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Part owner of troubled Comanche 3 power plant wants money back from Xcel Energy

  • Oct 2, 2022
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Source: 
Gazette

Oct. 2—A part owner of the troubled and soon-to-be decommissioned Comanche Power Station Unit 3 near Pueblo wants its money back.

CORE Electrical Cooperative delivered a notice Sept. 6 to the Public Service Company of Colorado (PSCo), Xcel Energy's Colorado branch, withdrawing from its partial ownership of the facility and demanding a refund of its 25 1/3 % ownership share. CORE, formerly the Intermountain Rural Electric Association, rebranded in 2021.

This action comes after PSCo's alleged failure to cure what CORE says is a default on the Comanche 3 contract within the required 180 days.

"We have an obligation to our members to protect their interests. As the mismanagement of Comanche Unit 3 continues, it is clear that we must take this step to withdraw non-operational ownership," CORE CEO Jeff Baudier said in a statement to The Denver Gazette.

CORE, Colorado's largest member-owned non-profit electric distribution cooperative, serves more than 165,000 customers in 11 counties east, west and south of Denver. The company filed a lawsuit in September 2021 alleging breach of contract, including claims of "systemic failures by PSCo to prudently operate Comanche 3 since it came online in 2010."

The $1.3 billion plant was supposed to operate for at least 60 years, but has been offline for more than 700 days since 2010, according to CORE.

CORE paid approximately $366 million for its ownership interest in Comanche 3 in April 2005.

The plant has a long history of unexpected repairs dating back to 2010, when it first went online.

Three recent major failures, in 2020, 2021 and 2022, ended up costing and additional $36.4 million, according to estimates in Colorado Public Utilities Commission reports.

Comanche 3 has the worst reliability of all of PSCo's Colorado generating fleet, according to the PUC reports.

Only 27% of the outage days were for planned maintenance.

The CORE lawsuit details an alleged history of poor operating practices, errors in operating the system and "inadequate and slipshod training and supervision."

A 2020 incident, the suit claims, was partly caused by contamination of the purified water used to produce steam that turns the turbine.

The plant's system uses "supercritical" steam at very high pressure and impurities in the water can cause damage to the turbine blades.

According to the Colorado Public Utilities Commission staff report, issued March 1, 2021, improper control of water purity and other maintenance errors eventually caused turbine blades to break, resulting in considerable damage.

The cost of repairing that damage, according to the report, includes $6.4 million in repairs and replacement power costs for the 141-day outage.

CORE alleges PSCo didn't make an insurance claim to cover the costs of the blade failure "to avoid disclosing that the damage was caused by PSCo's imprudent utility practices," according to the lawsuit. That, in turn, ended up costing CORE's members more.

On June 2, 2020, as operators began restarting the generator after the turbine repairs, a lubricating oil valve being operated by a PSCo employee shut off oil to the turbine's bearings, again causing substantial damage and requiring another 213 days to repair, at a cost of more than $20 million plus $14 million in replacement power costs.

On Jan. 28, an incident occurred when repairs to a high-voltage circuit breaker caused an electrical surge in the generator itself, causing damage to the generator's rotor. That required replacement of a special non-magnetic retaining ring that had to be forged in Germany, according to the lawsuit. The generator did not return to service until June 16, partially due to supply chain issues.

Michelle Aguayo, a spokesperson for Xcel Energy told The Denver Gazette in March that insurance will pay for those repairs and Xcel will "absorb the incremental replacement power costs." That means ratepayers will not have to bear the burden of Xcel having to buy more expensive power during the latest outage.

The Colorado Public Utilities Commission approved a settlement agreement in March that allows Xcel Energy to impose an additional $182.3 million on its customers, amounting to a 6.44% increase, or an average of $5.24 per month for residential customers and a 6.24%, or $6.64 per-month increase for the average commercial customer. The increases started April 1.

That's on top of a rate increase for the February 2021 freeze.

CORE said it has spent "upward of $100 million in additional maintenance and repair costs as well as replacement power costs" on the Comanche 3 unit, according to the lawsuit.

During this series of breakdowns, the Colorado General Assembly passed new environmental regulations as part of Gov. Jared Polis' "Greenhouse Gas Road Map" designed to reach net-zero carbon emissions by 2050.

Xcel set a target of an 87% reduction by 2030 in its Clean Power Plan before the PUC.

One of the carbon emission reduction plans proposed by PSCo was accelerating the shut down and decommissioning of the Comanche 3 unit from 2035 to 2031.

Part of the fallout of decommissioning the plant years ahead of schedule is that, according to its 2021 electrical plan, PSCo's customers may be on the hook for the estimated $732 million to dispose of and pay off the remaining construction costs.

CORE says PSCo doesn't have to shut down the plant in order to meet its statutory emissions goals.

"Public Service Company's filing in its 2021 Electric Resource Plan and Clean Energy Plan ... confirms that the retirement of Comanche 3 is not necessary for PSCo to meet its statutory emissions reduction target by 2030," said Amber King, communications manager at CORE. "The reality is that Comanche 3 has been so badly operated and maintained that it is no longer a reliable source of electric production. While CORE cannot comment on PSCo's motivations, the alleged environmental compliance in this instance disguises the early retirement of an asset that has been badly damaged."

PSCo tried to keep the detailed reports on the breakdowns secret when it responded to the PUC investigation, but CORE petitioned the court as part of its lawsuit to open the records to the public. On Nov. 16, Denver District Court Judge Shelley Gilman ruled the records be made public.

"We disagree with CORE's claims and expect to address them through the legal process," Aguayo said in an emailed statement Thursday. "Generation at Comanche 3 is important for all customers, and we value all our partners who help provide safe, reliable and affordable energy."

She also noted that Comanche Units 1 and 2 are operating, and that Comanche 1, will retire by the end of 2022 and Comanche 2 will retire in 2025.

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(c)2022 The Gazette (Colorado Springs, Colo.)

Visit The Gazette (Colorado Springs, Colo.) at www.gazette.com

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