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Colorado Springs Utilities outlines steps to restore power plant, maintain rates


From the June 16, 2014 issue of Public Power Daily

Originally published June 16, 2014

Colorado Springs Utilities (CSU) of Colorado is working 24 hours a day to bring its Martin Drake Power Plant "online as soon as possible to reduce costs to customers," Interim Chief Energy Services Officer George Luke said in a letter printed in the June 9 Colorado Springs Gazette. The utility is using Drake employees, other CSU personnel and hundreds of contract workers to restore the coal-fired plant, which was damaged in a May 5 fire, he said. CSU is providing weekly updates on the project on its website

"Maintaining competitive rates is one of our primary drivers," Luke said. A recent rate adjustment in the wake of the fire is temporary, and rates will be decreased as soon as Drake units come back online, he said. "Higher short-term fuel costs are a direct result of generating and purchasing more electricity that is produced with natural gas instead of less expensive coal from Drake," he said. "If we weren’t able to pay for the additional fuel charges, beyond what we are cutting in our base rate budget, our financial stability is jeopardized, which ultimately causes higher customer rates because of higher interest rates and borrowing costs going forward."

The municipal utility is cutting costs across the organization, Luke said. "More than $15 million in significant budget reductions are targeted for 2014; a 6 percent reduction in nonfuel operation and maintenance costs." CSU also is paying a $1 million insurance deductible by deferring or eliminating expenditures. The utility is asking all customers to help reduce rates during the restoration period by using only electricity that is needed, he said.

Drake replacement power costs are estimated at $3 million per month. To recover those additional costs, the City Council approved a rate increase of 7.4 percent for residential customers and 10.5 percent to 11.2 percent (depending on usage) for commercial and industrial customers, effective June 1.

The 254-MW plant produces about one-third of the community’s power year-round and is the lowest cost resource of CSU’s generation portfolio, the utility said. 

The utility’s goal is to start generating power from one of the plant’s three units in July and then get a second unit running this fall. With these two units running, 80 percent of Drake’s energy production will be online, CSU said.
 

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