Clouds loom over Drake’s future

Drake Power Plant dominates southwest downtown and might for decades to come.

Drake Power Plant dominates southwest downtown and might for decades to come.

When Colorado Springs Utilities first constructed a coal-fired power plant on the Drake site 80 years ago, it was a reasonable decision. Electricity demand was growing, and generating plants had to be situated near customers, as well as close to a rail line. If the working-class neighbors near the plant didn’t like the soot falling on their freshly washed laundry, that was the cost of progress.

Through much of the 20th century, downtown power plants were an unremarkable feature of many American cities. Like the cities themselves, the plants were noisy, smelly, dirty and necessary.

By the 1960s, thick plumes of visible air pollution shrouded most American cities, waterways were fouled with agricultural and industrial waste, and local governments had neither the power nor the will to take on the polluters. But the air would clear, thanks to Richard Nixon.

Founded two years after President Nixon was sworn into office in 1970, the Environmental Protection Agency was given a simple mission: Clean up America. The EPA created, implemented and helped to enforce regulations that removed visible pollutants from American skies.

Thanks to decades of increasingly stringent emission controls, the skies above the Martin Drake Power Plant are clear now, save for billowing clouds of steam in the winter. Expensive technological fixes have nearly eliminated particulate emissions and have drastically reduced other pollutants, including mercury, sulfur oxides and nitrogen oxides.

Utilities has kept Drake’s three operating units in service for nearly a half-century and has so efficiently maintained and upgraded the plant that it remains the system’s “willing mule,” the largest, most reliable and cheapest to operate of CSU’s six power plants. Yet keeping the mule in service has been expensive. Controlling particulate emissions cost tens of millions, as did installing progressively more effective systems to limit mercury, SO2 and NO2 emissions.

Meeting ever more stringent regulations will require the utility to spend $245 million to bring both Drake and Nixon into compliance. The work must be completed by 2017.

Current status

City Council is currently mulling a detailed independent study of alternative decommissioning plans for Drake. The report outlines a dozen alternatives, ranging from immediate shutdown to keeping it going indefinitely.

What will Council do?

If Councilors assume that the process of formulating and enforcing carbon dioxide emission standards will be as lengthy as for regional haze mandates, they’ll keep Drake in service for another 15 years. That may not satisfy environmentalists and downtown advocates, but it would allow CSU to both keep electric rates low and rebuild its financial capacity.

Would selling electrical generation and transmission to a private operator such as Xcel solve the problem? Not likely, says Utilities Energy Services Officer Bruce McCormick.

“Any private operator will have to have a return on their investment,” he said. “There will be a rate impact.”

Moreover, most management functions would be relocated to corporate headquarters, leading to the loss of hundreds of good-paying jobs in Colorado Springs.

None of those alternatives will seem palatable to Council. They’ll leave the willing mule in harness, and Drake opponents will have only one choice as they drive past the old coal-burner.

Avert their eyes.

Drake_regionalhaze1Regional Haze

After 11 years of monitoring visible pollution over 156 national parks and wilderness areas, the EPA issued an order in 1999 requiring states “in coordination with the Environmental Protection Agency, the National Park Service, U.S. Fish and Wildlife Service, the U.S. Forest Service, and other interested parties, to develop and implement air quality protection plans to reduce the pollution that causes visibility impairment.”

These “Regional Haze” mandates had very long time-horizons. As they evolved, CSU had 18 years from the date of the EPA’s first directive to bring its coal-fired plants into compliance. To comply, CSU would have to install “best available retrofit technology” on Drake and the Ray Nixon plant by 2017, satisfactorily controlling emissions.

CSU immediately began addressing regional haze rules. It quickly became clear that Drake and Nixon could easily be brought into compliance with most proposed future standards, but sulfur oxide (SOx) would present severe technical problems, particularly for Drake.

“Drake is on a constrained site,” said McCormick, “and there are three separate power generators in the building. That affects cost.”

During 2008 and 2009, Stanley Consultants prepared estimates for installing industry-standard dry scrubbers for Drake. The numbers were daunting.

A dry scrubber system would have an initial capital cost of $158 million, followed by $10.3 million in annual debt service and annual operation and maintenance costs of $6.4 million.

These estimates gave additional impetus to CSU’s 2007 joint venture with Neumann Systems, a new company based in Colorado Springs.

The deal seemed like a win-win to both CSU and City Council. Neumann’s proprietary technology was projected to remove 97 percent of SO2 emissions, compared to 90 percent for a conventional system. It might even be possible to use it to remove carbon dioxide from the plant’s smokestack gases, thereby solving the most vexing challenge confronting coal-fired power plants worldwide. Not only that, it would be substantially cheaper.

