In 1924, voters created the publicly-owned Colorado Springs Utilities enterprise (CSU), which provides electricity, natural gas, water and wastewater services to the Pikes Peak region. On Monday, the Utilities Board will vote on whether to prematurely close CSU’s coal-fired Martin-Drake power plant so it can be replaced with renewable energy sources.
Such a move could cost ratepayers up to $200 million, since no matter what is decided, ratepayers will continue to pay for the bonds that funded the pollution-control improvements at Drake. If it’s shut down they won’t see any savings on their utility bills. Instead they will have to pay even more to replace the lost generating capacity one way or another.
While the Utilities Board, which is comprised of the members of the Colorado Springs City Council, has taken public comment on the decommissioning several times it’s questionable how much credence or respect it gives the opinions of either its citizen advisors or its customers.
CSU admits that decommissioning Drake is not the most economical plan. According to its 2016 Electric Integrated Resource Plan (EIRP), “Among the 10 portfolios considered, three included the full Drake plant decommissioning. While still more costly than keeping the units online, the most economical option was a phased decommissioning schedule with Drake 5 in 2018, Drake 6 in 2023 and Drake 7 in 2029.”
What CSU means by this is that their preferred alternative is the most economical option of the three decommissioning options, all three of which would result in electric bills higher than some of the other options available that would lower utility bills.
The preferred alternative presented to the Utilities Board by the EIRP did not call for decommissioning the Drake power plant at all. The Utilities Board decided to close the coal-fired plant against the recommendation of its own EIRP, a move that City Council member Andy Pico characterizes as an anti-coal “war on the poor.”
“We’ve invested roughly 200 million dollars in the scrubbers and the scrubbers are in fact working great,” said Pico, “It does meet the EPA standards, it is in attainment of all required measures and that’s a significant amount of money.” He went on to say, “We are still paying on the bonds. That’s a significant cost. In addition to that there will be additional costs of generating electricity using natural gas. That by itself is probably about a 4 percent increase in rates.”
Keeping electrical bills low and environmental concerns are the top concerns of ratepayers.
A 2017 J.D. Power customer satisfaction survey of customers taken between August 31st and September 22nd commissioned by CSU concluded that a slight majority of ratepayers would be willing to pay 1 to 2 percent more for electricity to shut down the plant early.
Not provided to participants in the survey were the actual figures on what it would cost to abandon the investment in the Drake plant or the costs of shutting down and demolishing the plant and restoring the property to usable condition. Nor were the costs of replacing the lost generating capacity with renewable sources stated.
Pico says, “When you start talking about additional generation capacity that’s a whole other ball game. That is not included in those rates. We’ve already figured it out that we’re talking about 4 to 6 percent to close the plant and build new generation and power everything forward.”
When asked if they would be willing to pay 5 percent or more to close the plant the support dropped dramatically, with 42 percent of those 35 and under, 34 percent of those 36 to 55 and 22 percent of those over age 56 agreeing.
When asked if they were more concerned with the environment or the cost of electricity the balance was fairly equal. Sixty-four percent of respondents said air quality and 63 percent said low-cost electricity were extremely important. When asked about the importance of downtown development and image and reputation of the community, in both cases only 27 percent said these issues were extremely important.
But the survey didn’t ask if respondents think that the Drake plant is actually an environmental hazard, nor did it ask if the addition of new scrubbers resulting in the lowering of regulated emissions well below the EPA standards would affect their support for closing the plant.
At the December 5th City Council citizen comment session residents made it clear that the environment is important, but so are low utility rates. As Councilman Pico points out, the recent air pollution monitoring data suggests that operating the Drake plant and protecting the environment are not mutually exclusive goals.
Given three scenarios; to close the plant and keep the property for use by CSU; to close the plant and use it for “mostly non-utilities uses” (presumably but not explicitly including commercial use); and closing the plant and replacing it with new and smaller generation on the site, those who marked “fully support” were nearly equal across all three scenarios at 49, 45 and 48 percent respectively.
Examining the demographic breakdown reveals that income and age are significant factors in assessing support for closing the plant. Air quality, health and the environment and low-cost electricity dominated the under $55,000 income bracket at 73 percent for both, while in the over $55,000 segment 62 percent and 58 percent respectively found the issues to be “extremely important.”
Regarding the ultimate use of the Drake property, economic ranking made a big difference. For those with incomes under $55,000, 56 and 50 percent respectively opted for either closing the plant and using the land for other Utilities uses or building a smaller facility on the site while only 33 percent were in favor of using the site for “non-utility uses.”
Support for all three scenarios among those with incomes above $50,000 was roughly equal at about 50 percent plus or minus 4 percent with turning the site to non-utilities uses topping out at 52 percent.
In the 2016 EIRP, CSU claims that for “municipal utilities like Colorado Springs Utilities, [the state renewable energy standard] requires that energy from qualifying renewable energy resources must be at least one percent of electric retail sales for the years 2008 through 2010, three percent for the years 2011 through 2014, six percent for the years 2015 though 2019 and 10 percent for year 2020 and thereafter.”
Amy Trinidad, Public Affairs Specialist for CSU confirmed, “Yes, as a qualifying retail municipal utility, we are required to comply with the Colorado Renewable Energy Standard statute.”
The City Council meets as the Utilities Board at 1:00 p.m. on Monday and the decommissioning decision is agenda item 7.
Colorado Springs Utilities Board of Directors
December 18, 2017 Meeting
1:00 p.m., 121 S. Tejon, 5th Floor