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Legislature pulls back broad authority of the agency that owns Utah’s largest power plant

Photo of the Intermountain Power Plant.
Jon Reed
The Intermountain Power Plant in Delta has provided jobs and revenue to the local community. But state and county officials worry its influence has grown out of proportion.

The Utah legislature is taking back some of the broad authority it's given to the organization that owns the Intermountain Power Plant in Delta.

During this week’s special legislative session, Sen. Derrin Owens, R-Fountain Green, introduced a bill that gives state officials more oversight of the plant’s operations ahead of its transition from coal to natural gas and ultimately, hydrogen.

“This bill is not about or against the transition from coal to natural gas or to prevent hydrogen,” Owens said. “This is just to roll back some of the special privileges that have been given to one entity in the state.”

The Intermountain Power Agency is a political subdivision of the state, created in 1977 to finance and run the power plant. The agency is comprised of 23 municipalities in Utah, but sells electricity primarily to the Los Angeles Department of Water and Power and five other Southern California cities.

Since about 2002, Owens said IPA has lobbied for and received numerous exemptions to state law. As a result, the agency was given the ability to seize private land under eminent domain, avoid state audits and public meeting requirements and create additional subdivisions of its own with the same authorities.

Owens said it made sense to grant the agency those powers in the past due to the plant’s dominant economic footprint in the region. It has provided close to $800 million in state and local revenue, directly employs 400 people in Millard County and supports another few thousand jobs in surrounding fields that service the plant.

But given the massive transformation ahead, as well as IPA’s recent deals with out-of-state coal and natural gas suppliers, Owens said it was time to transfer some of that broad authority back to the state.

“IPA has been a great partner,” he said. “But once they pivoted away from that partnership and they've actually gone to Wyoming and signed gas agreements, that really takes jobs and taxes and school support, all kinds of things away from the state.”

The bill, passed Wednesday, subjects IPA to state audits and removes its ability to enforce eminent domain and create “clone” subdivisions.

An earlier version of the legislation would’ve imposed the same restrictions on two other Utah subdivisions — the Utah Municipal Power Association and Utah Associated Municipal Power Systems — but ultimately carved them out, even though UAMPS has some of the same authority.

While the bill passed, some legislators voiced concerns over how it would impact the plant’s future.

IPA is looking to raise $2 billion to fund the plant’s conversion and is set to begin that process in January. Legal changes ahead of those investments could delay things or make it more difficult to secure the project’s funding.

The new law could also affect other developments aiming to support the renewable transition. That includes Magnum Development, a local company developing underground salt caverns near the site to serve as long-term, renewable energy storage.

“We are in the process of inking contracts as we speak,” said CEO Craig Broussard. “We're about to order about $35 million worth of long lead items. And these will be impacted if, in fact, the bonds and other oversights with our bankers and lenders are impacted. So there is a direct connection to the repowering and jobs.”

IPA spokesman John Ward said the power agency also objected to the limited time it was given to review the bill and speak against it. Lawmakers permitted Ward and others speaking in opposition to the bill just about a minute each.

“It hasn't even been a week since we found out they were doing this,” he said in an interview Thursday. “So it'll take some time to work through what the impacts really are. But we will remain committed to pushing the project forward if we can.”

Ward also questioned the intent behind the bill, noting the carve outs for similar entities. He said that IPA is audited annually — by its members and a private company — and is not requesting nor uses public funds.

“The main reason for oversight of public entities is to make sure that the public's money is being spent judiciously,” he said. “This project doesn't use any Utah taxpayer money.”

He said the agency operates on revenue generated from the entities that purchase power from the plant, which has primarily been Los Angeles and nearby cities. The money it's raising will come from the municipal bond market.

Corrected: November 16, 2021 at 8:10 AM MST
This story has been edited to correct the spelling of Sen. Derrin Owens' name.
Jon reports on quality of life issues, education and the economy
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