After coal, a debate in Colorado over proposed new natural gas electricity generation

A view of the Craig Station coal-fired power plant. (Allen Best/Big Pivots)

This story originally appeared in Big Pivots.

Coal-burning for electrical generation will end in Craig before New Year’s Day of 2028 arrives. Will a new gas plant arrive in 2029 to partially replace the lost generation?

Tri-State Generation and Transmission Association says it needs a 307-megawatt gas plant there to ensure electricity will be available for its members across its four-state service territory, but particularly western Colorado.

Three conservation groups argue strenuously that Tri-State can keep the lights on without the gas plant — and at a cost that is $288 million less and with fewer greenhouse gas emissions. They instead recommend more battery storage in lieu of the gas plant.

The Colorado Public Utilities Commission is scheduled to make a decision on July 10. However, the PUC commissioners must first decide whether to order Tri-State to conduct additional modeling, as the conservation groups want. New modeling, however, would take time.

“Time is of the essence,” Tri-State said in a PUC filing on June 25. It warned of “serious risk of cost escalation” if procurement of renewables is delayed, citing snarled supply chains and rising prices caused by the tariffs imposed on imports by President Donald Trump, and a reshaped tax landscape in the budget reconciliation bill before Congress.

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For example, nearly all battery cells come from China. Many photovoltaic solar components also come from China. And the budget bill would strip tax credits for most renewable projects.

New gas plants have problems, too. Rising demand has caused lengthening wait times and higher prices. Companies that have not yet reserved the giant metal turbines now face waits of three or four years, about twice as long as just a year earlier, reported the New York Times in April. The report cited rapidly increasing demand from data centers.

“With demand for gas turbines reaching new heights and tariffs further threatening international supply chains, costs for new gas plants are soaring,” said a team from Boulder- and Basalt-based RMI in a June 18 report.

Colorado in the next five years will put coal in its rear-view mirror. The state got 80% of its electricity from coal combustion at the start of the 21st century. That had slipped to 60% in 2015. By the end of 2030, the state’s last coal plant, Comanche 3, located in Pueblo, will go silent.

All the state’s largest utilities are investing heavily in wind, solar and lithium-ion batteries. They are also hedging their bets with new gas plants. Brighton-based United Power is in the lead. During July it will formally dedicate a new 162-megawatt gas plant about 45 miles northeast of downtown Denver. The electrical cooperative is currently exempt from PUC regulation.

Xcel Energy, like Tri-State, must gain approval of the PUC commissioners. In another case currently before the PUC, Xcel says it needs between 1,050 megawatts and 2,625 megawatts of new generation as it closes coal plants and gets ready for a massive increase in new demand, about two-thirds of it from data centers. How real is that projected demand? Question marks littered the testimony in recent hearings before the PUC.

Two other utilities, Platte River Power Authority and Colorado Springs Utilities, also plan new gas plants. And like United, they are also exempt from PUC regulation.

The dispute about the gas plant at Craig revolves around perceptions of risk and uncertainty. Reliability of electrical supplies remains paramount. How to achieve that without significant cost increases?

Long-distance transmission across multiple time zones and weather systems will help. That, however, is both expensive and usually takes a decade or longer.

Banks of batteries have become integral parts of new energy resources. This is a battery bank owned by United Power located adjacent to a substation along Bromley Road in Brighton. (Allen Best/Big Pivots)

Reliable and affordable long-duration storage has become the holy grail in this energy transition. For example, Xcel Energy is partnering with Form Energy in an iron-air pilot project in Pueblo. This technology stores energy by essentially “rusting” iron during discharge and “unrusting” it during charging, making it a potential alternative to lithium-ion batteries for large-scale energy storage for up to 100 hours.

The difference this particular longer-duration technology will make in future needs is not clear. Xcel certainly is not betting its future on an outcome. It wants natural gas, too.

As for Tri-State, it views a gas plant as having 95% reliability compared to 50% for renewables. It frets that it has no experience with battery storage, although in any scenario it will soon have many of them in various parts of Colorado and New Mexico.

The question then becomes, in part, whether to delay expensive investments in a new natural gas plant for a couple years to see what new technological wrinkles may make that investment unnecessary.

