Coal-rich Colo. starts hiking long road to green power

Source: Benjamin Storrow, E&E News reporter • Posted: Wednesday, December 12, 2018

Colorado is in the vanguard of America’s energy transition. The Rocky Mountain State’s largest utility last week committed to slashing its emissions 80 percent by 2030 and zeroing them out by midcentury. And a day later, a municipal power company announced it, too, would eliminate its carbon emissions.

Those announcements came as a rural electric cooperative — one of the last bastions of coal power in Colorado — said it would ask state regulators to approve the breakup of its coal-heavy electricity supplier.

Now comes the hard part: actually greening Colorado’s power sector.

The challenges facing the state’s green energy revolutionaries are many. Several of the largest coal plants are co-owned by multiple utilities, meaning the decision to close them will not be up to a sole power company. State regulators’ power over Colorado’s rural electric cooperatives isn’t well-defined, complicating efforts of local co-ops seeking more renewable generation. And Xcel Energy Inc., Colorado’s largest utility, faces serious questions over the fate of its remaining coal plants, which pose a serious hurdle to its emissions targets.

“Having Xcel announce this goal is incredibly important and allows us to rest assured that we are pointed in the right direction. We share the same overarching goals,” said Erin Overturf, deputy director at Western Resource Advocates, a conservation group. “But there’s going to be significant work ahead to figure out how to achieve these goals in a way that maintains safe, reliable service and keeps costs reasonable.”

The outcome of Colorado’s evolution has significant implications for efforts to green America’s power sector, long one of the country’s largest generators of greenhouse gases.

Unlike other states committed to climate action, such as California and New York, where coal historically played a small role in the electricity mix, Colorado has a long history with the black mineral. The dynamic makes Colorado an important model for other coal-reliant states seeking to decarbonize their electricity.

Coal accounted for more than half of Colorado’s electricity generation in 2016. Its coal plants consumed nearly 15.9 million tons of coal that year, 15th most among states, and emitted 29 million tons of carbon dioxide, according to U.S. Energy Information Administration figures. That represents about a third of the state’s energy-related emissions.

Colorado is already taking significant steps to green its power sector. It arrived at a milestone earlier this year when state regulators approved an Xcel plan to close two coal units a decade early and replace their power with renewables (Climatewire, May 7).

The move is significant on two fronts. It will reduce the state’s power-sector emissions by roughly 11 percent, providing a major boost to Gov. John Hickenlooper’s (D) goal of slashing state greenhouse gases by 26 percent of 2005 levels by 2025 (Climatewire, Sept. 18).

The plan also demonstrated just how cheap renewables have become. Xcel concluded that installing 1,800 megawatts of new wind and solar was cheaper than running 660 MW of existing coal after receiving 430 bids for new renewable generation (Climatewire, Jan. 5).

The announcement has rippled across Colorado and the utility industry at large, showing power companies that installing renewables and retiring coal can create operational savings, said Mark Dyson, an analyst at the Rocky Mountain Institute, a clean energy think tank.

“It’s a pretty cool reflection of how fast the industry, the $400 billion U.S. power industry, can move when the money is right,” Dyson said. “It puts a stake in the ground, and it wouldn’t surprise me if we saw similar announcements from utilities in the next six months.”

Questions about Xcel, co-ops

Still, questions remain for Xcel. The Minneapolis-based utility co-owns the Hayden Generating Station, a 440-MW coal plant, with PacifiCorp and the Salt River Project. Whether those utilities would agree to close the plant or to Xcel selling its stake is an open question.

Xcel’s 505-MW Pawnee Generating Station in eastern Colorado lacks a retirement date. And its 750-MW unit at Comanche Generating Station in southern Colorado is one of the newest coal plants in America, having come online in 2010. The debt on the plant will not be paid off for at least several decades.

It’s not entirely clear what Xcel’s pledge to slash emissions means for those plants. The utility did not respond to a request for comment.

Several Colorado power companies nevertheless appear set to follow in Xcel’s footsteps. The Platte River Power Authority, a municipal power company serving four Colorado communities, said last week that it would zero out its carbon emissions by 2030. The power authority serves roughly 380,000 people and operates a 280-MW coal plant and several natural gas units. It owns a share in two units at the Craig Generating Station in western Colorado.

