CSU will hire consultant to study Drake options

Colorado Springs Utilities has issued requests-for-proposal to 10 companies to research the technical issues surrounding the future of the Martin Drake power plant. That study alone could cost up to $500,0oo, according to Utilities officials.

It’s all part of the issues surrounding removing Drake from the downtown landscape – and Utilities has a plan to kick off the study to decide what to do with the coal-fired plant, the emissions-cleaning technology planned for it, and how much each option will cost.

The plan involves hiring at least one consultant but probably two – one to perform the technical analysis regarding what to do with Drake and another to conduct an economic study about what can be done with the land if the plant is razed.

CSU board member Lisa Czelatdko will serve as the liaison between the board and project managers.

The work will start this summer and should wrap up in December, Utilities officials said.

A question hanging is what all of it might mean for ratepayers, and for Colorado Springs-based Neumann Systems Group, which has millions invested into the emissions-cleaning project.

The project has the support of utilities staff and of some of the board members.

“We chose this because we absolutely believed it was the best thing,” said Bruce McCormick, CSU chief energy officer. “We still do. Not all of the technology is new. There are other scrubbers out there. But this – and we’ve tested it extensively – is the one that works the best.”

In tests during the past four years, the emissions cleaning technology, called NeuStream, has proven to remove 97 percent of sulfur dioxide from the coal emissions, he said, adding that traditional cleaners only remove 90 percent.

Neumann was ready to implement a full-sized cleaner at Drake when the board “slowed” the  project to consider options about what to do with the Drake plant

That slowdown remains in place. Neumann will continue design work and will focus largely on how much of the Drake machinery can be transferred to the Ray Nixon power plant if Drake is closed.

But large equipment purchases have been stopped, McCormick said.

“We think it makes sense to continue some of it,” he said. “But we have asked that NSG stop buying large items.”

However, the CSU board approved some purchases last year – worth millions, McCormick said – and those arrived at Drake today, in the midst of the swelling concern about the future of the plant.

And some board members clearly support continuing with NeuStream, even at Drake.

“I am biased about Neumann and this technology,” said Scott Hente, president of the board. “I sat on the previous board that approved it, and I think this is the best technology out there. We know what plan B is – a traditional scrubber – and we know it will cost $80 million more than what we’ll spend on Neumann.”

Hente said Councilor Jan Martin, who was not at the board meeting, agreed with him.

Czelatdko also signaled support for continuing Neumann, noting that local contractors were working on the project.

“That’s about 28 companies – and that means jobs,” she said. “Jobs are important.”

Altogether, Utilities plans to spend about $240 million on scrubbers at Drake and Nixon, and acknowledged that the cost could mean higher electric rates – especially when combined with the Southern Delivery System project.

“We think a total of about 7 percent a year,” said Bill Cherrier, Utilities CFO. “We’re figuring out if we do this, what can’t we do?”

Utilities is also checking into the “stranded costs” of abandoning the project at Drake and moving it to Nixon, as well as the money lost if they stop the project at Drake now, and then return to it. Some of the machinery can be used at Nixon, but some has to be designed specifically for the space. Drake’s project was two scrubbers and Nixon only needs one, but it should be bigger than the two at Drake.

“We working feverishly on getting those projections,” said CEO Jerry Forte. “We just don’t have them now.”

Naysayers about the system appear to be new council members, who question not only continuing with coal, but the NeuStream itself.

Councilwoman Angela Dougan asked if any other utilities had signed on at this point.

“No,” said McCormick. “But we’re confident that this works. The utilities we’ve spoken with are taking a ‘wait-and-see’ approach, to get it up and running here, but there is significant interest.”