NEW YORK, Nov 22 (Reuters) - Portland General Electric Co (PGE) POR.N planned to stop burning coal at the Boardman power plant in Oregon, the state's only coal-fired plant, by the end of 2020 to meet pollution rules.

PGE however has not decided whether it will shut the 585-megawatt plant or convert it to another fuel, most likely biomass, Steve Corson, a spokesman for PGE told Reuters Monday.

On Friday, the Oregon Public Utility Commission approved PGE's plan to meet customers' electricity needs over the next 20 years, including the Boardman proposal.

"This plan responsibly addresses the future energy needs of our customers and strikes a sensible balance between customer costs and risks and environmental impacts and sustainability," Jim Piro, PGE president and CEO, said in a release on Friday.

"It also provides a reasonable transition time for moving away from coal to other sources of energy supply," Piro said.

PGE's 20-year plan also proposed the construction of more natural gas-fired and renewable generation, power transmission lines and expansion of energy efficiency and demand side resources programs, among other things, the spokesman said.

PGE said it will stop burning coal at Boardman, which provides about 15 percent of PGE's power, to comply with federal and state sulfur, nitrogen and mercury rules.

The spokesman said PGE determined it could cost about $500 million to upgrade the plant's emission controls to allow it to continue operating through 2040 and beyond.

But that is too high a price to pay in part due to the uncertainty over what federal and state governments will do to reduce carbon emissions to combat global warming, the spokesman explained.

Instead, the spokesman said PGE will spend about $75 million to upgrade the plant and keep it running until 2020.

The Boardman proposal is contingent on approval by the state's environmental regulators.

HARD TO BURN COAL IN NORTHWEST

Cheap hydroelectric power dominates the electricity market in Washington, Oregon and Idaho, keeping local power prices well below the national average.

Hydropower provides about two-thirds of the generation in Oregon, three-fourths in Washington and four-fifths in Idaho.

Power costs residential customers about 9.1 cents per kilowatt hour in Oregon, 8.3 cents in Washington and 8.5 cents in Idaho versus the 2010 U.S. average of about 12 cents.

Like Oregon, Washington has only one large coal-fired power plant, the 1,376-MW Centralia station.

In the spring, TransAlta Corp TA.TO , which owns Centralia, agreed to work with Washington to significantly reduce the plant's greenhouse gas emissions and provide replacement capacity by 2025.

Idaho, meanwhile, in 2006 established a two-year moratorium on processing proposals for new coal plants, and has continued to reject all coal plant proposals since then. Idaho has no coal-fired plants over 10 MW.

Oregon and Washington, which are both rich in hydro, wind and geothermal potential, also have renewable portfolio standards that require utilities to meet more of electric load with renewable energy sources.

Oregon requires the largest utilities to meet 25 percent of electric load with new renewable energy sources by 2025.

Washington requires all utilities serving at least 25,000 people to produce 15 percent of the energy from renewable sources by 2020. ----------------------------------------------------------- PLANT BACKGROUND/TIMELINE STATE: Oregon COUNTY: Morrow TOWN: Boardman about 160 miles east of Portland, the