CASPER - Under the type of greenhouse gas regulations favored by President-elect Barack Obama, Tri-State's proposed 700-megawatt coal-fired power plant in Kansas could cost ratepayers an additional $217 million annually in emission credits, according to a financial report released Monday.
Thousands of those ratepayers are among Tri-State's seven-member rural electric cooperatives in Wyoming.
"In light of the current economic conditions and the near certainty that some form of carbon constraints are just around the corner, we would much rather see a resource plan that gives us far more flexibility to tap into and benefit from resources in our own back yard," Dan McClendon, general manager of the Delta-Montrose Electric Association, said in a prepared statement.
A spokesman for Tri-State told the Star-Tribune that the report is rife with misstated facts and is an irresponsible misrepresentation of Tri-State's resource plan.
Financial research firm Innovest conducted the analysis, which was commissioned by the Natural Resource Defense Council, among other opponents of Tri-State's Holcomb Station Expansion Project.
The report notes that Obama repeatedly has said he favors a cap-and-trade approach to regulating carbon dioxide, the main greenhouse gas blamed for global warming. Under a cap-and-trade program, companies would have to purchase emissions credits for every unit of CO2 let into the atmosphere from qualifying facilities.
Theo Spencer of the Natural Resources Defense Council said Obama has also signaled that he favors making carbon emissions credits available through auction, which doesn't bode well for utilities that rely heavily on coal. Tri-State's energy portfolio is already 75 percent coal-based, according to the report.
To meet emission limits under a cap-and-trade program power, companies and their customers would likely have to invest in cleaner sources of electrical generation as well as pay for carbon credits for facilities that emit greenhouse gases.
"The prudent companies are focusing more on renewable sources of energy and less on conventional coal," Spencer said during a teleconference with the media on Monday.
Jeff Hohn is general manager of High Plains Power Inc. in Riverton, which is a member of Tri-State. Hohn told the Star-Tribune that members of High Plains Power haven't expressed much concern about continuing to rely heavily on coal-based generation.
"Coal is the most reliable and most cost-effective form of electricity," Hohn said. "Our main concern is to get our members the most clean, reliable electricity there is available."
Charles A. Larsen, general manager of Carbon Power & Light in Saratoga, said he appreciates the fact that Tri-State is moving cautiously in the direction of renewable power, because at the moment there is no replacement for large amounts of base-load power.
"A lot of our members don't feel the sky is falling," Larsen said. "There seems to be a mind-set out there in other places that renewables can pick everything up."
McClendon suggested that Tri-State is overly focused on centralized coal-based power when it could better encourage interest among its rural members in developing distributive and renewable generation, such as solar and wind. In fact, he sees wind, solar and geothermal development as a great economic development opportunity for rural electrics across the West.
Tri-State's Holcomb Station project in Kansas has been bogged down in legal battles. Tri-State spokesman Jim Van Someren said the company plans to continue the legal process so it can go forward with the project.
"We are assessing technologies and different resource options. Our board continuously analyzes the various risks inherent to the various options," Van Someren told the Star-Tribune.
While utilities have understood that federal regulations for CO2 emissions are imminent, there are many details yet to work out. That creates much uncertainty and makes it difficult for utilities to plan for and finance expensive electrical generation facilities.
The question before utilities, essentially, is what's more expensive: a new coal-fired power plant and purchasing the carbon credits to allow CO2 emissions, or relying on natural gas, nuclear power or advanced coal gasification technologies?
"That's all speculative at this point, and those are the precise things we are looking at and analyzing," Van Someren said.