A nudge, not a shove

Colorado air commission says 3 coal plants must retire by end of 2028 to help meet overlapping haze and greenhouse goals

by Allen Best

It was a nudge, not a shove, but one several electrical utilities say was entirely unnecessary.

Colorado’s Air Quality Control Commission on Nov. 20 voted to require three coal-burning units to be retired a year earlier than the utilities had planned.

Instead of Dec. 31, 2029, as originally scheduled, the three plants—Rawhide, north of Fort Collins; Nixon, south of Colorado Springs and Tri-State’s third unit at Craig—will be required to cease electrical production no later than Dec. 31, 2028. Commissioners indicated that they would not revisit the merits of their decision at the December meeting but must nonetheless confirm the prior vote. The plan will be submitted to state legislators in January for ratification.

The vote came late Friday afternoon after almost two days of testimony about how Colorado can move forward to lessen regional haze as required by the Clean Air Act. The staff of the state’s Air Pollution Control Division had recommended retirements aligned with what the utilities were planning anyway.

The Sierra Club and the National Parks Conservation Association presented an alternative. The two groups call for bumping up the retirement dates for the three plants by a year. Their proposal also called for Hayden units 1 and 2 to be retired in 2028. The two units had been scheduled to be retired before 2030 and 2036 respectively.

Doing so, said Michael Hiatt, staff attorney at Earthjustice’s Rocky Mountain office, would save Colorado consumers $68 million altogether, because the cost of coal has actually become that much higher than the cost of renewables. “I urge you not to let this opportunity pass,” he said.

Impacts to the Never Summer Range and the Kawuneeche Valley in Rocky Mountain National Park have driven Colorado to reduce emissions of nitrous oxide and other pollutants released in the combustion of coal. Photo/Russell Smith

A star witness for the environmental groups was Ron Binz, a former chairman of the Colorado Public Utilities Commission. “All in all I would consider these more nudges than burdening requirements,” he said. Binz said his experience at the PUC leads him to believe there will be substantial work for the utilities in accelerating the retirements but nothing that would pose serious problems.

Improving air quality was at the core of the air commission’s task. The U.S. Environmental Protection Agency in 1999 promulgated the regional haze rule, requiring each state to reduce emissions of visibility-impairing pollutants that negatively impact class 1 areas, including federal wilderness areas and national parks.

Colorado has submitted plans in 2008 and 2009 and revisions three times since. The EPA has approved plans, most recently in 2018. This is an incremental process.

Now, Colorado is going through two rounds of rule-making, the first phase wrapping up in December and a second to begin in spring 2021, to address remaining elements in the plan to be submitted to the EPA.

In deciding what can stay and what must go, states must evaluate options. For example, what would be the cost of installing additional pollution controls on the coal-burning units to more effectively reduce nitrogen oxide, one of the contributors to regional haze. The cost of altering the plants to burn natural gas was also evaluated. Closing plants and switching to renewables makes sense in every case.

Citing a study by Strategen, a consultant, the environmental groups reported that closing Rawhide a year early would result in $10.5 million in savings for consumers of Platte River Power Authority, which is comprised of four northern Colorado cities. Closing the Nixon power plant by the end of 2028 will save the 240,000 metered customers of Colorado Springs Utilities $3.7 million. And as for those who get power from the third unit at Craig, the savings would be $10.7 million.

The air commission has a dual motivation in this case, as was driven home by the environmental groups. It must figure out the best, most cost-effective way to cleanse Colorado’s air of the haze that obscures mountain peaks and damages human lungs. But, as a result of a 2019 law, it has the lead role in decarbonizing Colorado’s economy in the next decade by 50%. Shifting more quickly to renewables will help nudge along that effort.

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Colorado has 4,788 megawatts of coal-burning capacity, second among Western states only to Wyoming’s 6,358 megawatts. “Colorado has a long way to go in terms of cleaning up its coal sector,” said Matt Gerhart, an attorney for the Sierra Club.

Utilities protested, most specifically Tri-State Generation & Transmission, but also Xcel Energy. In various ways, they made one essential argument: achieving reasonable progress does not require Colorado to mandate closures.

“We don’t believe that it’s appropriate to mandate facility closures as a control measure in and of itself,” said Xcel Energy attorney Jon Bloomberg.

Doug Lempke, senior environmental policy officer at Tri-State, made the added argument that bumping up the closure of Craig 3 could jeopardize grid stability and also heighten the economic impact on local communities. He called the proposal “an extreme measure and completely unnecessary to show progress” toward meeting the regional haze reduction required by the EPA.

Tri-State had previously agreed to close Craig unit 1 by 2025. Earlier this year it had announced it would close the second unit by the end of 2028.

Coal being produced by at the ColoWyo Mine between Craig and Meeker in March 2020. Photo/Allen Best

The commission agreed to allow Tri-State’s ColoWyo Mine to continue operations through 2031, if it has additional customers. Barbara Walz, senior vice president for Tri-State, said she was not at liberty to disclose who or where those customers beyond 2028 might be.

Transmission costs of altered generation sources were discussed, but not in depth. Also discussed briefly several times was the consequence of early closings to local communities. Binz pointed to the potential tool of securitization, a legal refinancing device approved by Colorado legislators in 2019, of potential application to closing of the Hayden units.

After two executive sessions to confer with staff attorney Tom Roan, the Air Quality Control Commission voted 5-2 in agreement with the environmental groups that Colorado does have the authority to nudge the retirement dates. The commission will review the case at its December meeting.

Closure of the Hayden units was not included because the state had not included the technical record for the plants in the record. The commissioners said they expect the Air Quality Control Division to include a retirement deadline for Hayden of 2028 when the second phase of the case is taken up. Perhaps not coincidentally, Xcel Energy must file its resource plan by March 31 with the Colorado PUC, sharing its vision for the future of its generating resources.

After the meeting, environmental groups hurrahed. In an interview, the Sierra Club’s Gerhart said the decision was a recognition of the work by Colorado necessary to truly be a leader in the clean energy transition.

Tri-State issued a statement by Duane Highley, the chief executive, who again argued that accelerating plant closures is “unnecessary to achieve visibility goals and exceed requirements to achieve reasonable progress toward achieving visibility improvements under the regulations.” He also pointed out that the decision to require Craig 3 to close a year early “rejected the recommendation of the state’s professional staff.”

This story was modified to remove a false statement about the role of one of the speakers in the approval of Comanche 3, one of Colorado’s remaining coal plants.

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