Councilors were uniformly enthusiastic about the prospect of saving money, buying local and maybe even midwifing the birth of a transformative new technology with a worldwide market. If Neumann’s proprietary processes could remove CO2 from plant emissions, hundreds of new jobs might result.

Neumann’s experiment began with a small-scale test installation at Drake. A trailer-sized unit was deployed to treat emissions produced from 0.2 megawatts of plant operation, less than .1 of 1 percent of Drake’s total generating capacity of 254 megawatts. The test results were satisfactory, so CSU continued funding Neumann. The company installed progressively larger testing facilities, culminating in 20 megawatts.

At that point, CSU decided to move forward with Neumann, despite steady cost escalation. An initial estimate of $80 million had been developed after small-scale testing, but “detailed design and construction information” moved the estimate to $121 million in 2011. That estimate is now $131 million.

“That takes into account inflation and cost escalation in the (utility specialized construction) business,” said McCormick. “The numbers are essentially unchanged.”

The total cost of installing pollution control equipment on the Drake and Nixon plants to the 2017 mandates is currently estimated at $245 million. By comparison, new gas-fired capacity is estimated to cost $1 million per megawatt (Drake and Nixon combined have 461 megawatts of capacity).

This chart from Utilities shows how emissions have been reduced in recent years.

This chart from Utilities shows how emissions have been reduced in recent years.

A changed world

In another era, CSU’s decisions might have drawn little attention. But as concerns about hazy air over national parks were replaced by affection for renewables and fear of environmental catastrophe from carbon emissions, the context of public debate swiftly changed. If carbon was the problem, then burning coal had to be controlled.

That’s because existing coal-fired power plants emit more than 40 percent of all the carbon dioxide released annually in the United States.

The EPA has estimated that the average emission rates in the United States from coal-fired generation are 2,249 lbs/MWh (pounds per megawatt-hour) of carbon dioxide. Drake’s CO2 emissions, at 2,320 lbs/MWh, totaling 1,859,000 tons in 2013 are fractionally below average.

The EPA has released rules that would limit new generating plants to 1,100 lbs/MWh, a standard that would be impossible for any existing coal-fired plant to meet.

But even if CSU managers wanted to shut down Drake, that might not be possible. The billion-dollar cost of the Southern Delivery System, the ongoing capital cost of pollution control equipment and renewable energy mandates have significantly eroded Utilities’ financial flexibility.

That may explain why suggestions that the plant impeded economic development and had become a health hazard have been countered for years with the patient recital of the same facts.

“While the Martin Drake site has been in operation for over 80 years,” a 2012 CSU report states, “the three units in operation are not old by industry standards. The Martin Drake plant consists of three generation units … built in 1962, 1968 and 1974.”

How long can Martin Drake continue to operate?

“We can continue well beyond 20 years,” said McCormick. The only strictly operational constraints he cited were possible future unavailability of replacement parts, most of which have to be specially manufactured.

The war on coal

CSU policy mandates are embedded in the periodically updated Electric Integrated Resource Plan (EIRP). Early iterations of the plan do not mention abandoning Drake, or repowering it with natural gas.

Retrofitting the plant with pollution control devices might be expensive, but coal provided low cost per BTU, reliability of supply and appropriate utilization of sunk capital costs. And even as public debate mounted about the plant’s future, CSU managers didn’t back down.

As CSU states in a 2012 document: “The source specific plan that the state of Colorado submitted to the EPA calls for the Martin Drake and Ray Nixon power plants to have a regional haze compliance schedule filed with the state in 2013, and for control equipment to be installed and operating no later than 2017 … any delays in implementation of these controls increase our compliance risk and have the potential to increase project costs.”

Yet CSU appeared to be swimming against the tide. Hundreds of coal-fired plants across the nation owned by both private and public entities have been abandoned or shuttered in recent years, doomed by the sudden affordability of natural gas and the high cost of controlling pollutants from coal-fired generators.

Natural gas has many advantages over coal. A coal-fired plant may take days to start up or shut down, while natural gas can be started or stopped almost immediately, as demand dictates. A gas-fired facility produces no mercury, practically no particulates, and negligible quantities of oxides. It also emits less than half as much CO2 as a coal plant.

And while fuel costs are higher than coal, gas-fired generators do not require the costly pollution control systems associated with coal and will easily comply with future CO2 mandates.

Drake opponents have emphasized not only the long-term disadvantages of Drake’s continued operation, but also the facility’s public health impacts.

In a March 5 letter to the air pollution control division of the Colorado Department of Public Health and Environment, Maureen Barrett of Air Expertise Colorado asserted that the plant “currently emits pollutants at rates that are unconstrained by health concerns.” Barrett previously requested that CSU provide certain information that would enable her firm to “model the (Neumann) control technology on facility impacts.”

