Sierra Pacific wants to cut its reliance on natural gas

Sharply higher natural gas prices probably will leave many customers of Sierra Pacific Resources wishing for coal in their stockings this Christmas.

While there's no relief on the immediate horizon, executives of the Reno-based utility said last week they're looking to reduce their company's reliance on natural gas to generate electricity for northern Nevada.

One possibility, a company executive said last week, is a coal-fired plant at one of several sites in White Pine County near the Utah border.

Also under study is expansion of the company's coal-fired Valmy plant 130 miles northeast of Reno, said Roberto Denis, Sierra Pacific Resources' vice president of generation and energy supply.

Dennis said the company, which once planned to bring another 500 megawatts of coal-fired generation on line by 2014 or 2015, now hopes to move the schedule up to 2011.

About 55 percent of the power generated by Sierra Pacific Power in northern Nevada comes from plants fired by natural gas.

Coal accounts for nearly 44 percent and hydropower for a tiny piece.

The company generates only about 45 percent of the power its customers need.

The rest is purchased from suppliers ranging from big coal-fired plants in the Southwest to smaller geothermal and solar facilities in Nevada.

As natural gas prices have gone up 30 percent or more in the past year, Sierra Pacific feels growing pressure to diversify its mix of generation, executives said last week.

The biggest and fastest impact would come from plans by Newmont Mining Co.

to build a 220-megawatt coal-fired plant three miles north of Dunphy in Eureka County.

The plant, which awaits final regulatory approvals,would be able to meet about 13 percent of the needs of Sierra Pacific's customers on the hottest summer days and it would do so without relying on natural gas.

"It's a terrific deal for our customers," said Michael Yackira, executive vice president and chief financial officer of Sierra Pacific Resources.

But it won't come on line until 2008.

And about the same time that the coalfired plant owned by Newmont comes on line, Sierra Pacific may be bringing on a 514 megawatts of new gas-fired generation at its Tracy power plant along Interstate 80 east of Sparks.

The Public Utilities Commission of Nevada last week began hearings to decide if Sierra Pacific should be given the OK to build the plant.

The company also has asked the PUC to approve an additional 2 percent points of return on investment for the $421 million facility, which the company has called critical to meet the needs of its customers.

The company also is looking contract with operators of geothermal plants for a larger share of the electricity demanded by its customers.

Geothermal currently accounts for about 8 percent of Sierra Pacific's needs, and the company says that percentage will rise as new facilities developed by Sparks-based Ormat Technologies and other providers come on line.