Official: Utilities will delay applying for Ely plant OK

Nevada's electric utilities are expected to delay their application for final approval of the giant, coal-fired Ely Energy Center for two years, a top regulatory official said Wednesday.

Sierra Pacific Resources said in November that it was delaying work on the Ely Energy Center for an undetermined length of time. But Kirby Lampley, director of regulatory operations for the Public Utilities Commission, said Wednesday that he didn't expect the company to file a request for final approval until late 2009 or 2010, rather than March as originally anticipated.

The odds that the utilities will build the coal-fired power plant are getting slimmer with every delay, one analyst said.

"I think every delay makes it less attractive from the shareholder and ratepayer perspective," said Tim Hay, a former utilities commissioner and state consumer advocate. "And the company may be forced to look at separate options (for supplying additional power)."

Roberto Denis, senior vice president of Sierra Pacific Resources, rejected that perspective, though.

"People who are saying that are those that are wishing it will be canceled," he said. "We don't have any information that (the Ely center) is not viable."

Sierra Pacific, the holding company for Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno, believes the proposed project will reduce the utilities' reliance on natural gas, a volatile and increasingly pricey fuel, Denis said.

Yet, the Ely project is being put on hold because of delays in obtaining approval for use of federal land for the power plant.

The Bureau of Land Management, which previously was expected to act on the utilities' request to build the project on federal land later this year, cannot meet that deadline, Denis said.

The utility company has no idea when the federal agency will make its final decision on the project, Denis said. As a result, Denis said he could not project a time line for construction and completion of the first of two 750-megawatt generating units at Ely.

Meanwhile, the cost of the Ely project is growing, the company said in its latest annual report. Two years ago, the company estimated the power plant and a related transmission line would cost $3.8 billion. The new report updates the estimate to $5 billion if the Ely center were built today.

Escalating costs make the huge power project less attractive to Sierra Pacific stockholders and to customers of the Nevada utilities, Hay said.

But Denis said the cost of all types of power generation, including natural-gas fired plants and renewable-energy projects, are increasing.

Hay disagreed, saying the cost of wind power and geothermal power has declined over the last decade. The former regulator said renewable energy from 20-year-old geothermal power plant is among the utilities' lowest-cost power sources.

In addition, Hay said regulatory hurdles are getting higher for coal-fired power plants, which contribute to global warming because of massive amounts of carbon dioxide pollution.

Congressional leaders are expected to pass legislation that will either tax or otherwise restrict carbon dioxide pollution, increasing the cost of coal power.

Senate Majority Leader Harry Reid, D-Nev., believes continuing opposition to coal power plants also makes it harder to develop the Ely project, political observers say.

"It's not the first time we've heard about delays of this project if it's even built at all," Jon Summers, a spokesman for Reid, said later Wednesday. "With each delay, (the utilities) are presented with an opportunity to pursue renewable-energy development in Nevada, solar, wind and geothermal energy."

Reid advocates reliance on renewable energy, but Denis said the company cannot satisfy the growing population's need for additional power by building green power facilities only.

The disclosure about the two-year delay came about when director Lampley was explaining why the utilities commission staff wants to delay hiring an engineer to evaluate cost estimates for the Ely center. The regulatory official said the consultant should not be hired now because cost estimates would be out of date in two years.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.