Like Xcel, Platte River demonstrates the challenges and opportunities utilities face in shifting away from coal. When the power authority put out bids for new wind power in 2016, the prices were so cheap, it decided to triple its purchase from 50 MW to 150 MW, said Steve Roalstad, a spokesman for the authority.

At the same time, Platte River faces questions about its coal unit, the Rawhide Energy Station. The plant underwent a $46 million renovation this summer and is now scheduled to run until 2046. It’s too early to say what the authority’s commitment to eliminating its emissions means for Rawhide, Roalstad said.

“That’s one of the things the IRP will have to address now,” he said, referring to the long-term plan the power authority is in the process of revising.

An even bigger question centers on the state’s 22 rural electric co-ops, 18 of which depend on the coal-heavy Tri-State Generation and Transmission Association to supply their power. Tri-State supplies more than a quarter of Colorado’s electricity, but it hasn’t historically been regulated by the state’s Public Utilities Commission (PUC).

That may now change. A small western Colorado cooperative for several years has agitated to leave Tri-State in order to buy more renewables. The co-op, the Delta-Montrose Electric Association, has already hit the 5 percent limit on local power generation allowed under its contract with Tri-State, limiting its ability to adopt more solar and small-scale hydropower on local irrigation canals.

Delta-Montrose is asking the PUC to approve a reasonable exit fee from Tri-State’s system, arguing it has the responsibility to ensure that consumers’ rates are reasonable. There is some precedent for the argument, with the commission asserting its jurisdiction over Tri-State in a 2013 case.

The implications of Delta-Montrose’s request could be far-reaching as other cooperatives start raising concernsS about Tri-State’s reliance on coal. United Power Inc., Tri-State’s largest cooperative, questioned the association’s slow adoption of renewables in a letter to the association’s board last month. It noted that Tri-State’s rates are 28.5 percent higher than Xcel’s and argued that Tri-State’s reliance on fossil generation is hindering its consumers’ sustainability goals.

“Our Members are looking for ways to reduce their carbon footprints, especially our large industrial Members (United Power’s key accounts),” wrote James Vigesaa, chairman of the United Power board. “Not being able to deliver on this need due to Tri-State’s generation portfolio mix is also a serious problem for United Power and its growth trajectory and opportunities.”

Lee Boughey, a Tri-State spokesman, sought to allay those concerns. Tri-State has taken steps to adopt more renewables in recent years, he said, noting that roughly a third of its power now comes from zero-emitting sources. And as a cooperative, Tri-State is governed by its members, he said.

“Tri-State remains responsive to our members by ensuring reliability and managing costs,” Boughey said in a statement. “Our wholesale rates have remained stable four of the last five years, will not increase next year and are forecasted to remain stable in the years to come.”

Will Xcel provide a model?

The debate hints at one of the major questions facing the state, said Joe Smyth, a researcher who writes at Clean Cooperative about power cooperatives. Xcel’s moves were voluntary and based on the utility’s cooperation with the state and environmental and consumer groups, he noted.

But whether that model will be enough to decarbonize all of Colorado’s power sector remains to be seen. If Tri-State eschews Xcel’s bottom-up approach, it may fall to the state to enforce the emissions reductions.

“Colorado has been highly reliant on coal-fired power plants historically, and we’re in the middle of what looks like a rapid transition away from coal to renewable energy,” Smyth said. “The situation with the co-ops, I think, is like a window into who’s involved in that transition and how it’s done.”

It may ultimately fall to Gov.-elect Jared Polis (D) to turn the announced carbon reductions into reality. Polis, a Boulder congressman, ran on a 100 percent renewable pledge and will come into office boasting a new Democratic majority in Colorado’s Senate, giving the party control of all three branches of state government in Denver.

The governor-elect was on hand at the Denver Museum of Nature and Science last week, when Xcel announced its emission targets. Polis praised the utility’s efforts, saying they would benefit climate and improve public health.

“We’re showing the country the way,” he reportedly told the crowd.

Where exactly that leads remains to be seen.