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Fire becomes part of discussion on future of Drake power plant

By: monica mendoza
May 8, 2014 Updated: May 9, 2014 at 3:26 pm
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Photos submitted by Dwight Haverkorn

It is too soon to know if this week's fire at Martin Drake Power Plant will accelerate the decision on when to close the coal-fired plant.

The Colorado Springs Utilities Board likely will consider the cost to repair the 52-year-old plant, the length of time the plant is closed and the cost to buy fuel on the market when it deliberates over whether to keep Drake open for another 30 years or shut it down sooner, said Merv Bennett, Colorado Springs City Council member and chairman of the Colorado Springs Utilities Board.

"It has to be factored into the discussion," he said.

A fire at the downtown power plant this week took the facility off line, and comes as the Utilities board considers the plant's future. The board is wrestling with whether to close the plant because of its age and the expense of keeping up with environmental regulations or to keep it open for 20 to 30 years because of its cheap power.

There are 12 scenarios under consideration, each with a price tag that outlines the projected cost to continuing operating the plant against the social and environmental costs. The board has said it would make a decision by the end of summer.

Colorado Springs resident Bonnie Ann Smith, who has been following the issue for years and regularly attends Utility board meetings, said when she saw the smoke coming from Drake Monday morning it confirmed her feelings that the aging plant was dangerous. She said the fire and the cost to repair the plant should be considered in the decision of when to close Drake.

"For me there are three main issues: first is the age," she said. "Second is the coal plant in the middle of downtown and what if it had blown up? And third, Colorado Springs needs sunshine to power our economic development."

John Romero, Utilities general manger FOR energy services/acquisition, said he feels confident that the plant, built in three phases in 1962, 1968 and 1974, has been well maintained.

"The plant undergoes regular maintenance," Romero said. "They do an amazing job of keeping the plant up to date, with great replacement parts, very consistently."

The Drake fire erupted Monday morning and sent a huge plume of black smoke over downtown Colorado Springs. Sixty-two employees were evacuated safely from the building, with one employee treated for minor injuries. There was a voluntary evacuation notice for people in a three-block area of the plant. On Wednesday, Fire Chief Christopher Riley said lubricating oil that hit hot steam pipes caused the fire. How the oil escaped is under investigation.

Utilities CEO Jerry Forte, who toured the facility Thursday, said there was extensive smoke damage. But he said a fire wall just south of the where the fire erupted saved the rest of the building, including a new control room.

The entire plant was shut down and it could be eight weeks before even a section of it is operational, Forte said.

Drake has three generation units called No. 5, No. 6 and No. 7. It could be three weeks before Colorado Springs Utilities knows the full extent of the damage and cost to make repairs, Forte said.

"It's bad. There is tremendous amount of smoke damage," Forte said, pointing to the damaged building. "This first area, from the first brick column to the second one, is more or less where Drake No. 5 unit is. You can see that is the worst of the damage."

Drake provides about a third of the community's power. Now, the Ray Nixon, Birdsall and Front Range plants will pick up the slack temporarily.

Romero said he is planning for a worst-case scenario, which is all three generation units at Drake down for at least 12 months. But, he said there is no way of knowing how long the units will be off line, how much fuel on the private market will cost or how much it will cost to repair the plant.

Utilities has begun to buy fuel from other Front Range power companies. At Drake, electricity is produced at 2.5 cents per kilowatt hour. It could cost about 4 cents per kilowatt hour to buy the fuel to produce it, Romero said. The price depends on the time of the year and demand. May is considered a shoulder month, which means there is less demand, he said.

"Right now there is energy and capacity on the market for purchase," he said.

Utilities does not have a fuel savings account for such emergencies, Romero said. Fuel prices are passed directly to the customers. When the price of fuel goes up, so do rates. In February, the City Council, which doubles as the Utilities board, approved a 3 percent increase in electricity rates to cover the increase in fuel prices. The council, over the past several years, also has lowered rates when fuel prices drop.

"Everyone is curious about what that will look like," Romero said about the rates. "The honest answer is we don't know yet."

Drake's fate was scheduled before the fire to be the subject of a community meeting Thursday evening at El Pomar Foundation's Forum for Civic Advancement.

About 160 people attended the forum where three panelists discussed the need for diversification on energy resources and the environmental and economic costs of energy.

For years, the Colorado Springs community has tried to envision life without the Drake power plant. It discussed when would be the best time to retire the plant and how the community would replace coal, said Jane Ard-Smith, a member of the Sierra Club who was a panelist.

"After Monday, the risk just got real for us," she said. "Now, the conversation is what if we had to do that today?"

This summer, the Utilities board will consider options including closing Drake in the next three to five years and replacing the energy source with natural gas, which would cost about $242 million more than keeping the plant open for 20 years. An immediate closure of Drake has more social and environmental benefits, according to a report by an independent consultant. The report estimates Utilities would avoid spending $753 million - the monetized value of the repercussions of greenhouse gas emission and other environmental and social costs.

Resident Cliff Kotnik, a member of the Colorado Renewable Society who has been following the Drake issue, said it appears from discussions at recent Utilities board meetings that the Utilities board is leaning toward keeping the plant open for at least nine to 15 years.

"To me, the board really needs to look at the consultant's recommendations and start working on a plan," he said.

"We have this plant, and the consultant says we should start thinking of retiring it. Now, we presumably get insurance settlement for the fire and we put that money into it. Why keep pouring money into it?"

Utilities has $500 million in property insurance coverage per incident with a $1 million deductible - which is more than adequate coverage for this incident, Forte said Thursday. Utilities insurance coverage was reviewed and revised in the last 3 years, he said.

Bennett said he is concerned about the potential damage to Drake's internal infrastructure and the cost to repair it. But he said the board will wait until it has reports detailing the fire damage and repair costs before deciding if the fire should be part of the Drake retirement discussions.

"We don't know the full implications of the damage," Bennett said. "I'm not jumping to any conclusions. We don't have enough information to know that."

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