Tri-State 15 years ago remained heavily dusted with coal. As former Gov. Bill Ritter noted at a recent event, Tri-State’s leaders then fervently believed their future lay in coal forevermore. It’s a substantially different utility now. It will retire the first of the three units at Craig by the end of 2025 with the remaining two in 2027. It owns another unit in Arizona, at Springerville, which it will close in 2030. After that, it will own just one coal-burning unit at the Laramie River Station in Wyoming.

As it prepares to leave coal mostly behind, Tri-State has begun building large amounts of new renewables, including a solar farm in the Axial Basin south of Craig, near a coal mine.

This plan calls for the addition of 700 megawatts of wind and solar between 2026 and 2031. On top of that Tri-State wants to add 650 megawatts of four-hour battery storage.

As for gas, it proposes to replace the five turbines at the J.M. Shafer plant near Fort Lupton, increasing the capacity from 272 megawatts to 281 megawatts. The environmental community has no quarrel with that plan.

The new gas plant at Craig is the fulcrum for the dispute. Tri-State says it needs the eight new turbines of natural gas at Craig specially for peak demands or when renewables come short. The environmental community maintains that 550 megawatts of battery storage beyond what Tri-State proposes will do the trick.

“Although battery integration is important for a balanced energy strategy, the immediate needs of the Western Colorado system, particularly in the transition away from coal, require the inclusion of reliable dispatchable resources like gas plants to ensure system reliability,” the utility said in a June 10 filing.

Just transition is another element of the conversation. In 2019, state legislators adopted goals for an 80% decrease in emissions by 2030 as compared to 2025 levels. On the coattails of that goal-setting was the declaration that “strong and comprehensive policy is … needed to invest new financial resources in coal communities that are seeking to diversify and grow their local and regional economies in a manner that is both sustainable and equitable.”

In a settlement agreement reached in June 2024, Tri-State committed to paying $22 million to Craig and Moffat County from 2026 through 2029 to aid the community’s energy transition.

Tri-State is also on the hook for an addition $48 million in the next decade for lost property tax base — unless it adds new tax base. In that case, the new tax base will be deducted from the utility’s obligations. Part of its plan is to place 200 megawatts of battery storage in the Craig area by 2030. A gas plant would help even more, as Craig and Moffat County point out in their comments in support of Tri-State.

Once again, does Tri-State really need the gas plant to ensure the lights stay on during hot summer days and winter weeks when wind wanes as it did during Storm Uri in February 2021.

The conservation coalition — Sierra Club, Natural Resources Defense Council and Western Resource Advocates — insist Tri-State has not proven the need. In a June 18 filing with the PUC, they raised what they call “serious questions about the accuracy of Tri-State’s modeling.” They want the PUC to order Tri-State to conduct new modeling, a move that Tri-State resists because of the added time. Again, it says, time is of the essence.

Costs of the gas/no gas choices can be measured in several ways. Tri-State prefers a financial measuring stick called present value of revenue requirements to assess the cost of the extra-batteries option. This tool provides the total costs over the next 19 years.

By this measure, the heavier investment in batteries will require Tri-State to generate $88 million over the next 19 years. That difference is just 0.5% more in revenue spread across the more than $16 billion in revenue Tri-State projects is needed for both portfolios, say the conservation groups. A small price, say the conservation groups, of just 0.5% of increased cost in an outlay of more than $16 billion in capital outlays.

If the social costs of carbon and methane are factored in, the no-gas alternative will actually be cheaper, contend Western Resource Advocates and the two allied groups, the Sierra Club, and Natural Resources Defense Council. The PUC is required to consider these climate change impacts but is not required to use it as a basis for a decision. By the calculations of the conservation groups, this puts the new gas plant at $327 million — or 3.6% more expensive.

The most compelling numbers for the environmental advocates are the up-front capital costs. By that measure, building the gas plant and new transmission needed for its preferred projects will cost $288 million more than the deeper investment in batteries.

What others had to say

Other agencies and groups at the table (called “intervenors” in PUC dockets) didn’t raise objections to the gas plant. The Office of Utility Consumer Advocate, for example, saw the benefit to Moffat County as a positive more important than the “slightly higher emissions” caused by the new gas plant. It buys Tri-State’s argument about improved reliability.

The Colorado Energy Office urged that Tri-State explore sharing gas production with Xcel Energy, which is also closing its coal plants in northwestern Colorado. (Tri-State responded that it has explored that possibility but gave no evidence that the conversations were producing anything.)

