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NV Energy delays coal plant, hastens transmission line project

Updated Monday, Feb. 9, 2009 | 1:15 p.m.

NV Energy announced today that it has postponed plans to build a coal-fired power plant near Ely, but it will continue to build a 500-megawatt transmission line to connect Northern and Southern Nevada.

Michael Yackira, president and chief executive, said the decision to postpone the Ely Energy Center came because of the possibility that Congress will consider carbon emission legislation that would increase the cost of the project.

The project is estimated to cost $5 billion, but the application of carbon emission taxes would likely make the project not feasible, he said.

"We will not move forward until carbon capture and sequestration technologies are commercially viable," Yackira said, adding that the technology is still likely a decade away.

The 250-mile transmission line, which will run from a substation near Ely to the Mead Substation in the Eldorado Valley, is expected to be in operation by the end of 2012, Yackira said. The transmission line was part of the plan for the Ely Energy Center and will be built as proposed, except for a spur that would have connected it with the energy center.

The transmission line, combined with newly built and acquired natural gas generating plants in Southern Nevada, will allow the utility to move the state closer to being self-sufficient in meeting its energy needs, Yackira said.

In 2009, he said, NV Energy expects to meet 70 percent of the state's energy needs with in-state generating sources, and the transmission line will allow for more efficient distribution of in-state sources.

Yackira said he doesn't yet have a cost estimate for the transmission line or what its effect will be on rates, but he anticipates that in the long run, the transmission line will help keep rates down, because NV Energy will be better able to expand its renewable energy portfolio and less reliant on volatile energy markets.

"This is the quickest and best way to make sure that the renewable energy we generate stays in the state and that we make the best use of all our resources," Yackira said.

The utility chief said he expected to see legislation that would establish some form of carbon emission regulations this year. The possibility of such legislation was the reason for the decision, not the economy, he said.

"I don't think it has anything to do with the economic realities of our situation," he said. "It's about the economic realities of building a coal plant. … We looked at it and said, 'Now is not the time to take an economic risk for either our rate payers or our shareholders.'"

Yackira said the utility is looking forward to the existence of carbon capture technology, but that in the meantime, it will focus on natural gas and renewable forms of energy.

"The objective will be to get to a point where carbon capture technology will be viable so that we can improve the environment by limiting the amount of carbon that is released rather than just taxing it," he said.

Senate Majority Leader Harry Reid (D-Nev.) issued a statement applauding NV Energy's decision.

"This decision, as well as its recent efforts to add highly efficient natural gas units to its generation fleet, will help facilitate the development of even more renewable energy resources in Nevada and move our state more quickly toward a clean energy future," he said.

NV Energy's announcement was warmly greeted by the Nevada Conservation League.

"NV Energy has made the best possible decision to help create green jobs in Nevada and protect our children from the mercury, arsenic and lead produced by coal plants," Scot Rutledge, executive director of the Nevada Conservation League, said in a statement. "By speeding up construction of a transmission line that can carry electricity from Northern to Southern Nevada, NV Energy is showing its commitment to pursuing a clean energy economy that will help put thousands of Nevadans back to work."

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