Updated: February 20, 2014 at 6:01 am
Over the next few months the Colorado Springs City Council will hear complicated financial and environmental reports related to the city's downtown coal-fired power plant, Martin Drake.
It will study greenhouse gas emissions and air contaminants. It will be presented with financial graphics about the project operations and maintenance costs of running the Drake for the next 30 years.
But in the end it will break down on one simple question: What is more important cheap energy or the environment?
"It's the crux of the decision," said Mark Klan, engineer with Navigant consulting firm working on the Drake decommissioning report. Klan presented 12 options for Drake's fate Wednesday to the Colorado Springs City Council, in its role as the Colorado Springs Utilities board of directors.
"Are you interested in the cheapest rate for power, focused strictly on what you pay out of pocket or do you want to consider the social aspects beyond what is required by regulation?" Klan asked the board.
The board members wore their best poker faces as Klan laid out the options for decommissioning Drake. Even their questions did not reveal which of the factors - financial, environmental or social - will weigh more in their decision.
The board plans to have town hall meetings and take public comment on the issue, as well as hear from national energy experts before it decides when and if to close the power plant.
Drake was built in three phases in 1964, 1968 and 1974. Last year, the board set up the Drake Task Force to begin discussing when the power plant should be shut down. The board needs to figure out how and when decommissioning Drake fits into Utilities' 20-year Electric Integrated Resource Plan, which considers the entire electricity portfolio and forecasts supply and demand.
Now, Drake provides about one-third of the city's power. It would cost about $5.2 billion in capital costs, fixed operating costs, fuel costs and operations and maintenance costs to operate Drake until 2033. Those costs include the installation of Neumann Systems Group's NeuStream scrubber system, which is estimated to cost $131 million. The goal of the scrubber technology is to improve air quality and reduce pollution to meet federal emission-control standards.
One of the options the board will consider is closing Drake in three years. It would be the best for the environment, according to the report. But it would mean shutting down the scrubber project, said board member Jan Martin. She said the question of closing Drake never was raised when the board was considering its options to meet the federal emission control standards. Now, the board has committed about 70 percent of the $131 million and construction on the scrubber project already has begun.
"It has to be a pretty important benefit to stop a project right before you get done," Klan said. "But, it is one of the alternatives."
If Drake were shuttered by 2019, Utilities could avoid spending $753 million on greenhouse gas emissions and other environmental and social costs. But Utilities would need to build some other power plant or purchase power from other power companies.
The trade-offs are expenditures and costs, rate impacts, priorities and the planning schedule.
"It seems to me the key questions is how much risk are we willing to take," said resident Jane Ard-Smith, a member of the local chapter of the Sierra Club, one of about a dozen residents who spoke to the board Wednesday. "From my perspective minimizing the risk is the goal."
She said the board needs to scrutinize the numbers, especially electricity load forecasts and capital costs to upgrade the plant - both of which have been under and over estimated in years past.
The board will consider options that include keeping Drake open for 15 years and then either building a new power source, expanding renewable energy sources or buying power of the grid.
"Maybe retiring (Drake) in 9 to 15 years makes more sense to provide more flexibility and to give guidance and long-term planning," Klan said.