Jan. 4--With natural gas prices rising, Nevada Power may focus on cheaper coal as an alternative fuel for generating power. But the company stirs controversy when it proposes building conventional coal-fired plants.

Environmentalists consider traditional coal-fired plants to be the pollution-spewing dinosaurs of the energy industry. But officials from Nevada Power's parent say technology may help allay environmentalists' fears.

"We're actively pursuing and will pursue building clean, efficient coal power plants in this state," said Roberto Denis, senior vice president of Sierra Pacific Resources, Nevada Power's parent.

By clean, Denis means conventional coal-fired power plants equipped with the latest devices for stripping pollutants from the air. He said the company is not considering building integrated gasification combined-cycle projects, which use technologies that convert coal into a gas. These types of plants are not commercially viable yet, he said.

Jon Wellinghoff, an energy attorney who represents environmental groups, agreed with Denis about the useful role that renewable energy can play in reducing Nevada's exposure to volatile and currently costly natural gas. But he disagreed with Denis about the viability of coal-fired power plants that use gasification technology.

"The (coal) gasification technology, in fact, has been demonstrated over the last 10 years," Wellinghoff said.

By 2010 or 2012, when Nevada Power is expected to be building a coal-fired plant, coal-gasification technology will be fully developed for widespread use in the energy industry, Wellinghoff said.

Coal gasification technology is already in play. American Electric Power in September said it was contracting with General Electric Co. subsidiary General Electric Energy and Bechtel Power for engineering design of an integrated gasification combined-cycle plant in Ohio. The 600 megawatt plant, which is expected to start commercial operation in 2010, will be the first in the United States in 10 years.

Earlier in the month, Cinergy Corp. of Cincinnati and Vectren Corp. of Evansville, Ind., said they would negotiate with GE and Bechtel for a preliminary engineering study of a 600 megawatt gasification plant.

Edward Lowe, general manager of gasification for GE Energy, said his company and Bechtel are offering utilities "turnkey" gasification projects for fixed prices and fixed schedules, which will reduce risks for customers.

"We would not be offering it on a turnkey basis right now if this was not a commercially available project," Lowe said.

Studies have shown integrated gasification plants to be 25 percent more expensive on a kilowatt hour basis than conventional pulverized-coal plants, but Lowe said his company's studies show that the price premium can be reduced to 10 percent.

Also, Lowe said, integrated gasification combined-cycle plants generate half the pollution associated with the best technology for pulverized coal plants, Lowe said.

Denis said that conventional coal-fired plants meet current environmental standards, but Wellinghoff said conventional coal plants remain a big polluter.

"(Conventional coal-fired plants are) dirtier and, with pulverized coal. It's difficult and economically unattractive to also remove the (carbon dioxide)," Wellinghoff said.

Some scientists believe carbon dioxide, sometimes called "greenhouse gas," causes global warming.

"I have some serious doubts whether any more conventional, pulverized-coal plants will be built," Wellinghoff said.

He predicts states governments and eventually the federal government will follow the example being established in California and will restrict use of power from conventional coal-fired power plants.

The California Energy Commission in November proposed that investor-owned electric utilities in that state be prohibited from entering long-term contracts for power from plants that create more carbon dioxide than natural gas-fired plants.

Denis doubts the policy, if ratified by California Gov. Arnold Schwarzenegger, will affect Nevada Power's plans to build conventional coal-fired power plants independently or with a partner.

"I don't think anything would have or should have an impact on this state," Denis said. "Every time, they implement some artificial restrictions on the market, they have unintended results."

Denis listed economic reasons for building a coal-fired plant rather than a gas-fired one. He estimates, for example, that it costs several times more to use gas than to use coal to generate the same quantity of electricity.

"It's been between five and seven times (more expensive to use gas) in the last several months," based on the difference between the cost of coal and gas, he said.

At prices quoted last week, he estimated it cost $2 in coal to generate the same amount of electricity that would require $12 in gas (based on an average for the Southern California border on Dec. 21).

"Certainly, gas plants cost a lot less money to build than a coal plant," Denis said, however. It's easier to get a permit for a conventional gas-fired plant than a coal plant. It takes two or three years to complete a gas-fired plant but five or six years to build a coal-fired plant using conventional technology, he said.

Nevada Power says it has been considering building its own coal- fired plant or building one with another company. One potential plant-building partner is Sithe Global of New York, which is owned by the Blackstone Group, an investment company, and Reservoir Capital, a private investment group.

Sithe is preparing to start work on an environmental impact statement for the Toquop Energy Project at a Lincoln County site 15 miles northwest of Mesquite.

Sithe hopes to complete the project by 2010, Sithe Vice President of Development Tom Johns said. The plant would get coal from the Powder River Basin of Wyoming and Montana by rail and would use "supercritical" technology that burns coal at a higher temperature and more efficiently, he said.

Johns said Sithe would like to enter a long-term contract for most of the generation.

Meanwhile, LS Power Associates of East Brunswick, N.J., propose a coal-fired power plant near Ely. The White Pine Energy Station, a 1,600 megawatt plant proposed along with a 50 megawatt wind farm, would need a transmission line to deliver the electricity to Southern Nevada.

Johns rejected the suggestion of building a coal gasification project instead of a conventional pulverized-coal plant. He called gasification an interesting but costly and risky technology that is in the research-and-development stage and hasn't always worked out as planned. He mentioned Sierra Pacific Power Co.'s unsuccessful Pion Pine coal gasification plant, on which construction started in 1994 but which never operated as a coal gasification plant.

Gasification plants cost 20 percent to 40 percent more than traditional plants, and Johns said the supercritical plant would produce no more greenhouse gas than gasification technology. Capturing carbon dioxide would increase the cost by 200 to 300 percent, Johns said.

Lowe, however, said Tampa Electric has been operating an integrated gasification plant since 1995 and that has the lowest- cost generation on the Tampa power system.

Aside from coal, Wellinghoff suggested Nevada's extensive geothermal power as another alternative to natural gas. Nevada utilities could rely on geothermal power, a renewable resource that comes from hot underground water and steam, to generate electricity for prices comparable to coal-fired plant. A transmission line would be necessary to deliver power from the geothermal resources in Northern Nevada to Southern Nevada, but the utilities are discussing such a line, he said.