City faces tough options, and consequences, for Drake

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Suppose it’s 1975, and you love your ’70 Plymouth Superbird and its fire-breathing 440 6-pack. It’s cool, it’s paid for, it’s sleek and it’s fast. Gas is cheap … but wait a minute!

The damn government bureaucrats at something called the EPA are changing the rules — some nonsense about smog and lead pollution. You can’t buy good gasoline any more. C’mon people, I’m running 10.5/1 compression on this bad boy, so I need my leaded Sunoco 116 octane!

You can’t get it anymore. You can drive out to the airport and pay for aviation gas, but that doesn’t really make sense, so put the Superbird in the garage, face reality and get a new car.

As the Martin Drake Power Plant Task Force meanders slowly along, gathering data and preparing alternatives, much can be gleaned from a summary of the preliminary report, which will be released during a Dec. 3 open house at the City Administration Building.

HDR Engineering, which the task force hired to “explore energy source alternatives for replacement power, considering a broad range of economic, environmental, social and health impacts,” has listed a dozen alternatives.

The lowest cost alternative with the highest “financial return on investment” (FROI) is to keep two of Drake’s three units running for the next 30 years, shutting down the smallest of the three in 2033.

Using a different model called “sustainable return on investment” (SROI), the best course is to retire the smallest unit in 2016 and junk the other two in 2019.

Unlike FROI calculations, SROI takes into account “significant potential environmental and social costs and impacts associated with greenhouse gas (CO2) emissions.”

We’re in a position analogous to that of the Superbird owner — except that we don’t have a sleek muscle car that will be worth hundreds of thousands 30 years hence.

What we have is a beat-up 1974 Dodge Dart with a slant six, a utilitarian winter beater. Eventually it’ll break down and leave us walking, but let’s keep it anyway even though it needs some work.

If the majority of Council elects to keep Drake in operation, that would be an inherently political decision. They’d be betting that the country will come to its senses in 2016 and put Republicans back in the White House. Then we can forget all that nonsense about CO2, NOx and SO2. Coal yesterday, coal today, coal forever. Colorado Springs will stand in solidarity with Poland and China, both of which generate most of their electricity from coal.

But the country doesn’t care what Council wants — and neither would President Hillary Clinton.

Making a 30-year bet on King Coal would be folly.

We’ve already spent nine figures on pollution control equipment for Drake and Nixon. Yet running Drake is cheaper than coughing up $300 million for a sleek new plant.

Moreover, it’s not clear that Utilities can afford the investment without substantial rate increases. The billion-dollar borrowings used to fund construction of the Southern Delivery System have substantially eroded CSU’s overall debt/revenue ratio.

It’s not exactly comforting to note that CSU may have already spent enough money on Drake pollution controls and gas price hedging schemes during the past decade to have built a new plant.

We’re in a classic financial dilemma. Tearing down Drake and building anew might boost the downtown economy and protect us from the EPA’s future vagaries, but we’re too broke — so forget it.

We should consider whether it makes sense for the city to produce electricity. We distribute natural gas for heating, but we don’t own wells and pipelines. Investor-owned electric utilities such as Xcel benefit from economies of scale, efficiently producing electricity at rates comparable to or below those of Colorado Springs Utilities.

Selling electrical generation might have little or no impact on rates and net the city a billion-dollar windfall. But it’s all speculation — we can’t know unless Council is willing to consider the heretofore unthinkable.

Are we living in a dream world? Consider that when the Drake plant was first put into operation in 1925, one of its customers was a small manufacturing facility in Colorado City that built trucks.

The company soon disappeared. The creative destruction of capitalism spares no one and no company — and may not spare an isolated municipal utility, stuck with aging equipment, politicized ratemaking and billions in debt.

One Response to City faces tough options, and consequences, for Drake

  1. It is not possible to overstate what a destructive fraud the demonization of the building block of life , CO2 is .

    The bit of available carbon we have been restoring to the atmosphere from previous lush epochs is visibly greening the planet as seen from space while the total change in temperature since the invention of the steam engine has been about 0.8 centigrade , about 0.3% of our 288 kelvin .

    The refusal of the planet to warm over more than the last decade and a half while more of the world is benefiting from the reliable energy coal provides is doing more to kill this anti-science , anti-life fraud than any rational argument has been able to do .

    Bob Armstrong
    December 9, 2013 at 10:50 am