Why a Thoughtful Energy Transition Matters for Colorado Springs Utilities

Last month, the Environmental Protection Agency (EPA) made a preliminary announcement that helps Colorado Springs Utilities (Springs Utilities) in its ongoing efforts with the State of Colorado to identify a retirement date for the Nixon Power Plant beyond 2029. The EPA’s preliminary decision removes federal enforcement activity around the closure of Nixon. Springs Utilities must continue to work with the State of Colorado to find a suitable retirement date. The municipally owned utility remains committed to ensuring its energy system is reliable, cost-effective, and environmentally responsible for both customers and the community.

Getting the Right Resources — At the Right Price

Springs Utilities has been in talks with the state to discuss the challenges in securing a reliable, cost-effective replacement for the coal-fired portion of the Ray Nixon Power Plant. The Sustainable Energy Plan, which outlines Springs Utilities’ long-term energy path and includes the retirement of Nixon’s coal-fired unit by 2030, has been challenged by a volatile market and uncertain regulatory future for new renewable energy projects. These forces have created a perfect storm that could not have been foreseen when the original plan was developed. Last year, Springs Utilities received more than 200 responses to a request for proposals for new electric generation that would help serve as that replacement. The costs were staggering – at least 60% higher than expected for wind and 50% higher for solar. As a result, Springs Utilities has been communicating with its state and federal partners about the costs and reliability problems associated with retiring Nixon at a time when power is needed.

Coal and Renewable Energy

Though Springs Utilities closed the Martin Drake Power Plant ahead of schedule, there are distinctions between the two plants. In addition to coal, Nixon also includes natural gas generation. Drake was a 100-year-old coal plant, and closing it made good financial sense — it would cost roughly $200 million annually to operate and maintain. Nixon, on the other hand, still has more time before its true “end of life.” Like a reliable vehicle, when there are plenty of safe miles left, it makes good financial sense to keep it before getting an expensive loan for a replacement. This is what Springs Utilities is asking to do with Nixon. While it doesn’t make sense to run the coal-fired unit forever, Springs Utilities needs more time to run it while finding a sustainable option that also makes sense financially. Springs Utilities will continue to pursue renewable options; however, a reliable system must have base load generation, like coal or natural gas, that can run and support the system when the wind doesn’t blow and the sun doesn’t shine. Every utility in Colorado is unique — with different service territories, transmission capabilities and power plants that were built at different times. The energy system was built to meet the community’s unique needs over its 100-year history. Today, Springs Utilities continues to evolve and is committed to a smart energy transition at a pace that makes sense.