Debate rages over Colorado's second largest power provider investing in Kansas coal plant

By David O. Williams
Real AspenAugust 31, 2011

Conservation groups deeply involved in the resource acquisition planning process for Westminster-based Tri-State Generation and Transmission say they're very concerned the state's second largest power supplier behind only Xcel Energy is planning to build an 895-megawatt conventional, coal-fired power plant just across the state line in Holcomb, Kan.

“Their resource plan shows no need for that plant of that size during the entire 20-year period of their plan,” Bruce Driver, a consultant and former executive director of Western Resource Advocates, told the Colorado Independent recently. “At the same time, they are pouring money into Holcomb 2, which they will own if it gets built.”

The plant has been approved by Kansas regulators but stalled by a Sierra Club lawsuit and Tri-State's lack of clarity on whether it plans to actually go ahead with the plant. Opponents estimate Tri-State has already spent between $50 million and $100 million of ratepayer money on the facility.

Driver fears the company that supplies power to 44 member-owned rural electric associations in Colorado, New Mexico, Wyoming and Nebraska is planning to become a regional power wholesaler – something WRA would strongly oppose.

The months-long resource planning process stemmed from an agreement between Tri-State and WRA that received the blessing of the Colorado Public Utilities Commission, which at the time was considering an attempt to regulate the company the way it oversees publicly owned utilities like Xcel.

Tri-State developed a 400-plus-page planning document heavy on renewable energy, efficiency programs and natural gas – largely appeasing environmental groups concerned about global climate change and the carbon dioxide, mercury and nitrogen oxide emissions of coal plants. But then Tri-State refused to rule out building Holcomb 2.

“Tri-State agreed in the plan that [renewable energy] was the path forward, but then they have this business plan and at the same time they continue to pour money into a giant coal-fired power plant in Kansas,” Driver said. “It's the business plan that seems to be the guiding document for what they're going to do, and they won't let us see that.”

At a meeting on its resource plan in Westminster on Monday, Tri-State officials would not pull Holcomb off the table.

“We are constantly investigating a variety of resources," Tri-State general counsel Ken Reif said, according to the Denver Post. “Renewables, gas, coal, nuclear, demand-side management — all those things continue to be under continuous investigation by Tri-State.”

The Colorado PUC does not regulate member-owned co-ops, but a state law passed in 2007 does require the 18 Colorado co-ops serviced by Tri-State to obtain 10 percent of their power from renewable sources by 2020. By contrast, publicly owned Xcel and Black Hills Electric must meet Colorado's aggressive 30 percent renewable energy standard (RES) by 2020.

Still, Xcel invested more than $1 billion in the new Comanche 3 coal-fired power plant in Pueblo, and two Colorado co-ops that don't obtain power from Tri-State – Holy Cross and the Intermountain Rural Electric Association – chipped in a combined $466 million on Comanche 3. Coal is still king when it comes to cheap electricity, but environmentalists warn that health costs and air quality issues will continue to make it more expensive.

“Our board reserves the right to make the best decisions for our consumers — which may or may not include development of the Holcomb plant," Tri-State senior manager of public affairs Lee Boughey said at Monday's meeting, according to the Post.

However, a former Colorado PUC chairman in 2009 told the Colorado Independent that Tri-State may be legally obligated to reveal the looming costs and uncertainty associated with coal, which at the time was in the crosshairs of congressional climate change legislation that never materialized.

Still, the U.S. Environmental Protection Agency is plowing ahead with emissions requirements in New Mexico and elsewhere that will continue to add short-term costs to coal – one of the reasons Xcel worked out a deal to convert many of its aging coal-fired power plants on Colorado's Front Range to natural gas or renewables.

Besides being subject to that much lower renewable energy standard than Xcel in Colorado, Tri-State and its member co-ops are under no such mandate in either Wyoming or Nebraska. New Mexico in 2007 did pass a law requiring 10 percent renewable power for co-ops by the year 2020.

In Colorado in early 2010, Xcel provided about 55 percent of the electricity statewide, Black Hills 4 percent, Tri-State 23 percent and municipal utilities 18 percent.

Follow David O. Williams on Twitter.

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