Coal plants set to close in Colo., N.M., La.

Source: By Edward Klump, E&E News reporter • Posted: Sunday, January 12, 2020

A major Western power provider announced plans yesterday to shutter two plants as it prepares to exit coal-fired generation in New Mexico and Colorado, the latest in a string of coal closures across the U.S.

Tri-State Generation and Transmission Association Inc.’s shift drew a shoutout from Colorado Gov. Jared Polis (D) during a state address, as well as calls from the Sierra Club for more action.

First on the list of planned closures is the Escalante Station in New Mexico and its 253 megawatts of capacity. That’s set to happen by the end of 2020, Tri-State said.

The bigger milestone would occur by 2030 — the closure of Craig Station in Colorado and its 1,285-MW capacity from three units, as well as the closure of the Colowyo mine in northwestern Colorado. One unit at Craig already was scheduled to close by the end of 2025, so yesterday’s news builds off of that. Additional industry-related mine operations could be affected in Colorado and New Mexico.

“Serving our members’ clean energy and affordability needs, supporting state requirements and goals, and leading the fundamental changes in our industry require the retirement of our coal facilities in Colorado and New Mexico,” Rick Gordon, chairman of the board of Tri-State, said in a statement yesterday.

Tri-State’s announcement is part of an eventful week for coal plant watchers. The Sierra Club touted the potential closure of the 650-MW Dolet Hills plant in Louisiana as the 300th coal plant proposed to retire since the start of the Beyond Coal campaign. And the Arizona Republic reported that PacifiCorp plans to close a 395-MW generating unit at the Cholla plant in Arizona this year.

Tri-State CEO Duane Highley told reporters on a call yesterday that the decision to close plants was difficult for the board of directors, noting the effect on employees and communities. But he said it was time to develop a plan for the future of the organization. Tri-State calls itself a “not-for-profit power supply cooperative of 46 members, including 43 electric distribution cooperatives and public power districts in four states” that deliver power to over 1 million consumers.

Low costs for new renewables are helping to offset the expense of retiring coal assets early, Highley said, and it’s possible there could be rate decreases in the future. He said a further discussion of Tri-State’s Responsible Energy Plan is slated for next week.

That plan, he said, includes “significant reinvestment” in renewables and “beneficial electrification” work to support charging stations in rural areas. Yesterday, Tri-State discussed work toward a possible 90% carbon reduction from coal and gas assets it has operated in Colorado compared with 2005 levels by 2030.

‘Far more to do’

But Tri-State has faced criticism. Anna McDevitt, a senior campaign representative at the Sierra Club, offered a blunt assessment of the organization in a statement yesterday.

“From member co-op unrest, to the poor economics of coal and environmental policy pressures, Tri-State can no longer ignore the benefits of retiring its coal and replacing it with local, clean energy,” she said.

While announcements of coal plant retirements show “real progress,” McDevitt said, “Tri-State still has far more to do when it comes to member transparency and democracy, committing to decarbonization, and providing impacted communities with the tools needed for a just transition.”

Erin Overturf, deputy director of Western Resource Advocates’ Clean Energy Program, said closing coal-fired plants will help Tri-State lower its emissions of carbon dioxide and other air pollutants while enabling lower power costs for members.

“Continued operation of coal plants is increasingly more expensive than shifting to cleaner resources like wind and solar,” Overturf said in a statement. “At the same time, we recognize that these closures are economically challenging for many Tri-State employees and the communities where the facilities are located.”

Yesterday, Highley said Tri-State would provide $5 million in local community support and is working with leaders in New Mexico to address the impact of the transition. In Colorado, he said Tri-State was working with state leaders on “proactive legislation” to ensure that closures will meet greenhouse gas compliance obligations while maintaining stable rates and reliable power for its members.

“Almost half of Tri-State’s employees are involved in either coal mining or coal burning — you know, generation of electricity from coal,” Highley said, saying hundreds of jobs would be affected.

Questions continue to swirl around Tri-State, including interest by some members in exiting. And there are questions about the role of federal and state regulators in relation to Tri-State, which issued a news release on the matter last month.

The Sierra Club’s McDevitt also said co-ops should have an opportunity to work transparently with Tri-State to tap local renewables. Highley said he’s confident a new contract structure can be delivered by an April target, which he said could help member systems get the flexibility they’ve been seeking. The Sierra Club said a recent letter from a number of business owners asked Tri-State to commit to 80% carbon-free power by 2030.

Tri-State also said yesterday that almost 1 out of every 3 kilowatt-hours consumed by members is sourced from renewable, nonemitting sources. That could climb to more than 50% in the future, it said. Tri-State does have interests in other coal-fueled generation outside Colorado and New Mexico.

Dolet Hills

The Dolet Hills plant in Louisiana also bubbled into the news this week through a regulatory process and settlement agreement in Arkansas.

Southwestern Electric Power Co. has agreed to seek regulatory approval to retire the Dolet Hills plant by the end of 2026, according to Peter Main, a company spokesman.

“This action follows our change to seasonal operations last year as we adjust to electric power market conditions and the challenges of mining” lignite reserves, Main said in a statement.

Main also pointed out that the Sierra Club agreed to withdraw pending challenges related to Dolet Hills in Texas and Louisiana. But the Sierra Club trumpeted the potential closure of the plant in news releases this week.

“The retirement of Dolet Hills is a win for ratepayers, public health and the environment,” said Cherelle Blazer, senior campaign representative for the Sierra Club’s Beyond Coal campaign in Louisiana and Arkansas, in a statement. “This is a golden opportunity for investment in Louisiana and Arkansas with more cost-effective clean energy capital projects like building solar and wind capacity.”

A low market price for power and the cost of mined lignite are factors in making the Dolet Hills plant less competitive, Cleco Power LLC told E&E News.

Some uncertainty remains around when Dolet Hills may retire, though.

“Cleco continues to evaluate the future operations of the plant and the mine,” the company said in a statement.