The Intermountain Power Agency, an organization of 23 Utah municipalities which operates Utah's largest coal-fired power plant, reported $606.2 million in operating revenues for fiscal year 2005, an increase of $38.4 million compared to $567.8 million in fiscal year 2004.

The agency's annual report, released Tuesday during its annual meeting, described financial results for the Intermountain Power Project in Millard County as "another banner operating year." However, the report said, the year "was not without its challenges," particularly the higher cost of coal.

Fuel expenses for the plant increased $10 million in 2005 from the prior year due to a seller's shortage by the plant's largest coal supplier, the report said. In late 2004, IPP faced a dire coal shortage, having to use stockpile reserves to keep the plant operating.

Not only was the coal more expensive, but it was of a lower quality, the report said, requiring roughly 3 percent more coal to achieve the same level of electricity generation.

The agency reported a $12.3 million net loss in coal sales in fiscal year 2005, an increase from a $3 million net loss in 2004. The increase in the net loss, the report said, resulted from "difficult operating conditions in certain operating coal mines in which IPA has an ownership interest." In addition, operating costs at times exceeded the sales price of coal.

Despite the rising fuel costs, the plant finished the year $13.2 million in net costs recovered, which will result in a year-end credit to project participants.

The report said planning continues for the proposed construction of a third generating unit at the plant site. The agency is waiting for the issuance of an air-quality permit.

IPP — with a pair of 750-megawatt units since upgraded to 950 megawatts each — sells 75 percent of its electricity to six California cities. Los Angeles is entitled to 45 percent of the plant's generation.

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