Utah Gov. Spencer Cox and state lawmakers steamrolled local authorities in their zeal to pass legislation to have the state take over a 40-year-old coal power plant to keep it running while circumventing federal environmental regulations. Cox ignored more than a dozen requests to veto the legislation from local elected officials and agencies who warned the bill could lead to devastating financial consequences for them and the state.
Approved by lawmakers in the final week of the 2024 session and signed into law by Cox, SB161 could force Intermountain Power Agency (IPA) to sell a coal-fired power plant to the state to keep it operating instead of shutting it down next summer.
The new law, sponsored by Fountain Green Republican Sen. Derrin Owens, also requires IPA to apply for a permit with the Utah Department of Air Quality to keep the Millard plant running beyond next summer when it’s scheduled to be shut down, forcing IPA to break an agreement with the U.S. Environmental Protection Agency to shutter the plant by July 1, 2025.
Documents obtained through an open records request reveal IPA, its members, and federal officials warned Cox and lawmakers that SB161 could lead to immediate intervention by federal environmental authorities and leave them on the hook for costly litigation, which they cannot afford.
Cox’s office did not respond to questions from The Salt Lake Tribune about why he ignored those requests for vetoes.
During a televised debate, Cox defended SB161 as a necessary step in making sure the state can keep up with a rising demand for electricity.
“We haven’t even begun to see the repercussions of what’s going to happen just over the next few months and years. We are not generating enough power for the grid. We’ve seen brownouts in Texas. We’ve seen brownouts in places like California. Utah has historically produced more power than we consume. That is going to remain a challenge,” Cox said.
IPA, which consists of 23 mostly rural municipal governments, constructed the coal-fired plant in Millard County more than 40 years ago to supply power to its members. Most of the electricity generated by the plant near Delta is used by Southern California utilities, who pay for almost the entire operating cost. IPA is in the process of shutting down the plant as part of a transition to more environmentally friendly facilities as required by California law.
Lawmakers will meet in a special session next week to make changes to the new law.
Warnings about not vetoing the bill
In the days after lawmakers sent SB161 to the governor’s desk, at least 15 cities, counties and organizations sent letters pleading with him to veto the legislation.
In her letter asking Cox for a veto, Millard County Commissioner Vicki Lyman explained she currently works in IPP’s Environmental Group, which ensures the plant’s compliance with EPA regulations.
“After attending various hearings and sessions concerning SB161, I am convinced that most of the legislators that voted in favor of SB161 do not understand that the State of Utah cannot have less strict laws than the EPA and that the EPA dictates what the state can do — not the other way around. The state Legislature cannot force the EPA to change its rules,” Lyman wrote. “I just know from experience that you do not want to anger the EPA.”
Coal-burning plants produce ash that is stored in large ponds. In 2018, the EPA ordered IPA to bring its ash storage into compliance with new federal regulations or face the shutdown of the Millard power plant. Since IPA was already in the process of shutting down the plant, the EPA agreed to a longer timeline for enforcing the new coal ash regulations. Applying for a permit to keep the plant running breaks that agreement and could prompt the EPA to order the plant to be shut down.
That seems to be a real possibility. In a March 7 letter to Cox and other state and municipal leaders, the EPA explained that state law cannot usurp federal regulations, and SB161 could invite federal intervention to enforce those standards. The letter also said keeping the Millard County plant open would require a revision to the state’s proposal to reduce regional haze. If the EPA finds that plan lacking, it could require the state to implement a plan devised by federal regulators.
(Trent Nelson | The Salt Lake Tribune) Gov. Spencer Cox speaks at the Utah Capitol in Salt Lake City on Friday, March 1, 2024.
Several cities warned that if the EPA shut down the plant early, it would affect their ability to provide power for residents.
Bountiful City leaders said the current multi-year drought has led to a drop in the amount of electrical power provided to them from hydroelectric plants in 2022 and 2023. The city, which is part of IPA, was able to tap into its allotment instead of buying electricity on the open market, saving more than $875,000. They anticipate the same situation will occur this year.
“There is a very real threat based on the drafting of the 6th [substitute] that the EPA could intervene related to the coal combustion residual issues and prevent the operation of the coal units this summer and delay construction of the gas units, which would leave Bountiful with an untenable gap in our power supply portfolio,” the March 6 letter to Cox from the Bountiful City Council reads.
Cox signed the legislation into law on March 21 — the final day he legally had to sign or veto bills.
There are also worries that keeping the coal plant operational would jeopardize IPA’s new natural gas/hydrogen power plant, dubbed IPA Renewed, which is scheduled to come online next year.
Morgan City Mayor Steve Gale said in a letter to Cox that SB161 could sacrifice that new facility “for purely political reasons,” and that lawmakers shoved aside their concerns and ignored experts as the bill made its way through the session.
