PacifiCorp Application to Sell Coal Mining Assets

Background

PacifiCorp, a multi-state utility that serves customers in California’s Del Norte, Modoc, Shasta, and Siskiyou Counties, has filed an application with the CPUC requesting permission 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), and 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.

 
ORA filed its testimony on PacifiCorp’s application on July 11, 2016 (see below).

 
In December 2016, ORA, The Sierra Club, and PacifiCorp filed a motion for adoption of a settlement agreement in A. 15-09-007.

 

 

ORA Position

In testimony, ORA supported viewing the transaction as a whole and not as individual, isolated components as PacifiCorp has proposed. The sale was executed as a single transaction and the effects of the transaction as a whole will have broader consequences than their individual components might on their own. PacifiCorp has also retained an interest in the transaction in the form of a royalty agreement with Bowie for coal mined at Fossil Rock.
As outlined in ORA’s testimony, 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 Californians and 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


Please see ORA’s testimony for further detail and reports regarding the above risks.

 
ORA supports the adoption of the settlement agreement in its current form. The settlement agreement:

 

  • Stipulates testimony and data requests into the record of the proceeding.
  • Stipulates to certain facts regarding the transaction and its safety and environmental impacts.
  • Requires PacifiCorp to take greenhouse gas and coal costs into account in its long-term planning models.
  • Requires PacifiCorp shareholders to make a $30,000 contribution to a charitable organization in northern California.
  • States that parties do not agree on the CEQA requirements of the transaction, and that the Commission has enough information to make a CEQA determination.
  • Please see the proceeding docket (below) for other parties’ briefs and comments.

 
See ORA's July 11, 2016 Testimony.

 
ORA-01 – Direct Testimony
ORA-02 – Supporting Attachments

 

CPUC Docket

See the CPUC’s Proceeding docket. Visit the docket to subscribe to updates to this proceeding.