PacifiCorp
Application to Sell Coal Mining Assets

 

Background

On September 22, 2015, PacifiCorp filed an Application with the CPUC requesting to sell numerous coal mining assets located in Utah, but partially paid for by California ratepayers. The purchaser is a private coal company named Bowie Resource Partners. The mining assets include:

  • An exhausted coal mine that previously supplied coal to one of PacifiCorp’s power plants (Deer Creek)
  • A coal preparation plant (used for preparing coal for burning in PacifiCorp’s Utah power plants)
  • An equipment warehouse

These assets were part of a larger transaction that also included execution of two new agreements for coal supply to PacifiCorp’s Hunter and Huntington power plants and the coal mining rights at the undeveloped Fossil Rock Mine. The Fossil Rock contains approximately 40 million tons of coal valued at $1.5 – $2 billion.

PacifiCorp has also retained an interest in the transaction in the form of a royalty agreement with Bowie for coal mined at Fossil Rock.

 

Evidentiary hearings will be held at the CPUC in San Francisco September 2016.

 

 

ORA Position

ORA performed an in-depth review of PacifiCorp’s application and finds that the CPUC should not authorize its requests until the potential impacts of the transaction have been further evaluated.

ORA does not oppose the financial elements of the Transaction. However, ORA believes that the Transaction should be viewed as a whole, while PacifiCorp’s application only includes the elements of the Transaction which California ratepayers have paid. The effects of the transaction as a whole will have broader consequences than their individual components. 

ORA’s analysis finds that it is reasonably foreseeable that Bowie will mine the Fossil Rock coal reserves and export the coal to Asia through California ports, especially Stockton, Richmond, and Oakland. Coal prices are substantially higher in Asia and Bowie has clearly outlined its plans to expand export capacity through Oakland and to develop the Fossil Rock mine.

The mining of Fossil Rock and the export of coal through and out of California have the potential for substantial health & safety, environmental, and financial impacts on California ratepayers. These include:

  • Inherent safety risks from increased mining activity 
      
  • Inherent safety risks from increased rail traffic 
      
  • Increased derailment risk from slippery and corrosive coal dust 
      
  • Health impacts from fine particulate matter and toxins contained in coal dust 
      
  • Substantial greenhouse gas emissions equivalent to at least 3% of California’s annual emissions every year for over ten years 
      
  • The possible extension of economic life of PacifiCorp’s coal-burning power plants in Utah 
      
  • Financial impacts of locked-in coal prices for the next 10 years 
      
  • Financial impacts from federally-mandated emissions control technology

 

ORA also recommends that the CPUC should consider opening a rail safety proceeding to further examine the safety aspects of coal transit and export generally.

See ORA's:

July 11, 2016 Testimony with full analysis 

Documents related to ORA's Pending Settlement Agreement  

 

CPUC Docket

See the Proceeding docket. 

Visit the docket to view all party comments on the record, as well as to subscribe to updates to this proceeding.