Blog: CSU will have no choice but to shut down Drake

Filed under: Daily News |

By John Hazlehurst and Amy Gillentine - 

What’s going on with Drake, Neumann Systems Group, Colorado Springs Utilities and the Sierra Club? Is it possible that CSU will be forced to abandon the Neumann project and close the Drake power plant in response to a potential lawsuit from the Sierra Club?

We think so – and here’s why.

On Sept. 17, the Sierra Club filed a detailed notice of intent to sue “…the owners and operators of the Martin Drake Power Plant and Ray D. Nixon Power Plant for repeated and continuing violations of the federal Clean Air Act.”

The notice, in the form of a certified letter sent to Utilities CEO Jerry Forte, specified 37  violations, occurring between 1986 and 2012. The club alleges that, in the operations of both Drake and Nixon, CSU violated “…the Colorado State Implementation Plan (“SIP”), the Clean Air Act’s prevention of significant deterioration (“PSD”) requirements, and the operating permits issued to Drake and Nixon.”

CSU acknowledged receipt of the notice to sue, which was also sent to every voting member of the Utilities Board (but not to Mayor Steve Bach), but did not respond to any specific allegations in the letter.

On Nov. 19, the utilities board met for more than two hours in closed session. Bach, a non-voting member of the board, was also present. It was the first such meeting that Bach has attended since he took office in 2011.

No board member would talk to us about the subject of the meeting, either on or off the record. Dr. Dave Neumann, CEO of NSG, also declined to speak about the subject or about suggestions that the NeuStream could be stopped.

But based on conversations with other authoritative sources, we believe that CSU will have no choice but to suspend or cancel the Neumann project and eventually shut down Drake.

The violations of the Clean Air Act alleged by the Sierra Club may be largely technical in nature, but they are in fact violations. But that might not matter. If the club pursues a lawsuit, CSU and the city would likely lose the suit. Such an outcome could be financially ruinous, resulting in hundreds of millions in fines, legal liabilities, and other suit-related costs.

It’s reasonable to assume that CSU and the Sierra Club have yet to come to a final agreement. It’s even more reasonable to assume that CSU will immediately defer any further investment in Neumann Systems anti-pollution equipment until the suit is settled.

And that will be disastrous for NSG, a local company that employs 55 people with average salaries of more than $70,000. The company, which also has several laser patents, relies on CSU for the bulk of its financial resources. It also has a $10 million Department of Energy grant to use the NeuStream System to sequester carbon dioxide.

Neumann says that CSU can stop the work for a specific period of time, under the terms of the contract. But Utilities has to pay for the consequences of the stoppage, as well as any money to re-start the project. However, he says Utilities can also end the contract for any reason it chooses, or for a specific cause. The contract ties Neumann’s hands, and now he can only wait for a decision.

Unfortunately for Neumann – and for Colorado Springs residents and businesses who love their cheap, efficient downtown power plant – the Sierra Club is in the driver’s seat. If even a half -dozen of the alleged violations can be proven, CSU will be between a rock and a hard place.

It may not seem fair – after all, these are “merely” technical violations. It can be argued that none of them had any significant impact on actual emissions from the power plants. The city hasn’t been cited by the Colorado Department of Public Health and Environment or the Federal Environmental Protection Agency for any violations of the Clean Air Act.

And some people close to the issue say that the worst that could happen is that a judge would speed up the time that CSU has to comply with nitrogen oxide regulations, now set to start in 2023. That will cost millions – but only about $60 million added to the $121 million that CSU is paying NSG to comply with sulfur dioxide sequestration rules, due to start in 2017.

But violations they are, and the city knows to its sorrow that a Sierra Club lawsuit is as serious as a heart attack.

Twelve years ago, the Sierra Club filed a suit against the city and the United States Forest Service, alleging continuing and severe violations of the Clean Water Act in the operations of the Pikes Peak Highway, The city and USFS promptly settled, obliging the city to spend close to $15 million to pave the highway and remediate past environmental damage.

