From the Steamboat Pilot & Today | January 9, 2020

by Joshua Carney, Craig Daily Press
CRAIG — Tri-State Generation continues to make changes that are hitting the Yampa Valley hard.On Thursday, Tri-State Generation and Transmission Association announced it will close all of its coal-fired power plants and mines in New Mexico and Colorado by 2030. The power provider serves nearly 20 rural electric cooperatives.

Tri-State announced the closure of its Escalante Power Plant in Prewitt, New Mexico, by the end of 2020. It plans to close Craig Station Units 2 and 3, and the Colowyo Mine in Northwest Colorado by 2030.

The announcement from the Westminster-based power provider comes on the heels of pressure by two of its rural electric co-op members, including Brighton-based United Power and Durango-based La Plata Electric Association, in hopes of making a faster transition to renewable energy in recent years. The pair have sought to break up with Tri-State as a result of the power wholesaler’s reluctance to use more renewables and in seeking more say over their power sources, according to previous Craig Press reporting.

The power provider officially announced the following information on the closures during a teleconference Thursday:

  • Closures will result in 100% reduction of coal emissions in Colorado and New Mexico while increasing Tri-State’s competitiveness with cleaner portfolio and stable rates.
  •  Major changes in generation portfolio include closure of Escalante Station near Prewitt, N.M., by end of 2020, and closure of Craig Station and Colowyo Mine in Northwest Colorado by 2030.
  • Tri-State is working with state and local leaders to support affected employees and communities, and will seek legislation in Colorado to provide certainty on state greenhouse gas reduction rules.

In total, the closure of the power plants and mine impacts roughly 600 power plant and mine employees, who have been key to Tri-State’s and its predecessor generation and transmission cooperatives’ ability to supply reliable and affordable power to cooperatives for decades.

“Serving our members’ clean energy and affordability needs, supporting state requirements and goals, and leading the fundamental changes in our industry require the retirement of our coal facilities in Colorado and New Mexico,” said Rick Gordon, chairman of the board of Tri-State and a director of Mountain View Electric Association in eastern Colorado. “As we make this difficult decision, we do so with a deep appreciation for the contributions of our employees who have dedicated their talents and energy to help us deliver on our mission to our members.”

Tri-State will work with state and local officials to support affected employees and their communities during the transition.

“Our focus is on making these changes with the care and respect our employees and their communities deserve — easing the transition whenever and wherever possible,” said Duane Highley, chief executive officer of Tri-State. Highley and Tri-State pledged $5 million to each community affected by the closures and hopes to work in matched funds from the state level.

Tri-State’s strong financial position and cooperative business model helps ensure wholesale rates remain stable, if not lower, during its transition. Tri-State will account for coal assets over time through a to-be-determined use of deferred revenue, accelerated depreciation or regulatory asset recovery.

“With our not-for-profit cooperative business model and strong financial position, Tri-State is favorably positioned to successfully transition our resources at the lowest possible cost,” said Highley. “The low costs of renewable energy and operating cost reductions help to counterbalance the cost to retire our coal assets early.”

Tri-State announced the development of its Responsible Energy Plan in July 2019. The plan, which includes significant renewable energy additions, will be announced next week.

Craig Station and Colowyo Mine in Colorado retiring by 2030

Craig Station, a 1,285-megawatt, three-unit power plant in Moffat County, will close by 2030, based on Thursday’s Tri-State announcement. The power plant’s units were constructed by Colorado Ute Electric Association and began operations between 1979 and 1984.

Tri-State acquired Craig Station and other assets from Colorado Ute in 1992. The power plant currently employs 253 people.

Tri-State previously announced that the 427-megawatt Unit 1 will close by the end of 2025. Despite Thursday’s announcement for Units 2 and 3, the closing date for Unit 1 remains unchanged.

The 410-megawatt Unit 2 and the 448-megawatt Unit 3 will close by 2030, according to Highley. Tri-State operates Craig Station and owns 24% of Units 1 and 2. Tri-State owns 100% of Unit 3. Tri-State is working with the other plant owners to determine the specific details for the retirement of Unit 2.

“We have to do specific coordination with the co-owners of Unit 2,” Highley said during a teleconference. “There will be significant coordination as to who’s going to supply what coal when and on what schedule, and how rapidly those assets can be retired, but that’s yet to be done and we have time to work that out.”

Colowyo Mine, located in Moffat and Rio Blanco counties, produces coal used at Craig Station and will cease production by 2030, at which time operations will turn entirely to reclamation. Tri-State purchased Colowyo Mine from Rio Tinto in 2011. The mine currently employs 219 people.

