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Straight Talk About Coal by Idaho Power Consumer Connections, November 2013

Coal is an important resource for Idaho Power and for our customers.

Chances are, coal is generating a signifi'cant portion of the electricity you are using right now. It provides inexpensive, reliable energy that can't easily be replaced with other sources.

And, based on what we know today, it's going to be part of the answer to our energy needs for years to come.

But we understand the need to plan for a future beyond coal. At Idaho Power, we are mindful of the role environmental concerns, stricter regulation and the increasing cost of using coal will play in determining the next generation of energy resources.

Finding a path that continues to provide reliable, responsible energy at prices that are fair will be challenging. We are committed to engaging you, our customers, in a conversation about the best way to power our homes and businesses during Idaho Power's second century.

This special edition of Connections is part of that discussion.

The Bottom Line

Coal is much less expensive than many other sources of energy. There's an abundant, local supply right next door in Wyoming. But stricter environmental standards require us to upgrade our coal plants. Idaho Power's facilities meet or exceed all environmental reglations, and we will work with our co-owners to help ensure that remains ture. But as the cost of burning coal goes up, we'll have to choose whether to pay those higher costs, or replace coal with something else.

The Facts

A coal-fired power plant is a complex machine with a simple function: burn coal to generate steam, whic spins a turbine and generator to make electricity.

In the past, coal has typically made up about 42 percent of Idaho Power's fuel mix, although the amount varies from year to year, depending largely on how much water is available to run our hydroelectric dams. In 2012, coal represented about 30 percent of Idaho Power's energy sources.

That's a lot of power. A megawatt (MW) provides enough electricity for about 695 average-sized homes in our service area. To replace nearly 1,000 (MW) of electiricy, we'd have to build three natural gas plants similar to the Langley Gulch plant that was comleted last year, at a cost of more than $400 million. Apiece.

What About Renewables?

Idaho Power already has a lot of renewable resources in its portfoloi (se grahpic below). Renewable hydroelectric power has been the core of our business for nearly 100 years. But adding more wind and solar won't eliminate the need for coal. If every turnbine on every wind farm on our system was spinning monring, noon and night, they would generate less than 700 MW. In the summer, when demand is at its highest, there's often little or no wind.

Solar power also cannot provide power around the clock and in all weather. While the technology has advanced in recent years, the cost, space requirements and the lack of adequate storage capacity remain obstacles to large-scale development.

On a national scale, wind, geothermal and solar combined to produce less than one-tenth the energy generated by coal last year. Those sources are growing, but they clearly are not going to supplant coal any time soon.

The Best Choice Right Now

Idaho Power used analysis from Science Applications International Corporation, information from our plant co-owners and our own analysis in a study that examines the cost of future investments in our coal plants versus the cost of replacing the power with natural gas.

The study shows that investing in our coal plants is the right choice for us and for our customers. There's no option right now to reliably and economically replace the energy we get from coal. That's why we plan to invest in new emissions-reduction equipment at the Bridger plant. (See story at right.)

It could cost our customers up to $1 billion over the next 20 years, based on the coal study results, if we converted Bridger and Valmy to natural gas or replaced them with combined-cycle gas plants. Keep in mind that the coal plants are still being paid for.

Imagine you have a reliable older car that gets decent gas mileage. It needs some maintenance to keep it on the road. It isn't paid for yet, but there's no trade-in option. You'd really like a shiny new model that gets a little better mileage and runs cleaner, but can you afford to park your old reliable in the garage and add a second car payment to the monthly bills?

Security Through Diversity

Drawing energy from a variety of resources -hydro, coal, natural gas, wind, purchased power -- helps ensure reliable, affordable energy even if winter snowpack is low or gas prices spike or the wind doesn't blow. Through diligent planning and foresight, Idaho Power serves customers with one of the most diverse resource portfolios of any electrical utility in the U.S.

When our customers set a new record for electricity demand back in July, we kept the lights (and air conditioners) on thanks to a wide range of generation resources, including coal, which provided more than a quarter of the power needed.

Planning for the Future

Although coal will continue to help power our lives over the near term, Idaho Power is already planning for the day when those plants are no longer running. In the latest update to our long-term resource plan, we envision no new coal resources over the next 20 years.

We recognize that things change. New regulations, changes in the price of natural gas, advances in technology and other factors can all tip the cost-benefit scales. That's why we continually evaluate our resources and update our Integrated Resource Plan.

Read the coal study and Idaho Power's Integrated Resource Plan on our website.

Idaho Powers Fuel Mix (2012)

Hydroelectric	52.1%
Coal	32.5%
Wind	8.6%
Natural Gas	5.0%
Other Renewable (Biomass, Geothermal, Waste)	1.6%
Purchased Power	0.3%

Our Emissions Story

Idaho Power has a proud history of supporting the strenght and vitality of the communities where we live, work and serve. That commitment extneds from providing reliable electrical service to being actively involved in our communities and doing our part to preserve the unique way of life that makes southern Idaho and eastern Oregon such wonderful places to live.

That means ensuring our operations meet or exceed all environmental regulations. In 2009, our company went a step further. Responding to feedback from our shareholders, Idaho Power pledged to reduce overall emissions 10-15 percent below 2005 levels by 2013. We exceed that goal and extended it to 2015.

Our overal CO2 emissions in 2012 were the 31st-lowest among the top 100 utilities in the U.S. If you look at our emissions intesnity -- that's the amount of CO2 produced per each megawatt-hour generated (MWh) -- we are 27th-lowest. Both of these rankins have improved over the past two years.

Learn more on our website under About Us Choose "Sustainablity" and you'll see links to our CO2 Emissions on the right