It’s a situation analogous to that of an NFL defensive back called for pass interference in the end zone. He might not have actually pushed the receiver, but he put his hand on the receiver’s shoulder and didn’t look back for the ball – and the official dropped the flag.

In life, as in football, you have to know the rules. If CSU was sloppy and careless in its regulatory filings, which seems to have been the case, they’ll get penalized. The penalties may seem arbitrary and capricious, the Sierra Club’s allegations may seem frivolous and immaterial, but that’s too bad.

Welcome to the NFL.

7 Responses to Blog: CSU will have no choice but to shut down Drake

  1. The latest news about our climate change accelerating beyond the predictions of the experts says to me that Neuman’s technology is more important than ever. If its potential is to further include the sequestration of carbon dioxide, why does it’s potential not trump all other possible financial outcomes. If climate change spells anything to those who honestly look at the evolving world today, it spells very, very serious effects to our lives and especially to our children’s children. Making every decision based on financial’s alone seems terribly short sighted. We’re in a crisis and won’t admit it. Let’s try to see an alternative negotiation that says the Sierra Club acknowledges the effects of climate change and would like to see an acceleration of Neuman’s research in order to help SAVE THE EARTH!

    Tim Boddington
    December 3, 2012 at 12:42 pm

  2. That is so surprising that they would be sloppy in their filings. Mr. Forte consistently has received bonuses for his leadership. I wonder it there will be any more vigorous review of his performance this year?

    Sam Masias
    December 3, 2012 at 12:42 pm

  3. You forgot to mention that these are frivolous lawsuits that Sierra Club has been filing all around the nation. You also forgot to mention that they typically do not win these suits.

    Here is a direct quote from a Sept. 18th article from the Gazette by Seth Richardson:

    “Cutting-edge pollution control technology being tested at the Drake power plant is threatening the ecozealot Sierra Club’s political agenda to shut down all fossil fuel power production, so they are threatening to sue Colorado Springs for alleged unpermitted “major modifications” to the plant. Gazette reporter Daniel Chacon outlines the Sierra Club’s claims in today’s Gazette, quoting club organizer Bryce Carter as saying that the Neumann Systems Group technology being tested, and soon to be installed at Drake was “definitely a consideration” in the club’s lawsuit.”

    It also goes on:

    “The club jumped on the Drake controversy precisely because it fears what it calls “experimental and unproven NeuStream technology” will actually succeed in dramatically reducing pollution from coal-fired power plants, which it shows every sign of doing right now. Colorado Springs is today at the forefront of technological innovation that can keep coal a cheap and viable source of power for the next century or more.”

    I certainly hope you are wrong because these lawsuits are political tools and aren’t dealing with facts, but trying to scare people away from coal even though it is getting cleaner over time.

    Tim Griffith
    December 3, 2012 at 7:17 pm

  4. I believe it may be a little premature to be sounding a death knell for the Martin Drake Power Plant, John. You seem to focus on Drake but what about Nixon if the suit covers both? I don’t believe that the Sierra Club wants to close them down, just clean them up. How many of those violations occurred each year and how many are recent violations? I am not jumping on the bandwagon to close Drake, as so many want to do without knowing costs, alternatives, and impact to the owners/citizens. Let’s have all the facts before proclaiming that the death rattle is almost audible.

    Ron Rubin
    December 3, 2012 at 11:59 pm

  5. The cleanest coal is the coal that is left in the ground in favor of renewable energy like wind and solar complimented with cleaner burning natural gas. That NG could come from the Banning Lewis Ranch in the next few years. Think outside of the coal car.

    Sam Masias
    December 4, 2012 at 8:58 am

  6. Let us not forget the folks that work there? My spouse works at Drake, and that’s how we pay our bills. As Ron says, let’s get all the facts first.

    Jenn S
    December 4, 2012 at 4:06 pm

  7. What a bunch of nonsense. Like everyone knows if it ain’t broke, don’t fix. Our Utility company has been doing just fine.

    Frank Kennedy
    December 10, 2012 at 8:49 pm