Legal & Regulatory

Board Keeps Option to Close Colorado Coal-Fired Plant Early

A utility group on December 18 agreed to keep a coal-fired power plant in Colorado Springs, Colorado, open for at least a few more years, and its members said they are prepared to move forward with distributed generation and could import power to make up for the eventual retirement of the Martin Drake Power Plant.

The board of directors of Colorado Springs Utilities (CSU)—whose members also serve as Colorado Springs City Council—made its decision after listening to both supporters and detractors of the Drake plant, which has been dogged for years by activists and environmental groups over its emissions of sulfur dioxide, even after emissions-control technology was installed over the past few years. Its downtown location has made the plant a lightning rod for criticism in the continued debate of the future of coal-fired power in the U.S., particularly after a 2014 fire at the facility that took the plant offline for several weeks.

Board members on Monday heard from several people who spoke in favor of keeping the plant open at least until 2035—and in some cases, argued it should be kept open indefinitely, which is no longer an option due to the board’s action in 2015, in which it voted 5-4 to close Drake not later than 2035. Several others in the audience at the four-hour-plus meeting said Drake should be closed, and for many, the sooner the better, citing health concerns and the need for the city to embrace renewable power generation.

Plant Could Be Retired in 2035, or Sooner

Monday’s action keeps the 203-MW Drake facility on track to close as scheduled by 2035, though it could still be retired by 2025 or sooner, depending on the completion of studies that would enable the city to get a better handle on the costs of the plant’s closure and its impact on ratepayers and the city, particularly the downtown area near the plant. The board noted its decision provides “maximum flexibility on all scenarios and all closure dates between 2025 and 2035.”

Board member Richard Skorman said “we don’t have information” about how much rates would go up, or go down, making the process difficult. “We don’t have it, and we need to get it. There will be variables, [including] the 2020 presidential election. That may be a factor,” he said. “There may not be [future] subsidies for coal, and there may be [future] subsidies for solar and wind. There are so many unanswered questions. Let’s not make a decision until we have the facts, but let’s move as quickly as we can.”

“I focus in on the costs of decommissioning,” said board member Andy Pico, who noted the additional cost of burning natural gas compared to coal, if lost generation from Drake were to be replaced by gas. He said the utility’s “$200 million” investment in scrubbing technology to control emissions has been “95% effective,” and does not require additional investment since it’s already in place. He also said the board’s 2015 decision to close Drake not later than 2035 came after “four years” of intense study, and an ultimate decision on when to close the plant should not be rushed.

“I am not in favor of closing [the plant] any sooner than is economically feasible,” he said. “There are an awful lot of unknowns. We need to follow the EIRP (Energy Integrated Resource Plan) and staff recommendations before making a [final] decision.”

Board member Tom Strand, who chaired Monday’s meeting, said a majority of emails received by the board as of Monday morning regarding the plant supported keeping it open, by a ratio of about 2-to-1, although those speaking on behalf of closing the plant before 2035 were much more in evidence at Monday’s meeting, as they had been at previous meetings to discuss the plant’s future.

Strand said he favors closing Drake early—“I’d like to use the land for something else,” he said, noting the potential for economic development in the downtown core—but like Pico said he would like for the EIRP process to play out.

Board member Yolanda Avila said the city needs to have “the vision to move forward,” particularly due to the age of the Drake plant, saying the city likely has lost business to other areas of Colorado that are more progressive and already have embraced new generation technologies.

The two remaining operating units at Drake, Unit 6 and Unit 7, came online in 1968 and 1974, respectively. The CSU board in recent months has said it would look at closing the facility at least a decade earlier than 2035, and also considered leaving just one coal-fired unit operating after 2023, both decisions it could have made Monday. The decommissioning process for the plant actually began with the retirement of Unit 5 at the end of 2016.

