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Umatilla Tribes Take Unique Approach to
Proposed Gas Plant
The Umatilla Tribes and their developer partners are planning to build a massive natural gas-fired generating plant on tribal land in Oregon but say a special environmental foundation established as part of the deal will promote positive benefits for local land and water. The partners, who include the Confederated Tribes of the Umatilla Indian Reservation , the Eugene Water & Electric Board , and Williams Energy and Trading Company , say they have an informal agreement to commit $16 million of the roughly $800 million needed to finance construction of the Wanapa Energy Center in Umatilla County , Oregon , to establish a foundation that would sponsor environmental restoration projects. Interest generated by that endowment would provide approximately $500,000 to $800,000 annually, the partners say, and be managed by a board of directors comprised of the Tribes, developers, and local public officials. (The principal committed would be $8 million if the developers choose to build a 600-megawatt plant instead.)
The establishment of the Wanapa Foundation fits well with the Umatilla Tribes' mission to improve habitat for salmon, and the plant itself arguably lessens the Northwest's dependence on fish-killing hydropower dams. But as the impacts of global warming strike closer to home, (see related story on page 3 ), environmentalists are increasingly pushing for controls on carbon-dioxide emissions. Will the Wanapa Foundation provide sufficient funds to mitigate the CO2 plume from the 1,230-megawatt plant?
Ken Beeson , the EWEB project manager who chairs the partners' environmental mitigation committee, says the foundation intends to pay for carbon-dioxide mitigation to the extent required by Oregon standards, even though Wanapa will operate on tribal land and is not bound by state regulations. "We would like to be as good or better [on CO2 mitigation] than some of the other plants that have been sited in the region," says Beeson. He adds that his team consulted with state and federal officials and arrived at a rough figure – between $9 and $10 million – that the Wanapa Foundation will commit to CO2 reduction, though specific projects have not been identified.
An observer familiar with the mitigation fees Oregon exacts for CO2 emissions notes, however, that the dollar amount offered by Beeson wouldn't meet the costs typically charged to a power plant the size of Wanapa. If Wanapa were subject to Oregon law, it would be liable for closer to $15 million. And Oregon's price per ton for CO2 emissions may go even higher in the near future.
But Beeson says Wanapa will operate far fewer hours per year than a typical plant, perhaps producing as little as 55% of its potential output. He explains the plant is designed to shift on and off-line frequently in response to spot market conditions. Utility experts say that traditionally it hasn't been financially feasible to operate a primary power plant for so few hours. Jeff King , of the Northwest Power Planning Council , notes, however, that peaking burners installed on modern combined-cycle plants tend to reduce the operating hours that a plant logs because while the burners boost total potential output, they fire for only short bursts of time. The result is that the time a plant operates as a percentage of its potential output is substantially lowered. Still, a 55% operating log is highly unusual, King says.
Beeson says if Wanapa operates more hours than predicted, the environmental foundation will pay the commensurate CO2 mitigation costs in accordance with the Oregon formula. As for whether the Wanapa project can attract sufficient financing to endow the foundation, Beeson acknowledges that the financial picture is not fully resolved. The partners have no formal stated agreement to establish the foundation. As the project rolls toward completion Beeson says investors will look carefully at whether the environmental foundation can fit comfortably within its financial parameters.
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Kevin Fullerton