Citing proprietary technology, CSU denied Barrett’s Colorado Open Records Act request.

Barrett and other Drake foes have frequently complained that the single monitor that the state relies upon to measure Drake emissions is inadequate, and that the state should give greater weight to scientific modeling.

During 2012, when the Sierra Club made the same claims, CSU spokesperson Dave Grossman said they were blowing smoke.

“In fact, ongoing local monitoring between 1988 and 2007 showed that sulfur dioxide levels were significantly lower than the EPA threshold,” Grossman said. “Sulfur dioxide levels were continuously tested downtown and at 10 other sites around Colorado Springs. The levels each year generally ranged from 12 PPB to 26 PPB, well below the new standard. The monitoring program was discontinued in 2007 because SO2 levels were consistently so far below EPA’s standard.”

State regulators also pooh-poohed Barrett’s concerns, but with strange numbers.

“These (Neumann) controls are projected to reduce SO2 emissions at (Drake) by approximately 6,600 tons per year,” wrote Gary Kaufmann, deputy director of the Air Pollution Control Division.

Given that Barrett and CSU agree that the facility currently emits 4,578 tons of SO2, that figure seems questionable.

But it aptly symbolizes a debate largely incomprehensible to a non-technical person.

5 Responses to Clouds loom over Drake’s future

  1. CSU and Colorado Springs have shot themselves in the foot with Drake and the way they operate the electric utility. Instead of embracing renewables and distributed electric power generation CSU niggardly pays consumers for power they generate and then zealously sells that same power back to the consumer at retail prices. This policy has discouraged the dissemination of renewable energy in our community and has reduced energy supply choices for CSU. Unless and until CSU adopts a more generous and inclusive renewable energy policy they will find the corner they have painted themselves into getting smaller and smaller.

    Steven Shepard
    March 17, 2014 at 1:14 pm

  2. The above article gives its readers a balanced and informative view of the competing forces governing the operation of Drake and Nixon as well as coal fired plants across the nation. One must question how clean is “clean enough” when it comes to airborne particulates. The greatest impediment to the continued operation of coal fired electric plants is the EPA, which is driven by emotional and radical environmentalists who have little regard for practical solutions.

    Jimmie Bensberg
    March 17, 2014 at 1:25 pm

  3. McCormick states:
    “At that point, CSU decided to move forward with Neumann, despite steady cost escalation. An initial estimate of $80 million had been developed after small-scale testing, but “detailed design and construction information” moved the estimate to $121 million in 2011. That estimate is now $131 million.

    “That takes into account inflation and cost escalation in the (utility specialized construction) business,” said McCormick. “The numbers are essentially unchanged.”

    What a truckload of manure. $80m and $131m are very much changed numbers. Sounds like unchecked cost increases and poor project management to me.

    Duane Lighthall
    March 17, 2014 at 3:57 pm

  4. a few ideas for our CSU Board:

    1. as part of the city of champion and downtown development why not build a few smaller CHP (COMBINED HEATING and POWER PLANTS) in the city and get rid of Drake. This technology uses 80% of carbon input instead of low 30% at Drake to create energy. This would create additional revenue for CSU and reduces carbon foot print from selling heat to customers.
    2. To reduce electric load and increase economic vitality invest into energy efficiency (DSM programs, loan programs by local banks, etc.) this would create jobs and would lower cost for many businesses in town.
    3. Build your own wind farm along the Palmer ridge and use a private public financing structure to obtain the Federal tax credits for such. With the financing rates available to CSU (below 5%) we could produce power at below 3 cents a KwH fixed for the next 20 years and therefore fix part of the electricity costs for our community.
    4. look at Chattanooga Tennessee or Longmont Colorado and invest into a high speed community owned internet which would create an infrastructure which could create economic vitality and much needed jobs for our community. This would force Century link and Comcast to react and improve our mediocre “CYBER Infrastructure”.

    I think it is about time that we as a community think bigger and outside of the box and create a brighter future for our community now and for generations to come.

    peter miller
    March 19, 2014 at 10:58 am

  5. The Sun doesn’t shine at night and wind speeds are never constant, often blowing too weak to provide enough power or so hard that the wind turbines have to shut down. The use of renewable energy sources can cut fossil fuel use BUT the utilities must maintain the capacity to replace both wind and solar power. The overall cost of renewable energy is currently so high that without liberal tax incentives and government mandated use by our utilities there would not be a market for their power. Gas powered generators can start up quickly but coal keeps our energy costs down. Drake is paid for and mandated upgrades are less than any other energy solution. KEEP Drake in service.

    Stan
    March 26, 2014 at 10:55 am