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Drake fire may lead to utilities rate hikes in Colorado Springs

By: Monica mendoza and Lisa walton The Gazette
May 16, 2014 Updated: May 16, 2014 at 11:20 am
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photo - The fire damage at the Drake Power Plant can be seen from entrance Tuesday, May 6, 2014. A fire ripped though Colorado Springs Utilities' coal power plant Monday morning.  (The Gazette, Christian Murdock)
The fire damage at the Drake Power Plant can be seen from entrance Tuesday, May 6, 2014. A fire ripped though Colorado Springs Utilities' coal power plant Monday morning. (The Gazette, Christian Murdock) 

The fire at Martin Drake Power Plant could cost the typical Colorado Springs Utilities customer $5.34 a month.

Utilities will ask the City Council to adjust electric rates at its May 27 meeting to cover the estimated $3 million a month it takes to buy electric power on the market to make up for the loss at Drake, which has been shut down since May 5.

If approved, the rate hike will kick in June 1 and remain in effect indefinitely, said Dave Grossman, a spokesman for Utilities.

"We closely monitor fuel and purchase power costs each month," he said. "When we see changes we can immediately pass on savings or additional expense to the customer."

A fire erupted inside the downtown Drake coal-fired plant the morning of May 5 when lubricating oil came into contact with steam pipes. An investigation into how the oil escaped is ongoing.

Before the fire erupted at Drake, damaging a turbine and shutting down power generation, the plant produced a third of the city's power. Since the fire, Utilities has relied on its natural gas-fired plants and has been buying power from other providers.

It cost about 2 cents per kilowatt hour to produce electricity at the coal-fired Drake.

It costs about 3.5 to 4 cents per kilowatt hour to produce electricity at Utilities' natural gas-fired facility. It costs about 4 cents per kilowatt hour or more to buy the power from other providers, Grossman said.

There is no contingency fund within Utilities when fuel costs go up. The costs are passed to the customer. In February, the City Council increased electric and natural gas rates each by about 3 percent, which increased a typical customer's bill by about $3 a month. A typical residential customer uses about 600 kilowatt hours of electricity per month.

Council member Helen Collins said she will vote against the latest proposed rate increase, as she has on other recent rate increases.

"I'm not in favor of any increase especially when we just gave (Utilities CEO Jerry) Forte that huge raise - and now we will be increasing rates again."

The proposed rate increase will not be used to pay for the cost to repair the power plant, Utilities officials said. Forte told the council at its May 12 work session that a team of consultants with Utilities employees are assessing the damage. It could be two weeks before Utilities has an estimate on the cost to repair the plant, he said.

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