DEQ gives PGE three proposals for Boardman power plant

Oregon’s Department of Environmental Quality on Monday laid out three pollution control proposals for Portland General Electric Co.’s Boardman power plant — all of which enable closing the controversial coal-fired plant by 2020 or sooner.

But the proposals appear too costly for the Portland-based electric utility (NYSE: POR), which said it was “disappointed” by the new options. PGE’s own proposal to close the plant in 2020 was rejected June 17.

“We put forward a plan for Boardman that we believe reached a good balance between cost, risk and environmental benefits,” PGE CEO Jim Piro said in a news release. “We’ll do a complete analysis, but we’re disappointed that DEQ didn’t allow that plan to proceed.”

The state Environmental Quality Commission last year approved a plan that would allow PGE to close the plant in 2040 after installing between $520 million and $560 million in equipment to meet federal air quality rules.

But in April, PGE submitted an alternative that called for closing the plant in 2020 after just $40 million in new investment.

At the urging of the DEQ, the Environmental Quality Commission rejected PGE’s proposal on June 17 in favor of starting a new rule-making process to consider alternative options.

While the DEQ’s new proposals would help meet PGE’s goal of early plant closure, they come at a much higher price.

One of the new proposals, for example, would enable the closure of the plant in 2020 after the installation of about $320 million in pollution controls — far higher than the $40 million in new investment proposed by PGE.

DEQ’s proposals also allow for closure in 2018 after about $100 million in upgrades and in the 2015-2016 range after just $35 million in estimated costs.

PGE said both of those options either severely increase costs or, in the case of the last option, would require the utility to find a replacement for the plant’s enormous power supply in just five years.

Though vilified as the state’s largest stationary source of pollution, the 585-megawatt plant is a low-cost source of electricity that accounted for 24 percent of PGE’s power supply last year. The utility owns 65 percent of the plant.

Piro said DEQ’s proposals appear to “reflect an extreme interpretation of federal rules that won’t make sense for our customers or our state.”

Nonetheless, he pledged to continue working with the agency to “forge a workable rule.”

DEQ Director Dick Pedersen said the agency remains open to ideas and concepts for closing Boardman early.

“Our goal is regulation that is most protective of the environment while fair to ratepayers,” Pedersen said in a news release. “We are looking forward to working collaboratively with Oregonians and PGE to find the best closure option for Boardman.”

DEQ is soliciting public opinion on the proposals at its website, www.deq.state.or.us/aq/pge.htm. A fiscal advisory committee will consider the options in early July. That could lead DEQ to modify the proposals before making a formal rule proposal in September.