Wednesday, January 20, 2016

UPDATE: The cowardly lions — overly conservative Council delays EIRP's final hurdle, again

Posted By on Wed, Jan 20, 2016 at 3:16 PM

This just in from the Colorado Springs Utilities board meeting, in progress now:

—— ORIGINAL POST: TUESDAY, DEC. 22, 2:43 P.M. ——

Last we checked in on Colorado Springs Utilities Electric Integrated Resource Plan (EIRP), in late November, the Utilities Board (City Council) had just made a cautious move to adopt Portfolio D, taking the advice of its staff, which included input from the citizen-comprised Customer Advisory Group (CAG).

But the board failed to drive its wooden stake all the way into the heart of the vampire, leaving one last bit of business in need of doing in order to complete the EIRP: a decision on the more immediate fate of Drake Unit 5, even though units 6 and 7 will currently be allowed to run until 2035. (Many engaged citizens and business leaders believe we'll never get that far, but more on that below.)

That decision on Unit 5 was supposed to come at Wednesday, Dec. 16's meeting, but a 4-4 vote (with Councilor Keith King not present) delayed the decision once again, until the next meeting on Wednesday, Jan. 20. 

That may all sound like business as usual, but local activists and stakeholders with whom we've been in contact — CAG member Jacquie Ostrom; Barb Van Hoy, who advocates on behalf of the Denver-based Western Clean Energy Campaign; and attorney Leslie Weise, among others — see it otherwise. 

Mainly, it's rare to see Council not take the advice of its staff, tasked to facilitate the EIRP and present the portfolio options to the Utilities Board — namely acquisition, engineering, and planning general manager John Romero and principal engineer Katie Hardman, who showed thorough data and make a convincing case. 

Very clearly, on page 61 of this attached agenda (following EIRP notes that begin on page 50), they recommend that Unit 5 be decommissioned on or before Dec. 31, 2017.

Keep in mind this recommendation comes after roughly a year of evaluations and footwork. (Nothing near as willy nilly as one councilman's decision in November to tack six years onto Drake's death date, as outlined in Portfolio H, moving it from 2029 to 2035). 

In the preceding pages, you see the staffers' pros and cons columns (requested by Council in November's meeting). Notably on the pro side, decommissioning avoids a $1 million investment in burner upgrades, offsetting $400,000 in annual labor and maintenance costs, resulting in a $2 million savings for 10-year net present value. 

click to enlarge MATTHEW SCHNIPER
  • Matthew Schniper
Note also on the cons side of converting Unit 5 to natural gas, the "model results show it generates for only 650
hours per year operation (2018-2030 average)." And on the mothball option, it would cost ratepayers $4.6 to $6.2 million to mothball it and restart it after three years (or more money after that). 

"It's ironic that the most conservative people on the board voted the least economical option," says Weise. "They see Drake 5 as a security blanket. To me, they vote on ideology, not the best representation of the citizens ... why wouldn't they pay attention to all of these experts?"

Doing some more math, Unit 5 only provides 46 MW of dispatchable capacity, while according to CSU spokesperson Amy Trinidad, CSU's currently operating at 100 MW of excess electrical capacity, with another reserve margin of 145 MW currently. 

Makes Unit 5 look pretty unnecessary, huh?

Trinidad says that CSU predicts only an 8 MW per year growth in demand over the next 10 years, meaning CSU would still be at excess capacity — and Council's decision for a 12-percent Demand Side Management (DSM) goal, which equates to conservation initiatives while not incurring more than a 2 percent rate increase, will offset some of that demand growth. 

Weise had actually made a case last year, after the fire at Drake, to leave Unit 5 turned off. She and a group of volunteers, who she says "were all pros," submitted the following document, which insists it now costs ratepayers $7.4 million a year, having restarted the unit. 


And currently, as reported in the Gazette today, Weise is underway with a case against CSU regarding "the wrongful withholding of public records by the Colorado Springs Utilities in violation of the Colorado Open Records Act." 

You can read her petition here:


Lastly, regarding the mention above of people who don't believe this whole debate over Drake will last until 2035, here's a perspective from former councilman Tim Leigh of Hoff & Leigh Commercial Real Estate, who relatedly was investigated (and later cleared) by the city's Independent Ethics Commission for possible "conflict of interest based on direct or indirect financial interests in downtown properties affected by Drake closure."

Tim’s Market Report

The Colorado Springs Utilities Board finally took a step in the right direction. They set a retirement date for the Drake power plant. Unfortunately, it’s not for 20 years! Heck, in 20 years, health care will provide free face-lifts & liposuction, social security will make everyone rich, and I’ll still be running the Incline daily. More realistically, since the announcement, I’ve made several nickel bets that Drake will be gone in 10 years.

Continued spending on an old and inefficient coal plant [Drake] is one of the worst business decisions our community can make, especially since (with modern power plant technology] there are substantially better alternatives that don’t carry the same EPA emissions and attendant cost burden as coal plants. Recall the best way to get out of a hole - stop digging!

After the NSG scrubber is in place, the cost of power from Drake will be much higher than the alternative (a combined cycle natural gas power plant) which I’m told could easily be located on the Front Range or Nixon power plant sites south of Fountain, along I-25.

The basic principle of a combined cycle power plant is simple. Combined cycle plants burning gas in a gas turbine produce (not only) power (which is converted to electric power) but also produces a very hot exhaust gas. Routing these very hot exhaust gases through a water-cooled heat exchanger produces steam which can be turned into more electric power. It’s a Christmas miracle! It’s Doublemint gum!

From 5 minutes on the web, I learned

Conventional power plants produce 33% electricity and 67% waste. Combined cycle power plants produce 68% electricity and 32% waste. {Plus the waste is convertible to additional power! – Doublemint, doublemint!}
A combined cycle power plant would burn about ½ as much fuel as Drake to generate the same amount of power.

Because combined cycle plants burn gas, they’re not subject to costly EPA regulations regarding coal emissions clean-up.

When I was a member of CSU’s board, I recall learning coal power plants “with plans for decommissioning and a date certain” could be exempt from EPA mandates for the installation of emissions control devices. Under those rules, with the Board’s pronouncement, we shouldn’t need the Neumann scrubber (or any scrubber).

CSU management should immediately stop the spending! CSU management should immediately place the call! The executives need to quit spending on the scrubber and call the CDPHE or the EPA and begin a conversation where we receive a waiver for installation of the scrubber (and future scrubbers) which would save us millions!

Consider, once the NSG scrubber is in place (2017) CSU’s own report says the cost of power from Drake will be between, (approximately) 5 to 6 ½ cents per KWh. Alternatively, I’ve been told power generated from a combined cycle gas power plant would only cost about 4 ½ cents per KWh. KWh costs add up quickly!

Based on Mrs. Vedesas’ simple 4th grade math, it looks like postponing Drake’s retirement 20 years means we’ll pay an extra $24.7 million (each & every year)! Ergo, over time, under the current CSU plan, our community will spend nearly a ½ a Billion Dollars unnecessarily. That’s a ½ Billion dollar direct tax paid by the ratepayers because of the delay in decommissioning Drake!

I wonder what a ½ Billion dollar (alternative) investment would mean to the local economy.

With the ongoing spending at on the Scrubber and Drake, we’re digging deeper and deeper. Recall the best way to get out of a hole - stop digging!

If you want to join the conversation call 719-337-9551 or email Tim@HoffLeigh.com




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