City’s Costs for Intermountain Power Project Energy Expected to Jump Nearly 40%

Pasadena Water & Power’s energy bill from the Intermountain Power Project in Utah is about to soar, even as the City heads for the exit sign.

Five years ago Pasadena decided not to renew its contract with the IPP beyond its June 2027 expiration but it is on the hook for paying escalating costs through then.

At Tuesday’s 4 p.m. Municpal Services Committee meeting, PWP is expected to report those costs have risen by $20 million.

The IPP is a coal-fired electricity generation facility in Delta, Utah, which has been providing power to Pasadena Water and Power along with the cities of Anaheim, Burbank, Glendale, Los Angeles, and Riverside since 1987 through a 40-year contract that expires in June 2027.

In response to legislation and increased regulation of coal-fired power generation, the Independent Power Agency (IPA), which owns the IPP, has developed a plan to cease coal generation at the facility by 2025. IPA plans to transition IPP into a regional energy hub that integrates natural gas and low-carbon sources with emerging green technologies, including hydrogen-based energy.

The IPA began negotiations with the current participants, including PWP, for a new 50-year contract to succeed the expiring contract after June 2027. All existing participants in the IPP were invited to opt-in to the renewal contract in which the generating facility will operate as the Renewal Project.

In October 2018, PWP decided to discontinue participating in the contract beyond the June 2027 expiration. However, because the Renewal Project will start generating power in 2025, Pasadena, Riverside, and Anaheim, collectively called the “Exiting Participants,” will continue to receive energy from IPP and remain responsible for two years of costs associated with the Renewal Project.

PWP will present the latest update about the IPP and continuing talks with the energy provider when it reports to the Municipal Services Committee on Tuesday. When PWP presented an update on the IPP project in October 2020, PWP estimated the cost to Pasadena for 2026 and 2027 would be approximately $51 million, or about $25.5 million per fiscal year.

Based on a new analysis of information provided by IPA in November 2022, PWP now estimates the total cost to Pasadena to be approximately $71 million for 2026 and 2027, or about $35.5 million.

Most of the anticipated cost will be attributed to debt service cost estimates and variable generation and operating costs, the PWP report said.