Just several months after regulators approved Valmy’s natural gas conversion, NV Energy submitted a new plan. In it, the utility proposed adding two natural gas peaking units to Valmy that would produce an additional 411 megawatts, citing load growth and reliability issues. 

One problem: NV Energy had not mentioned the new peaking units in its previous energy plan just approved by state regulators. The utility said the peaking units — typically used during periods of high energy consumption — are necessary to help meet a growing demand for power in Northern Nevada and to balance the utility’s energy supply as it increasingly relies on renewable sources such as solar.

“Utilities all get judged for how reliable they are,” said Michael Milligan, an independent power system consultant who specializes in the integration of renewable energy into the power grid. “They don’t get extra credit for being extra reliable — nobody gets fired if they’re too reliable. A lot of people get fired if the system isn't reliable enough.”

Critics contend that the units are costly and will keep Nevada tethered to fossil fuel sources for decades — the two Valmy projects, combined with Silverhawk Generating Station, a natural gas project regulators approved in 2023 for Southern Nevada, will add 1,300 megawatts of new, natural-gas powered capacity in the state. And they also argue the utility pulled a bait-and-switch by omitting to mention the planned peaking unit expansion to state energy regulators.

“It was very strange they did not put that information on the table,” said Brian Turner, western regulatory director at Advanced Energy United, a clean energy trade group. “They hold all the cards — they can control what information gets shared.” 

Regulators ultimately approved NV Energy’s request, noting that in the future they expect to see projects presented in their entirety, not piecemeal.

The approval of the peaking units marks the third natural gas project approved in less than two years at a combined cost of about $1 billion.

“There is a lot of risk … and ratepayers are on the hook for paying off these plants,” Turner said.

‘Reliability is paramount’

The North Valmy Generating Station is jointly owned by NV Energy and Idaho Power. Valmy’s first coal-burning unit came online in 1981; its second unit came online in 1985. Combined, it produces enough electricity to serve approximately 315,000 households. 

Valmy serves as the main source of power for the Elko region and the surrounding Carlin Trend, one of the richest gold deposits in the world. In a 2023 report, the utility stated that Valmy “must run” to provide adequate, 24-hour power for the region.

But in the push for cleaner energy sources, coal, known as the dirtiest fossil fuel, has fallen out of favor. In 2013, at the urging of Sen. Harry Reid (D-NV), Nevada lawmakers passed a bill requiring the state’s remaining utility-owned coal plants be shut down.

Conversations around what to do with Valmy go back decades — as far back as 2007, a partial closure of Valmy by 2021 was considered by the utility, with the remainder of the plant to be retired by 2025. In 2013, regulators instead approved a 2025 retirement date for both Valmy units. In 2018, NV Energy announced it would replace Valmy with solar and battery storage, and in 2021, NV Energy outlined a detailed plan for Valmy’s full closure that was approved by regulators.

The plans were laid out in the utility’s integrated resource plan (IRP), which it is legally required to file every three years with energy regulators to ensure it has the resources it needs to serve customers while meeting state policy goals. If the utility wishes to make a change, it can submit an amendment.

NV Energy ultimately submitted a total of five amendments to its 2021 plan in less than three years, expressing concerns about costs for solar and battery storage projects because of supply chain issues. By 2023, in the utility’s fourth amendment, it said certain planned solar projects had fallen through and asked regulators for permission to replace Valmy with a battery storage facility — with no accompanying power generating source. Without any information about the generation source, state energy regulators denied the request, directing the utility to include a complete solution to Valmy in its next IRP or amendment. 

While retirement of the coal plant by 2025 was “a significant priority for this commission,” state energy regulators said at the time, “system reliability is paramount.”  

In response, the utility submitted a fifth and final amendment to its plan. In this amendment, NV Energy announced its plan to convert Valmy to natural gas, with full conversion to be completed by the end of 2026; that plan was approved by state energy regulators, who had previously expressed concern about losing it as a regional power source.

Just a few months later, the utility submitted its 2024 IRP. In it, the utility presented a load forecast showing substantial growth and requested two natural gas peaking units to accommodate it. 

Regulators approved the project while warning the utility that going forward they want “to see NV Energy’s entire financial picture for planning purposes and not receive information piecemeal.” 

In 2023, lawmakers passed AB524, a bill that would allow NV Energy to submit IRPs more often to reduce the need for amendments, which have a compressed timeline and offer less chance for scrutiny. During a May 2023 bill hearing, bill sponsor Assm. Howard Watts (D-Las Vegas) said he had heard concerns that “amendments have been coming very frequently, that some of the projects and amendments are extremely large, and they do not have the full timeline and the full analysis of the integrated resource plan itself.”

When asked why the peaking units were not included in the fifth amendment, NV Energy spokesperson Meghin Delaney said in an email, “As projections for economic growth changed, primarily drive[n] by demand for electricity to power data centers, plans were adjusted accordingly to ensure this technology could continue to advance.”

After its conversion, Valmy will continue to produce the same amount of power it had as a coal plant, plus up to 400 megawatts of additional, as-needed power from the peaking units, owned solely by NV Energy. 

The peaking units, which are capable of 15 percent hydrogen combustion, are intended to operate only as needed, Delaney wrote, particularly during the summer. She did not answer if there is a cap on how often the units can run. 

Expected to come online in 2028, the units will allow the utility to provide a level of grid stability that meets federal reliability requirements while eliminating the need for Valmy to run continuously, according to filings by the utility. 

But that level of reliability could be attained in other ways, said Turner.

“NV Energy may be reflecting a more historical, traditional view of ‘let’s build a gas plant, that will fix it.’ That is a traditional go-to for a utility,” Turner said. 

Load growth, mining and data centers

During the past four decades, Nevada has been home to the nation’s largest gold-mining boom, far surpassing what was produced during the famed 1800s California gold rush.

The utility has proposed retiring the Valmy natural gas units by 2049, but that date is arbitrary, critics say, spurred by the state’s 2050 net-zero carbon emissions goal. 

Moreover, critics say the Valmy repowering and addition of peaking units reneges on what the utility said it would do — retire Valmy. 

“This is a failure of planning for complete retirement after more than a decade of opportunity and direction to do so,” Turner said. “All in one of the most renewable resource-rich areas in the country."