California’s politics turned this small Utah town into a global energy hub

On a misty, gray morning in Delta, Utah, two Teslas drove past the little town’s towering coal plant. Their motors’ thin hums matched the now-silent behemoth that sits dormant after burning pulverized powder for nearly 40 years.

Two shinier, smaller natural gas plants sit in front of it, whirring gently, spitting out steam. These plants, which currently burn 30% hydrogen, were designed and built by Mitsubishi. Inside, half of the control room’s chairs are filled by central Utahns in cowboy boots, and the other half are filled by Japanese engineers.

Delta, population 3,700, has been home to state-of-the-art power plants since the 1980s. But the electricity it produces is not for Utahns. Their main customer is Southern California.

This all started in the 1970s. Conflict in the oil-rich Middle East made Americans realize they needed a self-sufficient and diverse energy industry, and Utahns in particular saw the crisis as an opportunity to use their abundance of easy-to-access coal.

Although it had the fuel supply, Utah didn’t have enough demand for power to build the kind of coal plant it wanted. So 23 Utah municipalities approached Los Angeles — the biggest municipal electric utility in the country — and five neighboring cities to make a deal.

By 1987, the Intermountain Power Project, known by most as IPP, had built two coal-fired units, and electricity was zipping 490 miles down from Delta to Southern California.

The coal plant generated billions of dollars for Utah

Intermountain Power Project electrified Delta’s economy right from its inception.

Jay Shaw, who was hired by IPP in 1985, told the Deseret News that when the coal plant was under construction, traffic on the town’s Brush Wellman Road — a previously quiet, middle-of-the-desert road — “would be two or three lanes wide, moving one direction” toward the plant.

The store where Shaw worked before switching to IPP was the “highest selling beer store in the state for a little while,” because there were so many workers in Delta who arrived from other states to help build the plant.

He said more than 200 people moved to the small town to help build the facility.

Since the coal plant’s turbines began generating electricity in the mid-’80s, it has generated $866 million annually in economic activity. Another Intermountain Power Agency report from 2023 showed IPP with a cash flow of $326 million from operating activities, and $349 million in 2022.

And while nonprofits are typically tax-exempt, the Intermountain Power Project agreed to pay state and local taxes, “so it is a tax payer, not a tax taker,” John Ward, a spokesperson for the Intermountain Power Agency, told the Deseret News. Since its inception, IPP has paid Utah $720 million in state and local taxes.

“No public money or public investment went into this,” Ward said. “All of the financing for building this plant is done by issuing municipal bonds in the publicly traded municipal bond market. So the cost for repaying those bonds and for operating the plant is covered by power sales to whoever is buying power.”

And who has bought 98% of the coal-generated power from IPP? Californians.

Delta’s power infrastructure exists because of California regulations

If coal and natural gas plants provide so many tax dollars, why would California allow them to be built in another state?

There are several reasons. First, it’s economical for a coal plant to be near its power supply, and in that sense, Utah is the perfect spot. A state report from 1990 described Utah’s “unparalleled accomplishment” in the coal industry, producing a record high of 22 million tons that year.

The report also mentions that California not only received coal-generated electricity from Utah, but it bought nearly one million tons of “electric utility coal” to fuel its own units (all of which have been shut down).

Second, California’s Environmental Quality Act, which passed in 1970, posed significant challenges to anyone wanting to build a coal plant in the state. If a plant was built in Utah, it would simply face fewer regulatory risks, permitting costs and delays.

California politicians “realized they could not produce coal without environmentalists — especially in LA — going crazy. So, take it from Utah,” Lance Christensen, a former legislative consultant in the California state Senate and current vice president of California Policy Center, told the Deseret News.

“If you can displace those environmental costs off to people in Utah but still receive the benefit of that energy, then why wouldn’t you do that?” he said.

In California, Christensen said coal’s reputation hasn’t kept pace with technological advancements, making it an outdated and inaccurate picture.

“A lot of people’s mentalities never switched,” Christensen said. “Coal is automatically dirty, because they remember these movies from the ’50s, ’60s and ’70s where LA was a completely smog-filled city, and it’s not anymore.”

He continued, “We (in California) have relied too heavily on the prediction of environmental doomsayers instead of understanding how we can get good, clean and accessible energy out of coal plants that we’ve already built and can sustain.”

