The long-awaited HDR Inc. “Study of Alternatives Related to the Potential Decommissioning of the Martin Drake Power Plant” was released earlier this week. As I ploughed through most of its 160 pages, I felt for our hapless city councilors. They’ll have to read it, understand it, and base important decisions on the report’s content.
Actually, don’t worry, guys — you can skip most of it. It can be used to support any decision that appeals to you, except keeping the creaking old plant in operation for another 20 or 30 years.
The lowest net cost alternative is to keep on shoveling coal into the ancient boilers for the next 30 years. Alas, that wouldn’t be prudent. HDR judged that the regulatory, performance, and maintenance risks are too great to retain the old clunker for more than 10 or 15 years.
Then it gets complicated. The lowest-cost alternative which melds financial, social and environmental costs and benefits is to close it in 2017, remediate the site, and build a new plant somewhere else.
But hold your applause, downtown backers! Those non-financial categories may not cut any ice with the council majority. Climate change deniers don’t care about carbon emissions, or about decreased emissions from coal transport. Spreading costs and benefits over a 30-year period means that current ratepayers might shoulder a disproportionate share of the costs of early retirement, making the four-year option even less attractive.
OK, let’s cut to the chase. What does HDR recommend?
Actually, they don’t recommend anything. Here’s the pertinent paragraph.
“Before reviewing the detailed results, one should keep in mind that the overall purpose of this study is not to specifically pinpoint the desired date in which the Drake Power Plant is to be retired or specifically identify the power generation technology that should be utilized. Rather, the study results are meant to be comparative in nature and provide decision makers with a balanced understanding of the implications and trade-offs associated with various alternatives. The analysis that follows is designed to inform future decisions and is not intended to prescribe the decision.”
That said, it’s clear that the study’s authors believe that Drake ought to shut down within the next few years and that the site ought to be fully remediated and redeveloped.
Here’s their cautious recommendation.
“The ultimate decision of when to retire the Drake Power Plant is one that must balance the financial and sustainable aspects and impacts on the overall CSU Utility system and operations and is principally driven and directly impacted by Colorado Springs’ environmental priorities. The analysis of alternatives has demonstrated that an earlier retirement does result in marginally higher financial costs to CSU, but conversely does also provide significant environmental and social benefits for the community. The community decision will be determined by the weighting and prioritization of these financial and environmental considerations as clear trade-offs exist between the studied alternatives.”
Sounds great, but there are two elephants in the room.
“The ability of CSU to minimize impacts on added costs for retirement(s) of the Drake units and replacement capacity on the overall rates to the community are not considered extraordinary or special from a rate making perspective but also were not specifically studied or analyzed as part of this study.”
In other words, does CSU have the financial capacity to fund a new plant? Given the company’s current debt load, should it defer any such ambitious capital project for at least another eight or 10 years?
Elephant # 2
Should CSU even be in the electrical generation business? That question was beyond the scope of the study. It’s one from which Council has fled like so many frightened mice. What would happen to local rates if an investor-owned utility such as Xcel acquired our electrical generation and distribution assets? Absent the kind of balanced, thoughtful analysis that HDR just presented on Drake, we’ll never know.
A decade ago, few elected officials dared to question city ownership of Memorial Hospital. Private sector skeptics had long contended that the city ought to get out of the health care business. As we now know, they were right — but it took years of public debate and fact finding before an appropriate solution could be offered to voters.
HDR should be commended for providing an even-handed, factual analysis of the policy dilemmas presented by Drake. It’s a great start to a larger debate, which we can no longer ignore.