Power firms planning $5 billion project joining north, south

New transmission lines could help spur use of renewable energy

By Kevin Rademacher <kevin.rademacher@lasvegassun.com>
Las Vegas Sun

Less than three years ago, Nevada's two largest electric utilities were warning of possible bankruptcy.

On Monday those same companies announced a 10-year, $5 billion plan to build four power plants and a transmission line connecting Sierra Pacific Power Co. in Reno and Nevada Power Co. in Las Vegas.

Company officials and renewable energy developers hailed the project as a key step in developing the state's abundant solar, wind and geothermal resources.

"To me, it's turning the corner," Rebecca Wagner, energy adviser to Gov. Kenny Guinn, said of the power company's announcement. "For years now they have struggled. Now they are making an investment in the future."

The project's first phase would include two, 750-megawatt, coal-fired power plants near Ely. Those plants would be tied to an existing transmission line carrying power west to Reno.

A 250-mile transmission line simultaneously would be built to bring power south to Las Vegas. Portions of that phase of the project -- which has a $3 billion price tag -- would start going into operation in 2011.

Two additional coal gasification plants -- a still-emerging technology that converts solid coal to gas to fuel power plants -- would add a combined 1,000 megawatts as that technology becomes commercially viable. Initial projections have those units operating in 10 to 15 years.

It's expected to take at least a year to receive the necessary permits and regulatory approvals before any construction can begin.

In making the announcement, Walter Higgins, chief executive of Sierra Pacific Resources, parent company of Nevada Power and Sierra Pacific Power, said the project will be the largest energy development in Nevada since the construction of Hoover Dam.

The need for 2,500 megawatts of new generation capacity is driven largely by the rapid growth of Las Vegas, said Roberto Denis, Sierra Pacific Resources senior vice president of energy supply and generation.

Nevada Power's peak demand this summer is expected to be 5,478 megawatts. The company also is obligated to acquire a 12 percent planning reserve to meet unexpected shortfalls because of hot weather or power plant failures. Through its own plants as well as an allocation from Hoover Dam and additional long-term contracts, Nevada Power can generate only 3,615 megawatts of electricity.

The balance of the demand is met by buying power from third-party providers, a practice that proved costly during the 2000-01 Western energy crisis.

Because of growth in the Las Vegas area, the demand is expected to reach 8,344 megawatts by 2016, Denis said.

"By adding these units, we'll be holding our own over the next 10 years," he said.

The transmission line will also allow the utilities to add more renewable power to the mix. The majority of the proposed wind power projects are located in the state's northeastern mountains near Ely.

Tim Carlson, who has been spearheading the development of many of these wind projects, said transmission access has been a stumbling block. On their own, wind power plants wouldn't generate enough power to justify the entire cost of a major transmission line.

If attached to a major fossil fuel project such as the proposed coal-fired power plants, transmission costs are diluted, making the wind power more viable.

"We've been waiting for something like this to take place," Carlson said.

Additionally, the connection of north and south will allow for the movement of solar power from Southern Nevada to the Reno area. And Northern Nevada's abundant geothermal power could be sent to Southern Nevada.

"The ability to send energy north and south would be a great advantage," said Gary Bailey, Southwest managing director for Solargenix Energy, which is expected to break ground next month on a massive solar power plant in Boulder City.

He said cities such as Ely and Elko have asked about solar power plants. While they could be built in those locations, solar plants are most efficient in the warmer climate.

"If you build most of the solar here and deliver it to other municipalities, you get the best of both worlds," Bailey said.

Nevada Consumer Advocate Eric Witkoski said the initial concept would seem to make sense, adding that the details will be subject to regulatory review.

"We probably need to up our diversification," he said. "Whether this is the correct direction, we'll have to take a look at it."

Kevin Rademacher can be reached at 259-4069 or at kevinr@lasvegassun.com.