a 270-megawatt coal burning plant. And also with us from the Division of Air Quality for the State of Utah, Rick Sprott.

Gentlemen, thanks for joining us.

A:        Thank you.

A:        Just a quick clarification, I am a managing director not the managing director. There are several.

Q:        There are others.