Though the regulations are tough, innovation prevails

California re-signed a contract in 2015 called “IPP Renewed,” with 21 Utah municipalities through 2077 in hopes Mitsubishi will transition to 100% hydrogen by 2045, achieving the state’s zero-emissions goals.

All power generated by IPP Renewed will comply with California’s Renewable Energy Resources Act, Global Warming Solutions Act (2006), Clean Energy And Pollution Reduction Act (2015), the 100 Percent Clean Energy Act (2018) and other legislation.

Requiring zero carbon emissions from power generation by 2045, as California does, requires massive innovation. And it just so happens that the land beneath Delta is perfectly formed to make that happen.

When power developers poked around in search of natural gas and coal, they instead discovered Empire State-sized salt reserves beneath the power plants. When solution-mined, these reserves, part of the West’s only high-quality geologic salt dome, can be naturally developed to store hydrogen — the fuel required for IPP’s new plants.

This natural feature “was zero consideration in why they put the coal plant there, but as it turns out, we are right on top of it,” Ward told the Deseret News.

Meanwhile, Southern California’s sunny weather and tax incentives have encouraged people to blanket their roofs in solar panels. During peak hours, Los Angeles and its neighbors have more solar power than they can use, so they send the power back through the 490 miles of transmission lines to Delta.

With this new power source, a host of developers, including Sawtooth, Chevron New Ventures, Big Oil Company and Mitsubishi, have created a joint-venture called “Aces Delta,” where engineers use LA’s solar power to split water molecules (electrolysis) for its H2. That hydrogen is then stored in the salt caverns where it waits to be burned in IPP’s natural gas-hydrogen plants.

When it’s completed, Delta’s plant will be one of the first to achieve large-scale hydrogen generation, storage and power production.

Who gets Delta’s dormant coal plant now?

California’s 2006 Global Warming Solutions Act has ended any future for coal-generated power sales to the state.

However, “Utah’s state Legislature has been very interested in trying to save those coal units,” Ward told the Deseret News.

In anticipation of IPP’s coal units coming off the grid, the Legislature formed a Utah Energy Council, which is looking for new users for the coal units. In case they could find one, IPP’s plant workers made sure both units were retired in operable condition, so they could come back to life easily.

Ward said at the beginning of December, there were 14 parties interested in the plant, but as of Jan. 8, Utah’s Office of Energy Development told the Deseret News there are still no buyers.

This is not without reason. The coal units need updates that will cost at least $125 million, and much of the state’s rich and accessible coal has been smashed and burned.

Compounding the issue is Utah’s own power laws.

Rocky Mountain Power, which is currently owned by Warren Buffett, claims service territory for most of Utah, southeastern Idaho and southwestern Wyoming. The only places that can legally opt in to using IPP’s power are those 23 Utah municipalities that signed the contract, which runs through 2027.

Because IPP is located in Delta, which is not one of those 23 municipalities, it can’t use the power generated at its plants to run its own lights. Every month, it has to pay a power bill to Rocky Mountain Power.

Even if the coal plant is sold for parts, IPP has prepared Delta for future innovation

If all else fails, and the coal plant is divvied up for pulverizers and pipes, IPP’s existing power infrastructure could still attract new power innovators.

Their transmission line to California is undergoing a more than $2 billion upgrade, taking it from its 2,400 megawatt capacity to 3,000 by 2027. IPP also built a new gas line that extends from I-15’s interstate pipeline, and the project has ample water supply.

Intermountain Power Agency’s vision for the site is that it must “become an energy hub,” Ward said. “It needs to adapt to whatever energy development makes sense for our project participants.”

And as the Deseret News previously reported, two Utah-based companies are running feasibility studies to build at least 2 gigawatts of nuclear energy capacity to power a 25-acre data center in Delta. If it moves forward, it would easily become the world’s largest data center campus, spanning 20 million square feet.

In justifying the location, Creekstone Energy wrote, “Our strategic location adjacent to the 1.9 GW Intermountain Power Project site provides unparalleled grid connectivity. This ensures robust power stability, access to major transmission networks, and the flexibility to support even the most demanding hyperscale AI computing requirements.”

But if Creekstone falls through, and if other power projects take root elsewhere, they will still likely use IPP’s massive transmission line to California.

“Either more stuff is going to get built in Millard County that fits what California power consumers want, or all those windmills being built up in Wyoming are going to build transmission lines through Utah, hook into that line in Delta, and Utah is going to sit here and watch Wyoming wind molecules whiz by for the next 50 years,” Ward said.