Just as Desert Rock is proposed for our Four Corners to satisfy electric demands in distant Arizona or Nevada cities, the electric supplier for southwest Colorado, Tri-State Generation, is proposing a new coal-fired power plant in western Kansas. Tri-State's 700 megawatts of new capacity will pump another 6 million tons of CO2 annually into the atmosphere if it gains approval for its plans. Ratepayers will be forced to absorb the billions of dollars in costs with wholesale rates jumping by at least 64 percent over the next five years.
Tri-State is the electric wholesaler that supplies electricity to 44 member coops across the Rocky Mountain states, including La Plata and Empire in southwest Colorado. Tri-State has recently embarked on a power plant building plan that will saddle coop members with skyrocketing electric bills while boosting global warming pollution by millions of tons annually.
A majority of Denver-based Tri-State's customers live in rural areas with depressed or stagnant economies. They simply cannot afford the double-digit rate increases that billions in debt will bring about. These rural customers will end up bearing the long-term liability for a construction project that will have little if any benefit for them. Their money essentially will be used to fund suburban growth on the Front Range and industrial energy development on the West Slope. Building 700 megawatts of new power will also leave Tri-State with a substantial power surplus, making it a near certainty that it will be selling its excess on the market. Should co-ops bear the cost of what amounts to market speculation?
To help secure Wall Street financing for its
proposed expansion, Tri-State is pressuring member co-ops to
extend their current contracts, which run through 2040, for another
10 years. The co-op contracts require them to buy 95 percent
of their power from Tri-State, meaning they’ll be stuck with conventional coal for at least the
next four decades if the new plants are built. Such long-term inflexibility
entails substantial financial risk. In addition to the high rate
increases ratepayers already face to cover capital construction
costs, factors such as rising demand for Western coal, volatility
in rail system and potential liability for controlling greenhouse
gas pollution will drive operating costs, and thus rates, even
higher. Tri-State’s wholesale rate could spike 80 percent
above current rates by 2011 and 160 percent by 2019 as a result.
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Tri-State’s plans will pour money into
the construction of new plants that aren’t even in its service
area. Ultimately, customers are footing the bill to ship jobs and
investment out of state. Conversely, there are parts of Tri-State’s
service area with huge potential for wind, solar and biofuels development.
Such projects could meet the type of demand Tri-State is projecting
and are economically beneficial, creating revenue for rural areas
in the form of jobs, property tax revenue and lease payments to
private property owners. Energy-efficiency measures alone could
cut 500 megawatts from Tri-State’s demand by 2019. Eastern
Colorado and Wyoming also have superior potential for wind energy
development. In fact, according to a study by
researchers at the National Renewable Energy Lab, the cumulative
impact payments to landowners, property tax revenue and job creation
makes windpower more economically beneficial than coal or natural
gas projects of equal size in Colorado. Much of Tri-State’s
region also has the agricultural resources for significant biomass
projects, and western Colorado and northern New Mexico are blessed
with great potential for solar energy.
Based on the type of growth Tri-State is experiencing – peak
demand rather than baseline demand – there are better, more
cost-effective ways to meet future power needs than a multi-billion
dollar investment that locks members into a decades-long commitment.
Tri-State says new coal is cheap, but that’s an over-simplification
based solely on current pricing. It discounts very real financial
risks such as rising demand for Western coal and volatility in
rail system, which have been driving up market prices. And it completely
ignores hundreds of millions of dollars in extra costs that regulating
green house gases will tack on to operating coal plants.
Ironically, similar circumstances lead to the
financial ruin of one of Tri-State’s predecessors, the Colorado-Ute Electric
Association. Forecasting large growth on the Western Slope, much
of it tied to speculative oil shale development, Colorado-Ute invested
heavily in new coal-fired power projects, including construction
of the Craig power plant. When Exxon and other oil companies shelved
their oil shale projects in the 1980s, Colorado-Ute lost some of
its biggest customers, and when it couldn’t pay back hundreds
of millions in construction debt, it was forced into bankruptcy
in 1990. |
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