Washington Power System Approves $1 Billion Project

Jul. 28–Energy Northwest’s board of directors approved a resolution Wednesday that launches the public utility consortium on its most ambitious power project since it began an ill-fated nuclear construction campaign three decades ago.

The former Washington Public Power Supply System — formed in 1957 to build power plants — now will begin seeking participants for a 600-megawatt Western Washington power station that is expected to cost about $1 billion.

“I think this represents an important and legitimate focus on our primary purpose, which is to provide options for our members,” said Energy Northwest spokesman Brad Peck.

In recent years Energy Northwest has sought to make its nuclear operations a smaller portion of its business by diversifying its portfolio with the addition of a wind farm and a solar station. It also operates a small hydro project at Packwood south of Mount Rainier and has looked at biomass projects.

But the utility contends future power needs can’t be met by wind farms alone.

Its new project would utilize a method of power production that is mostly foreign to the United States. Twin 300-megawatt plants would be fueled by a synthesis gas derived from a slurry consisting of coal and coallike petroleum coke.

Environmentally, the complex would be cleaner than a traditional coal plant but emit more pollutants than a modern gas-fired plant.

Its power would cost $35 to $45 per megawatt hour, a potentially attractive price given today’s energy market. More significantly, plant operators would be able to switch fuels, running on whichever is cheaper. The plant also could run on natural gas.

“The thing we’re confident of is we’ll be competitive because we can play one market against another,” said project manager Dan Porter.

The plant would come online in 2011 under the timeline being envisioned and may be expanded if there is enough interest.

Energy Northwest’s board, made up of representatives from each of its 19 public utility members, approved the resolution Wednesday by a vote of 13-5. One member was not present and one abstained. One, Snohomish PUD, was allowed two votes because it consumes a relatively large share of the power Energy Northwest generates and wound up splitting them.

Energy Northwest plans to build and operate the complex but likely would own only half of it. A prospective private power partner would assume ownership and all liabilities of the other half.

Though the consortium is optimistic that it will find buyers, the project would not be built unless Energy Northwest can sign customers to long-term power purchase contracts for all the power the complex would generate.

“This is in no way an irreversible decision,” Peck said.

Energy Northwest has two undisclosed sites in mind for the plant, both west of the mountains to be near power demand centers, and hopes to complete negotiations within 60 days.

It then would begin a lengthy process with the state’s Energy Facility Site Evaluation Council for a site certificate, which ultimately would have to be approved by the governor.

In the meantime, staffers will be refining cost estimates and pitching the project to potential customers. It has been envisioned that Energy Northwest’s own member utilities may sign up to buy all the power generated by one of the plants to meet power needs that will have emerged by the time the plant comes online.

Project manager Tom Krueger said Energy Northwest already has been contacted by private power interests about the other plant’s power.

“We’re very confident there’s a power need out there,” he said.

A simple majority of 10 yes votes was needed to advance the project. Seattle City Light, Chelan PUD, Ferry PUD and the city of Richland voted against it. Kittitas PUD abstained, which had the effect of a no vote, and the city of Tacoma did not attend the meeting.

Yes votes came from Pacific PUD, Grant PUD, Asotin PUD, Grays Harbor PUD, Franklin PUD, Klickitat PUD, Mason PUD No. 1, Okanogan PUD, Skamania PUD, Wahkiakum PUD, Benton PUD and Mason PUD No. 3.

The project has received somewhat tempered criticism from green-leaning interests that consider it an environmental step backward. Energy Northwest plans to participate in research to study whether it’s possible to sequester emissions from the project underground.

Supporters say it’s proper for Energy Northwest to investigate new power projects as was its charge when it was formed.

“As a utility member, this seemed to be an appropriate role,” said Benton PUD Manager Jim Sanders.

The former supply system took a beating after it failed to finish four of five nuclear plants it began building in the 1970s, defaulting on $2.25 billion in bonds for two of the projects.

But the consortium has rebuilt its reputation by proving itself to be at least a competent nuclear operator of the Columbia Generating Station north of Richland, improving its bond ratings and showing interest in environmentally-friendly power plants. That also has helped rebuild utility membership.

Franklin PUD Manager Jean Ryckman said the consortium has outlived its WPPSS days. “They took some unfair hits during that period of time,” she said. “I think they’re much more suited for it now.”

“Today’s Energy Northwest is not the old supply system, not in name, not in operations,” Peck said.

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