Utilities faces new hurdles

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Martin Drake Power Plant’s future rests on results of a study about whether to decommission it.

It’s been a tough week for Colorado Springs Utilities.

First, a City Council member called for the ouster of CEO Jerry Forte. Then, the Sierra Club gave notice it would file suit over allegedly unpermitted changes to the Martin Drake Power Plant. Finally, pesky questions about the Drake plant’s future just won’t go away.

So far, those questions seem to be going unanswered. Is there a former landfill under the power plant that will have to be cleaned up? No one knows. Does Utilities have enough power without Drake? Opinions vary. Will there be strong economic development opportunities if Drake is closed? Maybe.

What is certain is that City Council, sitting as the Utilities Board, will have to address the looming issue of Drake.

In a mass email this week, Councilor Tim Leigh questions whether the CEO of the multi-billion city enterprise has what it takes to run CSU.

Leigh was the first elected official to call for the ouster of then-Memorial Health System CEO Dr. Larry McEvoy, who resigned with a $1.15 million exit payment. Now, Leigh says, he has the same concerns about Forte.

In the email, Leigh asks if the CEO understood the Neumann Systems Group contract, which Leigh says gives the company 10 percent over the costs of installing its wet scrubber at Drake, and 15 percent if it is also installed at the Ray Nixon plant south of the city.

“Did they understand the deal?” Leigh asked. “Did they read the contract? Can they justify the speculative risk to the ratepayers and the outrageous profit to the vendor?”

And if a leader believed the deal was a good one, Leigh said that raised “interesting rhetorical questions.”

“Should his overall skill-set be questioned?” he asked. “What other decisions have been made by CSU leadership, which are sheltered by the shadows of an errant bureaucratic process and that are deleterious to the citizens, need to be revisited? Is it time to consider changes to the leadership?”

Leigh’s largest issue stems from the Neumann contract, he says, not with Neumann Systems Group itself. He believes the coal scrubber, known as the NeuStream, will cost ratepayers 10 percent more once it’s installed at Drake, another 10 percent when installed at Nixon, plus an additional 10 percent for mercury emissions cleanup. That’s a 30 percent aggregate charge for businesses, he said.

Utilities contests Leigh’s idea that the NSG contract was somehow flawed.

“Emissions control equipment is required by the EPA and state of Colorado to be installed on these plants, or they cannot continue to operate,” said Dave Grossman, CSU spokesman.

Grossman said the technology has been tested — and that conventional technology has been reviewed. CSU’s leadership went with Neumann because it was the “least costly way to comply with clean-air regulations and keep customer rates low.”

And contrary to Leigh’s opinion that the wet coal scrubber will cost ratepayers, Grossman said it will save an estimated $100 million over older or conventional technologies.

Sierra Club lawsuit

Monday afternoon, CSU’s problems with perception were compounded when the Sierra Club filed intent to sue for what it claims are 37 violations of the Clean Air Act.

Essentially, the Sierra Club says Utilities modified both its power plants without obtaining permits and without using necessary industry-standard pollution controls.

“Colorado Springs Utilities faces enormous capital costs to bring the plants into compliance,” the club said. “And the utility may also be required to pay severe penalties for its past and ongoing violations of the Clean Air Act.”

Changes were made solely to keep using cheap coal, said Bryce Carter, organizer for the group.

For its part, Utilities denies any wrongdoing.

“The Sierra Club has filed similar notices with many coal-fired power plants across the nation over the past few years,” Grossman said. “The notice to each utility alleges that the projects at a power plant have increased pollution. Colorado Springs Utilities has been diligent to evaluate all projects at Drake and Nixon and believe the plants are in compliance with all regulations.”

In fact, CSU has actually reduced emissions, he said.

“For example, particulate emissions have been reduced by over 99 percent, and nitrogen oxide emissions have been reduced by over 50 percent with the addition of pollution controls,” Grossman said. “Additional planned pollution controls will reduce sulfur dioxide emissions over 90 percent.”

The answer to the pollution problem — which the Sierra Club says is 3,415 tons of nitrogen oxides, 6,035 tons of sulfur dioxide and 11 pounds of mercury at Drake alone — is to close the plant, Carter said.

“They recently had the opportunity to launch a decommissioning study which would have paved the way to retire these old, dangerous and financially risky coal plants,” Carter said, “yet they chose to go the opposite direction, going as far as committing $120 million to extend the life of the Martin Drake plant with the installation of the experimental and unproven NeuStream technology without fully exploring all their available options.”

Business leaders want study

So far, there are many questions — and very few answers — about the Drake plant itself. Even Utilities can’t answer all of them.

What would it cost to close the plant, tear it down and clean up the site? It depends, they say, on what’s underneath the power plant. Rumors suggest it’s built on a landfill, but CSU can’t confirm that.

“Unfortunately, we don’t have any records from back then,” Grossman said. “We have heard that there was a landfill in that location prior to Drake being built there, but nothing to back that up.”

