§ 40-3.2-206 — Coal plant retirements - replacement resources

Colorado § 40-3.2-206

• Jurisdiction: Colorado
• Title 40: Utilities
• Art.: Air Quality Improvement Costs

Text

(1) (a) The
general assembly finds that, in designing a coordinated emission reduction plan as
described in section 40-3.2-204 and to expeditiously accelerate coal plant
retirements, it is in the public interest for utilities to give primary consideration to
replacing or repowering their coal generation with natural gas generation and that
utilities shall also consider other low-emitting resources, including energy
efficiency, if this replacement or repowering can be accomplished prudently and for
reasonable rate impacts compared with placing additional emission controls on
coal-fired generating units, and if electric system reliability can be preserved. To
that end, in the plan required under section 40-3.2-204, each utility shall include an
evaluation of the following proposals:

(I) The cost and system reliability impacts of retiring a minimum of nine
hundred megawatts of coal-fired electric generating capacity, or fifty percent of
the utility's coal-fired generating units in Colorado, whichever is less, by January 1,
2015, and repowering the affected coal-fired facilities with natural gas or replacing
them with natural gas-fired generation or other low-emitting resources, including
energy efficiency. The coal-fired capacity evaluated under this subparagraph (I)
shall not include any coal-fired capacity that the utility has already announced that
it plans to retire prior to January 1, 2015. The utility may also prepare evaluations of
additional scenarios, including scenarios that result in the retirement of less than
nine hundred megawatts of coal-fired electric generating capacity or the
retirement of some portion of the nine hundred megawatts of capacity after
January 1, 2015, but before January 1, 2018.

(II) Retirements of a portion of its coal-fired generating capacity in the period
after April 19, 2010, but prior to January 1, 2015. At a minimum, the utility shall
evaluate whether to retire a portion of its coal-fired capacity on or before January 1,
2013, or whether the retirements of coal-fired generating facilities that have
already been announced could be advanced to an earlier retirement date.

(b) (I) For all evaluations required by this subsection (1), the utility shall
report:

(A) The estimated overall impacts on the utility's emissions of oxides of
nitrogen and other pollutants;

(B) The feasibility of the retirement, repowering, or replacement on the
schedule proposed in the evaluation;

(C) The costs and impact on electric rates from these proposals; and

(D) The impact of the retirements on the reliability of the utility's electric
service.

(II) All evaluations required by this subsection (1) shall contrast the costs of
replacing coal generation with natural gas generation and other low-emitting
resources, including energy efficiency, with the costs of installing additional
emission controls on the coal plants.

(2) The utility shall set forth in its plan the utility's proposal for the best way
of timely meeting the emission reduction requirements required by federal and
state law, given the need to preserve electric system reliability, to avoid
unreasonable rate increases, and the economic and environmental benefits of
coordinated emission reductions.

(3) In reviewing the reasonableness of the utility's proposed plan, the
commission shall:

(a) Compare the relative costs of repowering or replacing coal facilities with
natural gas generation or other low-emitting resources, including energy efficiency,
to an alternative that incorporates emission controls on the existing coal-fired
units;

(b) Use reasonable projections of future coal and natural gas costs;

(c) Incorporate a reasonable estimate for the cost of reasonably foreseeable
emission regulation consistent with the commission's existing practice;

(d) Consider the degree to which the plan will increase utilization of existing
natural gas-fired generating resources available to the utility, together with
increased utilization of other low-emitting resources including energy efficiency;
and

(e) Consider the economic and environmental benefits of a coordinated
emissions reduction strategy.

(4) The utility may enter into long-term gas supply agreements to implement
the requirements of this part 2. A long-term gas supply agreement is an agreement
with a term of not less than three years or more than twenty years. All long-term
gas supply agreements may be filed with the commission for review and approval.
The commission shall determine whether the utility acted prudently by entering
into the specific agreement, whether the proposed agreement appears to be
beneficial to consumers, and whether the agreement is in the public interest. If an
agreement is approved, the utility is entitled to recover through rates the costs it
incurs under the approved agreement, and any approved amendments to the
agreement, notwithstanding any change in the market price of natural gas during
the term of the agreement. The commission shall not reverse its approval of the
long-term gas agreement even if the agreement price is higher than a future
market price of natural gas.

Legislative History

Source: L. 2010: Entire part added, (HB 10-1365), ch. 140, p. 470, � 1, effective April 19.