Platte River Power Authority Board Approves IRP, Here’s Rate Forecast

The Platte River Power Authority board of directors unanimously approved a long-term plan Thursday to provide electricity using significantly more renewable energy sources as it phases out coal, but it will also require a $250 million investment in natural gas infrastructure.

How much the plan will cost PRPA — an estimated $2.77 billion — will affect future electricity rates for the four owner communities: Fort Collins, Loveland, Longmont and Estes Park, which will then pass the costs on to customers.

If PRPA’s wholesale rate forecast comes true, it would represent a 6.3% increase per year for the next five years and a 60% increase by 2034.

The plan approved by the board on Thursday is a so-called integrated resource plan, or IRP. It shows the company has sufficient resources to reliably meet demand while being financially stable and environmentally responsible.

The PRPA has a goal of achieving 100% carbon-free energy by 2030, but the plan says the use of new and existing gas-fired facilities would reduce this percentage to below 90%.

During discussions leading up to Thursday’s vote, PRPA board members — the mayors of the four cities and representatives from each — explained why they support the plan, even if they wish things had turned out differently.

Fort Collins Mayor Jeni Arndt has expressed support for the PRPA’s direction at previous board meetings. On Thursday, she said municipalities need to operate within a framework of reality, not theory.

“We’re not doing anything in theory,” she said. “We have to go out, we have to install the panels, you have to buy them, you have to get them here. I’ve had so many people — scientists and others — who have said, ‘This is easy, look, I could do IRP to get to 100 percent.’ The difference is we have to do it.

“Anyone I’ve talked to… who is in the process of installing these things and hiring people to do them and then working on their just transition plan and everything that goes along with that, I couldn’t think of anyone in the field who doesn’t think PRPA is doing a great job.”

Longmont Mayor Joan Peck has been fielding some of the toughest questions about the plan in recent months, particularly around building new aero-derived gas turbines.

“I think it’s common knowledge by now that I don’t like the aerogas derivative,” she said, asking whether the PRPA has investigated other utilities that say they don’t use gas.

Raj Singham Setti, chief operating officer of resource strategy innovation and integration, told her that PRPA had found that utilities had power purchase agreements that did not disclose where all their power came from.

“They assume that all of the electricity they buy is green energy,” he said. “Every utility, at least in Colorado … has a gas component in their portfolio.”

Loveland Mayor Jacki Marsh asked for and received clarification that the gas turbine would not be used for base load power, but would be used when renewables could not meet demand. She also received confirmation that everyone in the power sharing group, which PRPA is a member of, must meet their own base load power needs.

“So it’s not about us supplying a base in another area (with gas),” she said.

“Would I like us to say today, ‘Great, battery storage is here … and we’re going to hit that target that we set for ourselves?’” Loveland Mayor Jackie Marsh said. “I wish we could say that. We can’t because … the technology hasn’t arrived. Battery storage is not where we hoped it would be six years ago when we were looking at it.

“I see this as a stepping stone to one day being 100% renewable,” Marsh said. “It’s a good step.”

Some social groups still oppose the turbines

However, several community groups still believe gas turbines are a bad move. Of the 16 speakers during public comment, 10 opposed the plan.

A statement from Northern Colorado Partners for Clean Energy read at the meeting called for accelerating the development of local renewable energy sources and clean energy storage.

“The PRPA has not made a convincing case that a full 200 megawatts of additional (gas) capacity will be needed in the next five years. The IRP is looking at a 20-year time frame to see what might be needed. Expenditures do not have to be made over that long of a time horizon, but rather based on short-term needs.

“The ability to buy corporate capacity can be acquired, not built,” the statement said. “And that may make sense in the next few years as the implications of technology, policy and market participation become more apparent.”

It went on to say: “Alternatives to gas are likely to be more cost competitive over the full life of a gas plant, resulting in an unsustainable financial situation of owning assets we are not using.”

Northern Colorado Partners believes PRPA should work with experts from the Colorado Public Utilities Commission, the National Renewable Energy Lab, the Rocky Mountain Institute, the Department of Energy and others to develop an alternative solution to achieve the 100% goal.

How much can electricity price increases be expected?

Over the next 10 years, PRPA wholesale rates are set to rise from 6.3% per year to 2.1% per year. If all goes according to forecast, the wholesale rate will be 60% higher in 2034 than in 2024.

PRPA attributes the increase to the costs of implementing a resource diversification plan. Coal production today is cheaper than non-coal production in the future, and PRPA will have to spend more money to buy battery storage, gas and renewables.

PRPA estimates that by 2030, energy supply costs will increase by 87% from 2018, when the goal of a 100% carbon reduction was first set, PRPA Chief Financial Officer David Smalley said during a public presentation July 17.

“We will cover it in our rates,” he said, noting that PRPA is a non-profit organization that does not pay shareholders and only collects fees for providing energy.

PRPA officials say the selected IRP strategy is likely to be cheaper than most other alternatives seriously considered.

His process modeled hundreds of portfolios that accounted for the amount of carbon used and the costs associated with it. It was narrowed down to five portfolios.

The adopted IRP, or “optimal new coal,” model is expected to cost less than all other models except one.

In terms of the amount of carbon dioxide saved, it ranks fourth out of five.

Here’s how the five models rank in terms of cost and total carbon emissions by 2030:

No new coal: $5.34 billion, reaching 126,000 tons of CO2
Minimum amount of coal: $3.37 billion, 127,000 tons
Carbon tax cost: $2.78 billion, 196,000 tons
Optimal new coal (selected plan): $2.77 billion, 241,000 tons
Additional new coal: $2.76 billion, 329,000 tons

PRPA wholesale rate increases forecast for the next 10 years

Long-term average wholesale rate forecasts based on current assumptions

6.3% for 2025-2029
5.3% for 2030-2031
2.1% for 2032-2034
Total: 60%