A coal conundrum at Reid Gardner

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I came across an interesting bit of information in the course of researching next week's cover story on Reid Gardner power plant. Earlier this year, NV Energy turned off the plant for routine maintenance for almost three-and-a-half months. They replaced its power with energy generated by natural gas.

As it turns out, natural gas is a cheaper energy source than coal -- at least right now. It is so cheap that NV energy has been decreasing the amount of energy produced at its old, coal-fired standby. And this has put them in a awkward position. Coal is literally piling up outside the plant. The utility has contracts with coal suppliers that require them to purchase a fixed amount of coal. Since they are using less and less of the bituminous stuff, they now have a surplus.

They have to do something with the coal. In a recent triennial integrated resource plan filed with the Public Utilities Commission of Nevada, the utility lays out its options for dealing with all the coal that just keeps piling up. Volume 22, page 111 has the details. The power company could try to sell its excess coal, but "coal markets are very depressed and sales opportunities are not currently available." Another option has the company running its coal-fired plants for the express purpose of burning down coal. NV Energy did not comment for the story, so I sought economists who were not affiliated with the local environmentalists who are trying to close the plant.

Cheap natural gas has "put coal out of the money," said Dallas Burtraw, an economist and senior fellow at Resources for the Future. And it may be the thing that eventually closes the old Reid Gardner plant.