“With ten years until the closure of Craig Station and Colowyo Mine, we have additional time to work with the legislature, our employees and the communities in Moffat and Rio Blanco counties to plan for and support the transition,” said Highley. “Our work starts now to ensure we can continue to safely produce power while working with stakeholders to thoughtfully plan for the future.”

Tri-State is working with the Governor and legislative leaders on proactive legislation that ensures the closures meet greenhouse gas compliance obligations in Colorado, while also maintaining stable rates and reliable power for Tri-State members. This legislation would give Tri-State the ability to transition resources in a timely and financially responsible manner while providing certainty.

“Working together, we can meet the state’s clean energy goals while preserving affordable, reliable and responsible energy for rural Colorado,” said Highley. “Our elected leaders understand that Tri-State’s transition to clean power will succeed if there is certainty for our cooperative’s members that wholesale electricity rates will be stable and power remains reliable for rural communities.”

Tri-State previously retired its coal capacity at Nucla Station in Western Colorado in 2019.

Escalante Station in New Mexico retiring by the end of 2020

Escalante Station, a 253-megawatt coal power plant near Prewitt, N.M., will close by the end of 2020. The power plant was constructed by Plains Electric Generation and Transmission Cooperative and began operations in 1984. Plains Electric merged with Tri-State in 2000. The closure of the power plant will impact 107 employees.

“The timeline to retire Escalante Station by the end of 2020 is driven by the economics of operating the power plant in a competitive power market, and by Tri-State’s addition of low-cost renewable resources,” said Highley. “Our Escalante Station employees work safely and tirelessly to serve our cooperative’s members, and we’re committed to support them through this difficult transition.”

Escalante Station employees will receive a generous severance package, the opportunity to apply for vacancies at other Tri-State facilities, assistance with education and financial planning, and supplemental funding for health benefits.

Tri-State will also provide $5 million in local community support, and is working with the New Mexico Governor’s Office, legislative leaders and local communities in Cibola and McKinley counties to address the impacts of the transition, including workforce retraining and other economic development efforts.  Tri-State will also address issues related to the McKinley Paper Company, which purchases steam and water from Escalante Station.

“Tri-State will provide local communities with resources they can utilize where they see fit, and we are pursuing all available avenues for additional support,” said Highley.

Tri-State previously retired its coal ownership capacity in Unit 3 of San Juan Generation Station in New Mexico in 2017.

On Thursday, following the State of the State address in Denver, Speaker KC Becker (D-Boulder) reacted to an announcement from the Tri-State Generation and Transmission Association outlining the retirement of all coal generation in Colorado and New Mexico.

“I applaud Tri-State’s commitment to Colorado’s clean energy future and am impressed by the bold carbon emissions reduction target they set. Meeting our state’s targets requires immediate collective action, and I’m happy to see Tri-State take their role seriously,” Speaker Becker said. “As our state transitions toward a clean, renewable energy future, we must always keep in mind that this change will bring difficult transitions for Colorado’s energy workers, their families and communities.

A commitment to a clean energy future also requires a commitment to a fair and just transition for Colorado’s workers. Protecting and supporting workers and communities through these shifting economic tides remains a top priority for the legislature. I look forward to continuing to work with a broad array of stakeholders to find ways to support and protect working families affected by a changing energy economy. The Just Transition Office created by the legislature last year will continue to work with impacted communities and worker representatives across the state on a plan to support those impacted by the transition away from coal.”

However, Congressman Scott Tipton (CO-03) blasted Governor Jared Polis and the Colorado State House Democrats over the announced future loss of jobs as the direct result of their policies signed into law in 2019.

“The announcement that the Craig Station and Colowyo Mine will be fully closed by 2030 is economically devastating for Craig and Moffat County. 472 direct jobs will be lost,” Congressman Tipton said. “Based on the population of Moffat County, that would be the economic equivalent of about 98,000 jobs lost in the Denver Metro Area.

“The closure and loss of jobs is the direct result of the State Legislature and Governor Polis’s policies passed in 2019. Instead of implementing a responsible all-of-the-above energy plan that relies on free market innovation and technological advancement to drive cost and demand, Governor Polis and State House Democrats forced the heavy hand of government to manipulate the market, end a source of affordable energy production, and kill jobs. After all of that, Colorado will remain connected to the main power grid which will continue to rely on coal generation from other states. This loss of these jobs is on the Governor’s hands and on each of those that voted for his plan. They should be forced to look these impacted families in the eyes and explain to them why they think their livelihoods are not important enough to save.

“Tri-State should provide training and placement services for those employees who will be impacted by this announcement and the State of Colorado must do the same—and it needs to be comparable skills, opportunities and pay. My office stands ready to work with the Craig community to help wherever we can at the federal level, including with economic development grant proposals and assistance, appropriations requests, job fairs, and access to other federal services. We are in touch with local officials and with Tri-State.”