Archive for Monday, September 18, 2017

Holcomb power plant unlikely to be built, company says; $93 million already spent

September 18, 2017

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— A controversial plan to build an 895-megawatt coal fired power plant in southwest Kansas now appears to be dead, company officials behind the project have said.

In an August filing with the Securities and Exchange Commission, Denver-based Tri-State Generation and Transmission Association described as "remote" the chances that it will ever build the plant, and it said the company is writing off as a loss more than $93 million it has already spent on the project.

"Although a final decision has not been made by our Board on whether to proceed with the construction of the Holcomb Expansion, we have assessed the probability of us entering into construction for the Holcomb Expansion as remote," the company said. "Based on this assessment, we have determined that the costs incurred for the Holcomb Expansion are impaired and not recoverable."

That statement came just five months after the Kansas Supreme Court cleared the way to proceed with construction, rejecting a challenge from environmental groups to an air permit issued by the Kansas Department of Health and Environment.

The plant had been in the works for more than a decade, however, and by the time that court decision came down, there were new federal regulations in place making it more difficult to build new coal-fired power plants, and the economics of renewable energy had changed significantly.

Tri-State and Sunflower Electric Cooperative based in Hays first proposed to expand an existing coal-fired plant in Holcomb in 2007, during the administration of former Democratic Gov. Kathleen Sebelius.

Later that year, Kansas Department of Health and Environment Secretary Rod Bremby stunned state officials when he denied a permit for the plant, citing carbon dioxide emissions and the dangers of global warming as the major reasons.

Many believed it to be the first time a public official in the United States had denied a permit based on concerns about climate change.

Lawmakers who questioned the science of climate change were harshly critical of the decision, including then-Sen. Jay Scott Elmer, who is now on the Kansas Corporation Commission, which regulates the electric industry in Kansas.

By 2010, however, Sebelius had been named to a cabinet position in President Barack Obama's administration. Tri-State and Sunflower had down-sized the scope of their initial plan and applied for a revised permit, and Sebelius' successor in the governor's office, Mark Parkinson, was eager to resolve the matter.

In November of that year, after Parkinson said he supported the revised plan, Bremby stepped down as KDHE secretary, and the revised permit was issued.

The Sierra Club, however, continued to challenge that permit in court, a lawsuit that eventually led to the Kansas Supreme Court's decision in March.

In its filing with the SEC, Tri-State said its board of directors had not yet decided how it plans to recover the $93 million loss, but it said it would not attempt to recover it through rates it charges its customers.

Comments

Ken Lassman 2 months ago

I don't trust that these folks will be saddled with covering the investment already made. I fully expect that they will start to pull a fast one to help recoup that loss like they finagled getting out from under a huge debt that wasn't going to repay itself for the first Holcomb power plant by agreeing to build this expansion project. Maybe this has all been a fancy way to get a power plant built for Western Kansas without having to pay full price all along.

At any rate, at least the Kansas economy has not been saddled with an additional unneeded carbon belching growth engine designed to subsidize front range development across the border in Colorado. Not only will this decision prevent carbon emissions, but every Kansan living east of that plant will breathe a little easier, thanks to the Brembys of the world who were willing to stand up when it counted.

Clark Coan 2 months ago

I'm sure Bremby and the Sierra Club won't be receiving a "thank-you" card from Tri-State for delaying the project long enough so they wouldn't get stuck with an albatross.

Steve Jacob 2 months ago

Nice to see the free market work! Natural gas is cheaper and more efficient, that's why this will not be built. Wind and sun energy are great, but a long way before it powers major areas, until then, natural gas beats coal and nuclear.

Ken Lassman 2 months ago

The power production landscape is quickly changing, Steve; the Lazard 10. levelized unsubsidized cost of power results from 2016 put the cost of coal at around $100/MWh , peaking gas plants $200, reciprocating engine natural gas ~$80, gas combined cycle $60, utility photovoltaic ~$52, onshore wind $50, and rooftop solar ~$145. With those numbers, and considering the scalability of both solar and wind, look for much more wind and solar getting into the equation for utilities. These two kinds of electrical energy generation have been the lion's share of new energy production installed in the US and it's not going to change anytime soon. While the total renewable fraction isn't as much as the total nuclear fraction, it's coming up quickly and will be neck and neck sooner than you think. Check out the Lazard study: https://www.lazard.com/media/438038/levelized-cost-of-energy-v100.pdf

Dorothy Hoyt-Reed 2 months ago

What did they spend $93 million on? Lawyers? Maybe the lawyers ripped them off? I think this company is a rip off.

Michael Kort 2 months ago

The cost of solar panels are dropping on a regular basis and their energy output is going up .

Mass storage of wind and solar is a problem that many are working on and answers will come .

The biggest problem is our societies' dependence on central plant and central distribution wired network thinking, which solar is challenging as it generates over any rooftop or parking space, parking lot, large building, personal home, etc..

Some companies like Walmart, Fedex, are saving tons of money already on their big building's operations thru solar .

Newer solar panels can produce pretty good outputs on cloudy days unlike the older models that didn't .

Hurricane Maria is now a cat # 3 and is supposed to go to cat # 4 and will retrace Irmas path over many islands that Irma already destroyed recently .

The coal lobbyists don't want Donald to get it and he is not displeasing them .

Louis Kannen 2 months ago

Thank God Rod Bremby had not only the intelligent common sense, but along with it, the Cojones to make the unequivocally correct call.

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