Life after Craig coal

A deal has been submitted that lays out Tri-State’s pivot from coal in Colorado. Now it’s up to state regulators

by Allen Best

The hand-writing had been on the wall for at least several years, but the announcement in January 2020 shocked some in Craig. Tri-State Generation and Transmission, the operator of three coal-burning units, announced it would close the last of the three units by 2030.

Craig, heavily dependent on well-paying jobs at the Craig Generating Station and the coal mines that delivered the fuel, faced an uncertain future.

Some clarity has arrived with a settlement agreement filed yesterday with the Colorado Public Utilities Commission. Tri-State, Colorado’s second-largest electrical provider, has reached an unopposed joint settlement with 16 intervening parties, including several environmental groups.

The three commissioners can approve the agreement or amend it or even reject it altogether. The latter has rarely if ever happened in parallel proceedings.

The agreement proposes $22 million in payments to the taxing jurisdictions in northwest Colorado between 2026 and 2029 and then anticipated investments of $48 million in additional benefits to the Craig community between 2028 and 2038.

The agreement also specifies that if a natural gas plant gets built, as Tri-State wants, it will be in Moffat County. A secondary choice would be to buy existing gas generation in western Colorado or southwestern Wyoming.

If the PUC approves the agreement, it will define Tri-State’s path forward as it pivots from a coal-heavy generation portfolio. The plan would see the greenhouse gas emission associated with the power generation within Colorado dropping 89% by 2030 as compared to 2005 levels.

Of Tri-State’s electricity that is delivered to currently 41 member cooperatives in a four-state service area, 70% will come from cleaner sources.

Tri-State has moved up retirement of the last of its three coal-burning units in Craig to New Year’s 2028. It has also committed to shedding its coal-burning capacity in Arizona at the Springerville plant by September 2031. That will leave it with just its share of a coal-burning plant at Laramie River Station, near Wheatland, Wyo.

The settlement agreement submitted to the PUC was heralded by many involved in Colorado’s energy transition – including local officials in Craig.

“It would be hard to overstate how truly groundbreaking this agreement is,” said Moffat County Commissioner Melody Villard. “The commitments made by Tri-State ensure that the communities are not left behind in the energy transition. We will now have reliable, long-term resources to drive our own transition and determine the trajectory of Moffat County’s economy after coal.”

The agreement will not leave Craig and Moffat County economically whole, she added, but will assist them in planning for what she called a promising future.

Craig Mayor Chris Nichols had this to say: “The energy industry is pivotal to our local economy and makes up such a large component of our tax base. We are pleased that the commitments contained within the settlement agreement represent Tri-State’s reinvestment in the community that has anchored Craig Station for decades.”

And Duane Highley, the chief executive of Tri-State, said this: “We will continue to work with our employees, the City of Craig and Moffat County for years to come.”

Wade Buchanan also heralded the agreement. He directs Colorado’s Office of Just Transition. His first week as the first employee of that office was in March 2020, less than two months after the coal plant closures were announced. He attended meetings in Craig with community leaders.

“This agreement sets a high standard for community assistance elsewhere in Colorado and around the country,” said Buchanan.

Elsewhere in Colorado, Xcel Energy, the operator and primary owner of Comanche 3, the coal-burning unit in Craig, has agreed to pay Pueblo County jurisdictions the property taxes on the plant to 2040 even though the plant is to be closed by New Year’s Day 2031.

Tri-State’s announcement of the agreement also included warm statements from the Sierra Club, the Colorado Independent Energy Association, and the Colorado Energy Office. All were engaged in the discussions before the PUC and were signatories to the agreement.

What will replace this lost coal generation? Tri-State has been adding renewables, both wind and solar.

If the new gas plant is built near Craig and it’s of a combined-cycle style, it must have a nameplate capacity of between 250 and 300 megawatts. It must also have the technology that will allow capture of 90% of its carbon dioxide emissions. Sequestration studies of the geology in the area of the existing coal plant in Craig have already been conducted. Tri-State does not see this happening before 2031, though.

Under Tri-State’s preferred plan that was endorsed with this agreement, it will seek to add 1,250 megawatts of renewable resources and energy storage between 2026 and 2031. The storage is broken down into short-term duration, meaning of 4 to 20 hours, and long-term duration of 20 to 100-plus hours.

Geothermal potential is also mentioned in the settlement agreement. Tri-State will be required to solicit bids for production of electricity from enhanced geothermal sources of 20 megawatts or greater in Western Colorado or Southwestern Wyoming. That doesn’t mean that Tri-State will be obligated to accept those bids.

Highley, during a webinar in late May, said that he thought geothermal and nuclear had similar cost curves. In the case of nuclear, he said, he doesn’t see it becoming cost competitive until 2035 to 2050.

Colorado Gov. Jared Polis, an enthusiastic supporter of geothermal, said at a recent conference that he believes Colorado can get 4% to 8% of its electricity from geothermal sources by 2040. It currently has none.

The settlement agreement also includes provisions for how Tri-State is to conduct modeling to help ensure that its resource mix will allow it to continue to provide reliable, affordable power in the event of an extreme weather event, such as several days of windless but cold winter weather or extreme heat in summer.

Also notable is the provision that calls for Tri-State to “aim to control at least 5.5%” of peak demand through demand-response programs by 2030.

The agreement also speaks to potential for new generation to be located in western Montrose County, where Tri-State had a small coal plant in the area of Nucla that operated intermittently until 2019.

Many of Tri-State’s precise plans depend upon whether it gets aid from the federal government through the New Era funding provided by the Inflation Reduction Act of 2022. Tri-State has applied for substantial aid to smooth the transition from coal to a generation portfolio with fewer emissions.

For background reading on just transition see these stories:

Colorado aims for Just Transition, Aug. 7, 2020

When the coal plants finally close, Aug. 13, 2020

No just transition yet after 2019 closing of coal plant, April 30, 2021

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