Utilities operating in Colorado, New Mexico, Utah and Arizona announced plans this week to close coal units several years ahead of schedule and otherwise employ creative solutions to bring down emissions as the region moves away from coal-fired generation.
Tri-State Generation and Transmission Association on Jan. 9 said it will close the 253-MW coal-fired Escalante Generating Station in New Mexico—originally slated for closure in 2045—by the end of 2020. The 46-member nonprofit wholesale power supplier will also close all three units of the 1,285-MW Craig Station in Colorado's Moffat County, as well as the Colowyo mine that feeds it, by 2030. Colorado's Trapper Mine, jointly owned by several utilities, is a dedicated supplier to Craig and will lose its only customer when the plant closes, Tri-State CEO Duane Highley said on a phone call with reporters following the announcement.
The planned closures significantly move up retirement of Tri-State's remaining coal assets in the two states, its only coal resources in which the organization has a majority operating interest. Tri-State also owns the 400-MW Unit 3 at Arizona's 1,560-MW Springerville Generating Station—operated by Tucson Electric Power—and has a stake in the 1,710-MW Laramie River Station in Wyoming.
Tri-State next week plans to follow up with additional news regarding its renewable-energy investments, Highley said on the call.
Almost half of Tri-State's current employees are involved in either coal mining or coal burning, he said, noting that the plant and mine closures will directly affect 600 Tri-State workers. The company is working with lawmakers in both New Mexico and Colorado to soften the blow, and will supply $5 million in local support to the rural McKinley and Cibola county communities affected by the Escalante closure, Highley said. Escalante employs 107 people, and Tri-State hopes the State of New Mexico can match its financial commitment to the area. Economic development organizations there have been working with the rural electric cooperative association and are ready to deploy the funds, Highley said.
Craig's 427-MW Unit 1 was already scheduled for closure in 2025, but the 410-MW Unit 2 was expected to operate until 2038, and the 448-MW Unit 3 until 2045, Tri-State Chief Financial Officer Pat Bridges said on the call. Tri-State owns 100 percent of Craig Unit 3, which it will close by 2030. It will negotiate with two other utility owners regarding the shutdown of Unit 2, also by 2030, Highley said.
Bridges said the early closure of Escalante will result in about $270 million in stranded assets. Craig's current asset value is about $400 million, but Tri-State plans to depreciate those assets over the next decade, Bridges said.
Nevertheless, Highley said the decisions were driven by economics as much as by state policies enacted in 2019 to reduce greenhouse gas emissions and, in New Mexico, to increase the amount of renewable energy consumed in the state.
The savings in energy costs, Highley said, "helps us with the accelerated write-off of what will become stranded assets from the early retirement of coal." Reliability and rate stability are the organization's top priorities, and declining costs for renewable resources could conceivably lead to an eventual rate reduction, he explained. This would be welcome, he added, since Tri-State members "serve some of the poorest communities in the West."
Tri-State would not benefit from the contested securitization provisions of New Mexico's Energy Transition Act in the Escalante closure, because as a not-for-profit, member-owned cooperative it has access to different debt instruments, Highley said on the call.
Elsewhere in the Southwest, PacifiCorp of Oregon, which owns the 350-MW Unit 4 of northeastern Arizona's coal-fired Cholla Power Plant in Joseph City, informed Arizona Public Service, the plant's operator and the owner of the other three units, that it would close Unit 4 at the end of 2020.
APS closed a Cholla unit in 2015, freeing up capacity on its 345-kV transmission lines, and plans to close its remaining units by 2025 (see CEM No. 1562). PacifiCorp had previously set January of 2023 as the deadline for closing Cholla 4, but continued operation is not economical compared with alternatives, the company said in an emailed statement. PacifiCorp's most recent integrated resource plan called for the closure due to economic pressure on coal and increased customer demand for low-emitting resources (see CEM No. 1559).
Arizona's second-largest utility, Salt River Project, in a Jan. 6 news release bucked the coal-closure trend, saying it had adopted an operating plan for the Coronado Generating Station in the town of St. John's in which it would continue to run Units 1 and 2 of the plant while "splitting" the selective catalytic reduction equipment already installed on Unit 2 to process emissions from both units. Each unit will be curtailed annually until the plant's scheduled closure in 2032, resulting in lower emissions than a scenario in which Unit 1 would close in 2025, according to SRP.
Coronado currently operates on an interim strategy for reducing nitrogen oxide emissions that involves curtailment of Unit 1 during the winter months. The new strategy will allow SRP to avoid the cost of additional SCR for the unit and instead invest $50 million to $60 million to re-engineer Unit 2's SCR to accommodate both units, according to the release.