Zach Pierce, senior campaign representative for the Sierra Club’s Beyond Coal Campaign, in a statement said “The costs of clean energy and new battery storage technologies are now competitive with fossil fuels, and are in some cases even more affordable. That is why cities and utilities around the country are closing down old coal plants. After deciding to delay the vote to retire Drake, it’s important that Colorado Springs Utilities be open and transparent about the financial and public health costs of keeping the coal plant open and to set a clear timeline for a new retirement vote.”

Three Scenarios Considered for Closure

As part of the plan to close Drake, CSU has considered three scenarios to replace the plant’s generation, beyond sourcing additional power from the nearby 480-MW Front Range Power Plant in Fountain, with which it currently has a power purchasing agreement. The scenarios involved replacing at least 128 MW of Drake’s generation, either from inside of its service territory, with new generation at the Drake site (a solar farm or new natural gas-fired plant have been discussed) or additional generation at its 60-MW Birdsall power plant in Colorado Springs; bringing in power from outside CSU’s service territory; or a combination of both scenarios, which is what the board supported Monday.

Audience members who spoke Monday in support of keeping the plant open told the board they were concerned about rate increases for electricity due to an early closure of the plant, with costs for early decommissioning passed on to ratepayers. Some also said they think the emissions problems cited by the Sierra Club and other environmental groups have been overstated, noting Colorado Springs has consistently been included on lists of U.S. cities with the cleanest air in recent years. A 2017 report from the American Lung Association ranked Colorado Springs eighth among U.S. cities with the lowest year-round average particulate pollution.

Many of those who spoke in favor of closing the plant sooner rather than later cited pollution from the plant, and also said they would prefer the lost generation from Drake be replaced by renewable sources instead of natural gas. They said the city’s economic future would be better served by innovative technologies provided by renewable generation.

John Romero, the utility’s engineering and planning general manager in its Energy Acquisition department, talked about the scenarios studied by CSU to determine the impact to ratepayers of different closure strategies. He said there were area residents who said they were willing to pay an extra 1% to 2% on their monthly bills to help cover the cost of an earlier closure. He also noted that the utility likely does need additional transmission to be built to facilitate a transition from generation at Drake, and board members unanimously supported expediting regional transmission projects.

Report of Emissions Violations Spurred Action

The Drake plant has been at odds with activists and environmental organizations for years, and calls for its closure intensified in recent weeks after a report—apparently inadvertently leaked by the Colorado Court of Appeals as part of a proceeding—surfaced that allegedly indicates the plant has been in violation of federal regulations on emissions, surpassing maximum allowable levels of sulfur dioxide (SO2).

Leslie Weise, an area resident, environmental activist, and attorney who had sought information on the plant’s emissions, received the data in an email from the court. Her previous requests for the information from Colorado Springs Utilities and El Paso County had been denied. Because she had received the data by mistake, she returned it, but was allowed to speak about the email’s contents.

She told the Colorado Springs Gazette that “none of the information provided demonstrates compliance with the EPA standard for safe levels of sulfur dioxide. In fact, the only formal studies [CSU] conducted show just the opposite—consistent violations of the health-based standard.”

The utility has denied any violation of standards and said it has not tried to hide emissions data.  “The information developed by AECOM is not data on actual emissions from the plant,” CSU spokeswoman Amy Trinidad told the newspaper. “Actual emissions data has been and continues to be made publicly available.”

AECOM, a multinational engineering firm, had studied the plant’s emissions for CSU. Its report was designed to help CSU in its legal arguments with environmental groups. The utility, and Trinidad, said it was not expected that the report would be released to the public.

The Drake plant in 2011 gave Colorado Springs company Neumann Systems a $73.5 million contract to install a NeuStream scrubber process to help reduce its SO2 emissions. There was disagreement about the contract, since it was awarded to Neumann directly and not put out to public bidding. Over the next few years, costs for the scrubber system nearly tripled, although testing has shown the system has removed more than 97% of SO2 at the plant.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)

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