The energy office and San Miguel County also mentioned a hope that Tri-State would get electricity from enhanced geothermal. Tri-State reported it had received a bid for a 20-megawatt geothermal plant, likely the first such bid in Colorado. It did not select it.

John Clark, the mayor of Ridgway, also wrote in support of geothermal. “I’ve always been climate-conscious and truly believe there’s no limit to the number of efforts we should be pursuing in an attempt to avoid the worst of what could come if we don’t do enough about climate change,” Clark told Big Pivots in an e-mail.

“We live in a promising area for geothermal,” he added, and enhanced geothermal — created by tapping heat from deep well — is an around-the-clock source of energy.

If Tri-State is based in Colorado and has its largest number of electrical cooperatives within Colorado, it also supplies electrical cooperatives in Wyoming and New Mexico and public power districts in Nebraska. It’s one system stretched across the four states. Members from all four states wrote letters both in support and against the gas plant.

Most supportive of the gas plant were the eight member cooperatives in Wyoming. They pointed to double-digit rate increases projected by Tri-State and continued rate impacts for the next decade. They suggested that the costs are due to adding renewables and the goals for emissions reductions.

From New Mexico came exactly the opposite argument from several state legislators, county commissioners, and Navajo Nation members. The alternative favored by conservationists is a “viable — and superior — alternative to spending several hundred million dollars on a gas plant that will emit millions of tons of greenhouse gases over its expected operating life,” they said.

Colorado elected officials have also weighed in with a letter signed by 33 individuals from town, city, and county staffs as well as elected officials. That letter, too, made the economic case against a new gas plant as well as the climate benefits.

Chaffee County Commissioner PT Wood, one of the signatories, told Big Pivots that he has personal doubts the reliability of natural gas. Coal was supposed to be reliable, but the Comanche 3 generating station at Pueblo has been closed for extended periods. Plus, he sees the extraction of natural gas as being “incredibly harmful to the landscape.”

Many individual letters were filed with the PUC, obviously developed using a common template but with some localized embellishment.

From Mancos, west of Durango, Brandi Lynn Piller described a new gas-fired plant as “fraught with financial risks due to volatile market prices and high construction costs.”

From Walsh, a few miles from the Kansas and Oklahoma borders, Fred and Kay Lyn Hefley noted the installation of two 50-kWh wind generators on their farm. “We strongly urge Tri-State to achieve its goal of 100% clean energy in Colorado by 2040 using wind and solar power.”

And from Matheson, on the windy plains about 50 miles east of Colorado Springs, Jan Kochis, and her husband, Virgil Kochis, said they strongly oppose the gas plant at Craig because it “contradicts Colorado’s decarbonization goals and risks becoming an obsolete asset, potentially burdening co-op members with hundreds of millions in stranded costs, as seen in past fossil fuel missteps.” They have 30 wind turbines on their property that generate electricity for Xcel.

Martha Whitmore, of Ridgway, saw it entirely differently. Whitmore said Tri-State was going far too far into renewables. They are “not constant, not reliable and (are) expensive to develop. If the State of Colorado is hell bent on eliminating reliable fuels, then the State had better get going with permitting new nuclear facilities. And, since the same enviros who scream about carbon also scream about not wanting nuclear power either, better not decommission our existing coal and natural gas power plants. We will be on rolling blackouts …”

Following is Tri-State’s preferred portfolio for 2026 and 2031 for 1,657 megawatts:

700 MW of renewable power purchase resources:

• 200 MW solar in Eastern Colorado (2028)
• 100 MW solar/battery hybrid in New Mexico (2028)
• 200 MW wind in Eastern Colorado (2029)
• 200 MW wind in Wyoming/Western Nebraska (2030

650 MW of contracted hybrid and standalone short-term storage resources:

• 50 MW battery in Western Colorado (2026)
• 150 MW battery in Eastern Colorado (2027)
• 50 MW battery/solar hybrid in New Mexico (2028)
• 100 MW battery in New Mexico (2028)
• 100 MW battery in Eastern Colorado (2028)
• 200 MW battery in Moffat County, Colo., in Western Colorado (2030)

Gas plant

• 307 MW owned natural gas combustion turbine facility with hydrogen-blend capability in Moffat County in Western Colorado (2029).

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