PacifiCorp 2007 Integrated Resource Plan (May 30, 2007)

PacifiCorp – 2007 IRPChapter 3 – The Planning EnvironmentUnder Title XIII of the EPAct, a number of tax incentives are established. These incentives areprimarily focused on development of gasification technologies both for electric power generationand coal-based gasification processes that produce liquid and gaseous fuels as well as primarychemical feedstocks. Available credits will be allocated on a first-come, first-served basis takinginto account Department of Energy (DOE) balancing of the EPAct policy goals (fuel diversity,location, technology, CO 2 capture, project economics), i.e. integrated gasification combined cycle(IGCC) projects that include greenhouse gas capture, increase by-product utilization, andother benefits will be given high priority in the allocation of credits for IGCC projects.Under the guidelines there are three separate application periods (2006, 2007, and 2008); theapplication date for each application period is June 30 of each year. Based on the overwhelmingresponse the DOE received in 2006, the availability of investment tax credits (ITCs) is expectedto diminish with time.PacifiCorp submitted confidential applications on June 29, 2006 to the DOE for ITCs under thissection of the Act for IGCC facilities at both the Hunter and Jim Bridger plant sites. PacifiCorpalso indicated an interest in Energy Northwest’s planned development of the Pacific MountainEnergy Center IGCC project. The proposed location for this project is in Port Kalama, Washington.Energy Northwest submitted a confidential application to the DOE for ITCs under this portionof the Act for that portion of the plant which would not be owned by public power entities.Section 413 of EPAct also authorizes, subject to appropriations, funding support for a demonstrationproject to be built in the Western U.S. The Wyoming Infrastructure Authority (WIA)issued an RFP for a Wyoming Coal Gasification Demonstration Project on July 17, 2006. TheWIA’s intent for this RFP process was to identify one or more Wyoming based projects for thepurpose of seeking Section 413 funding. PacifiCorp provided an expression of interest in responseto this RFP on August 17, 2006, followed by a confidential proposal to the WIA in October2006. As described in Chapter 5, the WIA recently selected PacifiCorp to participate in thejoint IGCC project.In addition to the ITC programs available for qualifying IGCC or advanced clean coal technologies,the EPAct makes available $350 million for ITCs for qualifying industrial gasification projects(not necessarily for power generation).Title XVII of the EPAct provides for loan guarantees for innovative technologies, such as(IGCC) or technologies that reduce or sequester pollutants or greenhouse gases. PacifiCorp hasreviewed the potential application of loan guarantees for potential IGCC projects under considerationand has determined that loan guarantees provide little value to the company and wouldentail significant regulatory complications.Renewable Energy ProvisionsThe renewable energy production tax credit (PTC), which was set to expire at the end of 2005,was extended through the end of 2007. (The U.S. Congress extended it again through the end of2008 as part of the Tax Relief and Health Care Act of 2006.) Additionally, the eligibility periodfor power production from open-loop biomass, geothermal, small irrigation, landfill gas and municipalsolid waste projects is increased from 5 to 10 years. Finally, incremental hydropower50