Dec 27 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Warren Cornwall Seattle Times

On the outskirts of Centralia, the state's only coal-fired power plant stands like a factory from another world, shining bright around the clock, steam and smoke pouring forth as it generates enough electricity to light all of Seattle.

But that power comes at a price -- pollution.

Until new equipment went in about five years ago, the plant was blamed for much of the haze that obscured views of Mount Rainier. Today, the 470-foot-tall smokestack remains the state's largest single source of poisonous mercury.

But efforts to crack down on that mercury pollution may ensure the Centralia plant remains a rarity in Washington as a power plant fed by coal.

Even as some states go on a building binge of coal-fired power plants, Washington is considering hefty restrictions that would do the opposite, essentially allowing just one new coal plant to be built. It's part of an emerging schism over coal as a future source of energy, pitting those who see it as reliable and cheap against those who consider it the dirtiest way to make electricity.

On one side is Texas, where a Dallas energy company wants to build 11 new coal power plants. On the opposite end is California, which wants to bar the use of most coal power to fight global warming.

Washington voters in November endorsed a shift toward cleaner energy. They approved an initiative requiring major utilities to get 15 percent of electricity from renewable sources like wind by 2020.

Now, if Washington makes proposed restrictions on mercury emissions a reality, it will be further allied with the California camp. But that may hinge on the outcome of a debate between a huge state agency and the leader of a much smaller one.

Plans to cap mercury

The latest attempts to limit mercury, a potent poison that can hurt development of children's brains, began with a federal rule issued in 2005 that set a 2018 deadline for cutting emissions.

But, like at least 15 other states, Washington is drafting an even tougher standard. In its case, the deadline would be 2013.

The state also would block coal plants in Washington from participating in a federal program that lets some plants keep puffing out more mercury through a "cap-and-trade" program. That gives companies an "allowance" of mercury to emit every year. If a company doesn't use all its allowance, it can sell the remainder to another power plant so it can emit more mercury.

That has the large state Department of Ecology, which is charged with protecting the environment, at odds with the chairman of a state board called the Energy Facility Site Evaluation Council, which oversees permits for new power plants.

For Ecology, the issue is relatively simple: "We were really driven to act on this because of our concern about mercury," said Sarah Rees, an Ecology manager working on the new mercury limits.

The cap-and-trade system would allow some plants to pay to keep pumping out more mercury, and people living nearby could suffer, Rees said. It also delays cuts in the pollution.

For Jim Luce, chair of the Energy Facility council, as well as several power companies, that would limit options in the search for new electricity.

Luce said he favors a regional trading system with Oregon, but he doesn't like the nationwide program.

If power companies can't use a cap-and-trade system at all to buy the right to more emissions, the mercury limits would effectively mean only one more coal plant could be built in Washington, Luce warned.

"Look at the projections for resources that are going to be needed for the Northwest. Where's it all going to come from?" he said.

More plants coming?

The Centralia plant would benefit from being the first plant in the state, by getting most of the state's mercury allowance.

But meeting the new limits by 2013 could be nearly impossible because the technology hasn't been developed yet, said Richard DeBolt, a Republican state representative who works as a spokesman for the Centralia plant, owned by Canadian-based TransAlta.

"If they would support extending it until 2018, then we would be fine," DeBolt said.

Although the coal mine next to the plant shut down this month, TransAlta plans to keep running the power plant with coal shipped in from Wyoming and Montana.

Ecology officials are optimistic that such mercury-cleaning technology will be available by 2013, but they say the proposed rule allows some latitude if it isn't.

Right now, the leading candidate to use the rest of the mercury allowance is Energy Northwest, a consortium of public-utility districts that has applied to build a power plant in Kalama, Cowlitz County, along the Columbia River near Portland, fueled by coal or sludge left over from refining oil.

But a company called United Power is also considering a coal-powered plant in Wallula, in Walla Walla County in southeastern Washington.

If the state pursues the tighter limits on mercury, one of those companies may lose out.

Yet there's little agreement on how many coal plants the region really needs.

The Northwest Power and Conservation Council, a federal agency that plans for the region's electricity needs, predicts that in the next two decades only one more small coal plant of between 400 and 425 megawatts is warranted in all of Washington, Oregon, Idaho and Montana.

Puget Sound Energy, however, has said it could need to make as much as 675 megawatts of coal power in that time just for Western Washington.

Then there are environmentalists who even question the need for the Kalama plant, particularly with the initiative passed by state voters that dictates that major utilities get more power from renewable sources.

"We really don't see any need for coal development in the Northwest, period," said Marc Krasnowsky, spokesman for the NW Energy Coalition, an environmental group.

Warren Cornwall: 206-464-2311 or wcornwall@seattletimes.com