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Colorado Challenges Department of Energy's Unlawful 202(c) Order Requiring Craig Unit 1 Coal Plant to Stay Open

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DENVER ~ On Wednesday, the State of Colorado took a stand against the U.S. Department of Energy's 202(c) order to keep the Craig Unit 1 coal plant operational. The plant, which was originally scheduled for retirement on December 31, 2025, had been deemed inoperable due to damage. The decision to keep it open would require extensive costs without any improvement in grid electric reliability.

According to the Federal Power Act, the Department of Energy has limited authority to take action during energy emergencies. However, Colorado does not currently have an energy emergency. In fact, the state and the rest of the region have some of the most reliable power systems in the country. The North American Electric Reliability Corporation has found no elevated reliability risks in the Rocky Mountain region in both the short-term and long-term.

Governor Jared Polis expressed his concerns about this decision, stating that it would result in unnecessary costs for Colorado ratepayers. He also mentioned that it would create uncertainty for employees and delay investments in new and lower-cost energy projects that were previously planned.

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The closure of Craig Unit 1 was part of a well-thought-out planning process that concluded it would be more cost-effective to replace aging, unreliable, and expensive coal generation with proven local power generation. This would not only create jobs but also invest in Colorado communities while lowering and stabilizing energy costs for consumers. While there is no exact estimate on how much it will cost to continue operating the plant, experts believe it could be around $85 million per year.

Will Toor, Executive Director of the Colorado Energy Office, expressed his concerns about this order as well. He stated that it would take money out of Colorado ratepayers' pockets and have a particularly harmful impact on rural communities across the West who may be forced to absorb unnecessary excess costs to keep this plant operational. Toor also criticized the Trump administration's decision as "Soviet-style central planning" driven by ideology rather than the realities of the electric grid, which could result in dirtier air and higher electric rates in the state.

This order goes against Colorado's orderly and measured process to ensure a stable energy grid. The state's regulations require all investor-owned retail electric utilities and wholesale electric generation and transmission cooperatives to file an electric resource plan (ERP) with the Public Utilities Commission (PUC) every four years. These plans must include multiple electric demand and energy forecasts, evaluation of existing resources, assessment of planning reserve margins, contingency plans for additional resources, and a competitive solicitation to evaluate cost-effective resources.

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The planning process also includes a reserve margin to meet a 0.1 days per year loss of load expectation standard. Utilities can propose additional generation during this planning period if necessary. However, these plans must meet availability and dispatchability criteria. The entire process is transparent and involves extensive intervener input before a final decision is made by the PUC. In cases where generation needs arise outside of the normal ERP cycle, interim ERPs and applications for certificates of public convenience and necessity can be filed to address those needs.

In conclusion, Colorado's state planning process is thorough, transparent, and involves expert analysis of grid conditions and ratepayer impacts. It is unlikely that the federal government has the same level of visibility into the state's grid or resource needs as the state planning process does. The appeal filed by Colorado is an effort to protect its ratepayers from unnecessary costs while ensuring a stable energy grid for its citizens.

Filed Under: Government, State
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