Carbon Loading

Xcelís solution to rising energy prices includes a lot of coal. Is that a bad thing?

"The so-called savings from building the plant is a few percent, at most, of the billions that will be spent to operate it," she says. "And if they delay it a few years, it will wipe out the savings. They made a decision to build a coal plant first, then shuffled around the numbers to make it work."

The proposal was also based on some dubious projections about the price of coal over the next few decades. One Xcel official testified that the economic modeling for the plant looked at a range of natural-gas prices but only a "base" coal price, with allowances for inflation. But the actual price of Powder River Basin coal has doubled in recent months, from around six dollars a short ton last January to more than twelve dollars the week of October 12, defying the notion that coal is an economically stable fuel. Since the new Comanche unit would use up to 3.9 million tons of coal a year, even a five-dollar jump in the cost per ton would hike the operating cost of the plant over its fifty-year lifespan by close to a billion dollars.

"They're assuming that, for the next thirty years, the price of Powder River Basin Coal will stay completely flat, at around six dollars a ton," Glustrom says. "Any economist will tell you that's a questionable assumption."

Extra carbs: A third unit will double the power 
generated by Xcel's Comanche coal plant in Pueblo.
Extra carbs: A third unit will double the power generated by Xcel's Comanche coal plant in Pueblo.

The price of coal remains less volatile than that of natural gas, despite occasional spikes, Stutz responds. As for the 10 percent figure the company used for power generation from wind, he says that conservative estimate forces Xcel to add more turbines to achieve the wind-power goals required by Amendment 37 and the settlement agreement.

If the plant costs more to build or operate than projected, those cost increases will end up being passed along to customers. In fact, Xcel got permission from the PUC to begin recovering plant construction costs through additional charges to energy bills starting in 2007, although the plant might not be operating until around 2010. "The PUC has allowed Xcel to do what the least-cost plan rules were intended to avoid -- shift risks to ratepayers instead of generators," Glustrom contends. "In this plan, the stockholders take no risk."

Glustrom's economic arguments failed to dissuade the PUC, or even convince the agency that she had a right to object. But she soon became even more disillusioned with the state health officials who granted air permits for the new unit, even though their federal counterparts claimed the plant was already releasing "massive amounts of illegal emissions."

In early 2002 the EPA had issued notices of violation to Xcel for emissions from Comanche and its Pawnee coal-fired plant near Brush. The notices were part of a long-running battle between the agency and power companies over whether, under the 1990 Clean Air Act, modifications in older plants require new pollution controls or are simply "routine maintenance," as the plant owners contend.

"The plants were already in full compliance with the Clean Air Act, in our opinion," says Stutz. "We've remained in compliance. The general public thinks that once you're put on notice, you're guilty until proven innocent. It's been a major bone of contention with us. There were fifty power plants around the nation that were put on this, but nothing's been done since."

Nothing's been done, Glustrom counters, because of political interference. "The Bush administration basically rolled out the red carpet for coal plants," she says.

Under state law, the Colorado Department of Public Health and Environment is supposed to investigate "written and verified" complaints of air-quality violations. The EPA notified the CDPHE of its findings regarding the Comanche and Pawnee plants, but the state agency failed to conduct any kind of investigation. In its responses to public comments on the permit, the CDPHE took the position that it had "broad discretion" whether to investigate possible air-pollution violations, and that doing so in this case would be a waste of time and money, since Xcel was going to clean up the units as part of the new construction.

Dave Ouimette, an official in the department's air-quality-control division, says the EPA notices had no bearing on the state's handling of the permitting process for the new Comanche unit. "[The notices] weren't issued by us, and the EPA didn't take any further action," he notes. "So we felt it was quite legitimate to move ahead with the permits as we did."

Updating the pollution controls at the existing Comanche units will result in a net reduction of sulfur and nitrogen emissions at the plant, even with the additional emissions from the new unit. Xcel got "credit" for that reduction in the permit process, despite state and federal regulations that prohibit issuing such credits for emission reductions that merely meet current compliance levels. Citing the current litigation, Ouimette declined to comment on that point.

Glustrom and Barber watched and waited as Xcel's proposal made slow but remarkably smooth progress through the maze of PUC and state health department regulations. They watched as the environmental objectors signed the settlement and stopped objecting. They watched as the National Park Service, which in the past has routinely opposed new power plants that decrease visibility at national parks and monuments, chose not to intervene in this case -- despite NPS modeling of air emissions that indicate significant impact from the Comanche plant on haze at the Great Sand Dunes and Rocky Mountain National Park.

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