“We strongly encourage you to veto SB161 as it provides little to no benefit for Utah and creates unnecessary burden for the Municipal owners. We feel all of the conversations have been ignored and need your help to bring the Legislators to the table for meaningful conversation,” Gale wrote.
Gale added that Morgan City, which has a financial stake in IPA, would not be able to handle the cost of the almost certain court battle that will arise if the agency is forced to violate its agreements with the EPA.
‘Another state authority that usurps municipal authority’
Ahead of the 2024 legislative session, Republican legislative leaders made it clear that continuing to use coal to generate power was a top priority. They argued that the state would be unable to meet the energy demands of its growing population unless coal-fired power plants remained operational.
Rocky Mountain Power said it was moving up the closing dates for its two coal-fired power plants in Emery County to 2032. In response, the Legislature passed two bills to help the utility keep those plants open. In April, RMP said it would stick to its original timeline for retiring those plants in 2036 and 2042.
SB161 also creates a brand new state entity, the Decommissioned Asset Disposition Authority, which will oversee the sale of the IPA facility. The new body would determine the power plant’s fair market value and then choose a buyer based on several criteria that are heavily weighted in the state’s favor.
As first proposed, the authority would have seven members. Along with the Director of the Utah Office of Energy Development, there are six appointed positions—two by the governor, two by the Utah Senate president and two by the speaker of the Utah House.
After pushback and revisions throughout the 45-day legislative session, a fifth substitute version of the bill increased the new authority’s members to nine, three of which would represent IPA. The governor, Senate president and House speaker would each make one appointment instead of two. The remaining three seats would go to the heads of the Utah Department of Environmental Quality and Department of Natural Resources and a representative from a municipal power company.
But less than 15 minutes before the bill won final approval in the House, lawmakers swapped in a sixth substitute version, reverting the authority’s makeup back to the first version and stripping out any representation from IPA.
(Francisco Kjolseth | The Salt Lake Tribune) Sen. Derrin Owens, chair of the Digital Wellness, Citizenship, and Safe Technology Commission, leads a meeting at the Utah Capitol to discuss a youth social media strategy on Tuesday, Nov. 15, 2022,
Local officials were outraged by the last-minute switcheroo, complaining the new version was made public just minutes before the final floor debate and adopted without giving them a chance to provide input or a public hearing.
“It is appalling that with this legislation, the legislature would insert yet another state authority that usurps municipal authority and control of our municipal assets,” the letter from Bountiful City read. “Now the legislature seems poised to derail all that work with a sneaky substitute run in a way to intentionally avoid the public process and outcries of cities. The tactics undertaken and the bill as drafted seems to showcase the new tool de jour employed by the legislature to direct operations from the state Capitol with one-size-misfits all policies.”
Oak City Mayor Shim Callister, who also manages the municipal power department, used his letter asking for a veto to rip the bill’s sponsor for refusing to engage with IPA members on the legislation.
“It is ironic that Senator Derrin Owens, the chief sponsor, has nearly half of the Utah municipal members of IPA within his district, yet he steadfastly refuses to hear our concerns or consider the devastating effects the legislation potentially creates for us,” Callister wrote.
Owens is currently running unopposed in November’s election.
For every million dollars spent by IPA, Callister said, Oak City, a town of roughly 600 people, is on the hook for $40,000.
“Our cost share of that amount becomes devastating to us,” he wrote. “It will force our electric rates much higher and will compel us to defer any significant capital improvements of our system for years.”
The final version of SB161 makes it clear that there will be repercussions from lawmakers should IPA refuse to bend the knee. If IPA does not notify lawmakers by the July 1, 2024, deadline that they intend to submit an application to keep the Millard County plant open, the bill says lawmakers shall make recommendations to the governor to take “appropriate action,” which could include a takeover of IPA’s board of directors by the Legislature.
On March 4, IPA, through its law firm Holland & Hart, sent a letter to EPA leadership explaining that they vehemently opposed the legislation, but lawmakers were determined to keep the coal-fired power plants open.
“To compel IPA to submit the application, the bill threatens reconstitution of IPA’s board of directors (and other unspecified consequences) if IPA fails to do so. A parallel bill introduced in the current legislative session proposed to give a majority of the board seats to state legislators, presumably to enable the legislators to require the board to take actions contrary to IPA’s regulatory commitments,” the letter read.
That bill did not advance, but the letter says it was made very clear to them the legislation would be re-introduced if IPA does not submit the application as mandated in SB161.
“SB161 would force IPA to submit an application to continue operation of the coal units or risk a decapitation of its governing body and takeover by the Utah Legislature to force the same result,” IPA’s attorneys wrote.