Drake was originally built in 1924, but its main boilers are modern, he said.

Does CSU need the additional power from Drake? CSU says yes, but former Councilor Richard Skorman says the plan was to close Drake by 2016 because it was too old to meet pollution control regulations.

“Why did that change?” Skorman asked. “At its peak, with the hottest summer, CSU used only 870 megawatts of power. With Drake, it has 1,100. Without it, it could still cover the peak demand.”

And, he says, CSU could reduce carbon dioxide emissions by closing the plant, reducing the threat of climate change.

Will extinguishing the boilers at Drake equal higher rates for businesses? If the answer is yes, many business leaders say they aren’t interested. Dan Malinaric, general manager at Atmel, has said publicly that the company would consider moving before it pays more than the $12 million it already pays in annual utility bills. Atmel is CSU’s largest customer.

Even Skorman, a strong advocate for closing the plant, says that if it means higher rates, he’ll back off his recommendation.

“I’m a business owner too,” he said. “And I’m not interested in paying more. If that’s what it means, then so be it.”

To answer all the questions, business groups called for a study, considered and then rejected by the Utilities Board.

“We don’t know the facts; the community doesn’t know the facts for continuing Drake or moving it,” said Doug Quimby, board chairman of the Greater Colorado Springs Chamber and EDC. “It’s an important issue for economic development and having uncertainty about what’s going to happen with it, is not particularly good. It’s time to get going with a study.”

Like Skorman, the Downtown Partnership is pushing to close the plant.

“We are deeply concerned that the investment of significant new dollars in the Drake facility without a detailed understanding of the opportunities to decommission the plant may lock our Downtown … into a regrettable position for decades to come,” said Sam Eppley, chairman of the Downtown Partnership. “At the core of our concern is a conviction that we should close the Drake plant as soon as feasible.”

And the Chamber/EDC wants the group to study more than just Drake’s future.

“I think it’s part of the larger issue, that we need to look at the ownership and governance,” Quimby said. “Actually, either put it to rest or decide that we’re going to do something. We have no particular position as to what the outcome should be, because we don’t know. But it’s a very important issue to economic development and to business stability.”

3 Responses to Utilities faces new hurdles

  1. Dear Colorado Springs City Council and Mayor.

    I’ve heard some disturbing news about plans to close the drake power
    plant. I would like to say that I think that is a horrible plan.

    Here are several reasons for not closing:
    1) Its paid for and a new plant would put the city in massive debt.
    2) A new plant would have to be paid for by me and other citizens and
    we can’t afford either new taxes or rate hikes.
    3) Increasing rates will make you look incredibly foolish by first
    turning off street lights because they cost too much money, and then
    increasing the cost of the same electricity that powers them. Have you
    even thought of this?
    4) It is a historical part of Colorado Springs a part of the
    landscape. Do you realize it’s nearly 90 years old? Colorado Springs
    has had a long history with electricity going back to Nikola Tesla and
    the Drake power plant is a reminder of our heritage.
    5) As for aesthetics the steam cloud it creates is a familiar to me as
    the mountains. When lit by motor city it at night it actually looks
    very cool.
    6) Also several business rely on the cheap power produced here so
    increasing rates might drive them out of business; or make new ones
    not come here in the first place.
    7) I will vote against you if you tear it down. And convince my
    friends and family to do the same.

    As for the reasons I’ve heard for closing it:
    1) Cheap natural gas: Drake is able to produce electricity using coal
    or natural gas. So this point is moot.
    2) Aesthetics: so you think it looks ugly. So does a good part of down
    town like the rail road tracks, and the warehouses. It would be far
    cheaper to build a privacy wall around the power plant or even paint
    something pretty on its walls then to build a new one.
    3) It pollutes: So do cars but the emission test have been lifted on
    those in El Paso County. So I don’t think we have an issue with clean
    air. And the plant has been extensively upgraded to burn a lot
    cleaner.

    I honestly can’t think of a rational reason why this is being considered.

    Sincerely a concerned citizen

    Jonathan
    September 20, 2012 at 10:26 am

  2. All this sudden talk about decommissioning Drake is nothing more than a land grab for a select few. If the powers to be get their way all of the businesses and homes in that area will be condemned and the buildings knocked down for what? To move a minor league base ball team down town? They closed the Denver machine shop and Crissy Fowler, ran Rampart supply out. tore down the homes and other business to rehab that area, put in a park and nothing else has happened for what 3,4 years? I want low cost electric. I was born and raised in this town and really want to retire here. But a few people don’t give a crap about the rest of Colorado Springs citizens. All they want is to remove citizen rule of our municipal utilities so that they can reap profits. The people of Colorado springs need to pay attention to how we are soon to be screwed over.

    eugene
    September 20, 2012 at 9:46 pm

  3. I’m with Janathan I’m concerned about this for all the reasons that he is please think carefully about this.

    Marathon Energy
    October 1, 2012 at 4:47 pm