California Gets Closer to Closing the Door on Coal

Last week, the California Public Utilities Commission signaled it is ready to close the door on dirty coal investments.  The only remaining coal plant owned by an investor owned utility in California is Four Corners, located in northwestern New Mexico and CPUC has indicated that Californians won't have to pay for coal-generated power much longer. 

In 2006, California passed SB 1368, the Emissions Performance Standard. The precedent setting law prohibits new ownership investment in base-load power plants that fail to meet minimum performance standard for carbon emissions, which effectively prohibits investment in coal burning plants. The standard allows no more carbon pollution than would be generated by a combined-cycle natural gas plant (though some recent natural gas plants appear to have lower emissions). Since coal plants all have significantly higher carbon emissions than combined cycle gas plants, the law effectively eliminates new investments in coal generation facilities, unless the owners installed carbon capture and sequestration.

The law has been an outstanding success in California’s ongoing leadership in fighting a global climate disaster by preventing any new investment in dirty coal plants (all coal is dirty) by California utilities.

Still--the law did not immediately bring all of the coal plants owned by California utilities to a halt.  It prevented only new ownership investment, allowing CA utilities time to phase out their coal use.   California passed the Climate Solutions Act (AB 32) the same year, which set a cap on total statewide emissions and set in motion the rules to start emissions reductions from all sources, including CA owned coal plants. 

Southern California Edison owns 48% of two of the generating units at Four Corners.  Edison requested the CPUC allow continued investment at Four Corners, claiming they were obligated by contract to maintain the plant. NRDC objected to this request, noting that while only new ownership investment is prevented by SB 1368, the CPUC needed to scrutinize investments at Four Corners to ensure that they were necessary for current operation and safety, and not merely intended to extend the life of the plant. 

This summer, NRDC worked with Edison to come up with a shared framework for evaluating investments at Four Corners after passage of SB 1368.  We submitted joint comments to the CPUC and last week’s decision mirrored most of our recommendations. 

The decision includes a few key components that signal the waning days of dirty coal in California:

  • Life extending investments requested by Edison will be evaluated to ensure they are necessary for safety, environmental compliance or operation of the plant within the remaining period of contractual obligation (through 2016);
  • Investments will not be allowed above the pre-requested amount, unless catastrophic or unforeseeable circumstances require;
  • Edison is required to analyze whether California customers would be better off if Edison sold the plant by 2012.
  • No investments will be allowed at Four Corners after 2012.

The decision doesn’t shut-down Four Corners tomorrow, but it makes clear that California is serious about ending the dirty coal era state-wide and also serves as a model for other states to do the same.