NV Energy Begins Process to Exit Coal-Fired Electricity Business

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--NV Energy Incorporated (NYSE:NVE) (Las Vegas, Nevada) is getting out of the coal-fired electricity business. The company, whose utility subsidiaries include Nevada Power Company (Las Vegas, Nevada) and Sierra Pacific Power Company (Reno, Nevada), will be closing the Nevada-based coal-fired generation it owns and selling its interest in a large coal-fired power plant in Arizona. NV Energy helped draft legislation (SB 123) compelling those changes, which passed the Nevada legislature June 3. Nevada Governor Brian Sandoval supported the legislation in draft form, and he is expected to sign the bill into law this month.

The Nevada utility was recently acquired by MidAmerican Energy Company (Des Moines, Iowa), a unit of Berkshire Hathaway (NYSE:BRK-A) (Omaha, Nebraska). MidAmerican's utility units operate in Iowa and Illinois. The Iowa company also owns PacifiCorp, a utility operating in several Western states, including Utah and Oregon. For more on the MidAmerican-NV Energy transaction, see June 3, 2013, article - MidAmerican Energy Holdings to Buy NV Energy Incorporated.

Under the new law, NV Energy will close about 557 megawatts (MW) of coal-fired generation it owns in Nevada. Units 1-3 of the Reid Gardner Generating Station, located near Moapa, Nevada, will be closed by 2014. Those three units, totaling about 300 MW of generating capacity, came online between 1965 and 1976. The fourth unit, a 257-MW unit co-owned by the California Department of Water Resources, came online in 1983. That unit will be closed by 2017, according to the new law.

In addition, NV Energy will divest its 11.3% stake in the Navajo Generating Station (NGS), located in Page, Arizona, by 2019. That stake is about 255 MW. NGS is operated by Salt River Project (Phoenix, Arizona).

Another Nevada coal-fired generator owned by NV Energy, the North Valmy Generating Station, was not affected by SB 123. Independent of the legislation, the utility-holding company plans to close that two-unit plant sometime after 2020. NV Energy's 50% ownership of North Valmy works out to about 261 MW of capacity. The other half of that plant is owned by Idaho Power Company (Boise, Idaho), a unit of IDACORP Incorporated (NYSE:IDA) (Boise, Idaho).

The new law requires NV Energy to replace the company-owned and soon-to-be-retired coal-fired generation with 550 MW of company-owned generating capacity and 50 MW of company-owned renewable generating facilities. In addition, NV Energy will issue requests for proposal (RFPs) for 300 MW of renewable energy generation.

NV Energy has not developed a timeline for building the 550 MW of new generation. SB 123 was supported by a wide range of powerful interests, including U.S. Senate Majority Leader Harry Reid, Governor Sandoval, NV Energy, the casino industry, the Sierra Club, labor unions, and a Native American community, Moapa Band of Paiutes, which lives close to the Gardner station.

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