An irrigation canal in Colorado and our great national energy transition
by Allen Best
An ordinary looking irrigation canal in west-central Colorado has become a small pivot in the great national debate about what our future energy system should look like. Centralized power generation from primarily coal-fired power plants, symbolized by the giant smokestacks seen in Brush, Craig, and Pueblo, lies at one end of this debate. At the other end is small, decentralized power production from primarily renewable sources such as is proposed for the South Canal near Montrose.
The South Canal was sculpted through hardscrabble hills to deliver water imported from the Black Canyon of the Gunnison. The water irrigates 66,000 acres of farms and orchards in the Delta-Montrose area. Emerging from a tunnel, the water drops rambunctiously in several places, with electricity-generating potential that was obvious even when William Howard Taft, our most portly of presidents, visited Montrose in 1908 to dedicate the Uncompahgre Project.
Instead of developing small, local power sources, however, electrical providers in the Delta-Montrose area turned to giant new power sources: the massive new dams of the Colorado River and ever-bigger coal-fired power plants. It was a national trend. After World War II, in response to burgeoning demand, power generation became like products from Costco: big and bigger.
Challenging the paradigm
In recent years, Delta-Montrose Electric Association has challenged that paradigm. It’s among 22 electrical co-operatives in Colorado set up in the late 1930s to service primarily rural areas. Several of them along with co-ops in other states in 1952 created a wholesale provider, Tri-State Generation and Transmission. Tri-State a decade ago pushed to build another giant coal-fired power plant, this time near Holcomb, Kan. It wanted commitments to mid-century from its 44 member co-ops. Delta-Montrose along with Kit Carson Electric, a co-operative in Taos, N.M., refused. Flattening demand has, at least for now, idled plans for the giant new coal plant.
Delta-Montrose instead set out in 2008 to develop the raw power of water in the South Canal. Two turbines able to produce 7.5 megawatts of electricity have been installed. Cost of that of the electricity is relatively low, 4.5 to 5 cents per kilowatt-hour, says Jim Heneghan, renewable energy engineer for Delta-Montrose.
Then Percheron Power proposed to yoke the energy of a remaining 14-foot drop with a technological variation of the Archimedes screw. Would Delta-Montrose buy the power?
Yes, Delta-Montrose was interested, but it had a problem. It was already procuring 5 percent of its own power, the maximum that Tri-State policy allows member co-ops to produce on their own. So Delta-Montrose appealed to the Federal Energy Regulatory Commission, an agency with broad powers in the byzantine world of energy regulation. Delta-Montrose argued that a 1978 federal law trumped Tri-State’s so-called all-requirements contract. FERC agreed. “We find that Delta-Montrose is obligated to purchase power” from the independent provider, FERC declared in June.
How about Tri-State’s 43 other members? In mid-October, FERC indicated the ruling applies to the other distribution co-operatives. Some think it may apply to yet others among the nation’s 840 electrical co-ops. Much depends upon whether individual co-ops choose to take advantage of the opportunity.
The FERC decision can be seen in tandem with other Colorado news of late: the debate about net-metering and Boulder’s goal of accelerating innovation and energy transformation by getting a divorce from Xcel Energy.
Even without carbon-reduction goals, market forces have been changing the energy landscape. “The cost of local generation from renewables is rapidly declining while the cost of electricity from traditional sources continues its steady rise,” says John Covert, who has worked to foster innovation of business models in the San Luis Valley.
Biomass developer J.R. Ford predicts the FERC decision will “embolden other projects.” Ford proposes a biomass plant that would produce up to 3.4 megawatts of electricity to customers of Durango-based La Plata Energy. He would achieve this by burning wood drawn from within a 50-mile radius of Pagosa Springs. In addition to electricity, he is providing a market for removal of forest debris, thereby dampening wildfire potential. That local environmental benefit needs to be part of the power calculation, he argues.
The ruling could also yield another environmental benefit. Tom Vessels, who began producing electricity several years ago from methane emitted by a coal mine near Paonia. With the proper price incentives, he says, the three megawatts of production could be expanded to 10 megawatts—with a corresponding reduction in the powerful heat-trapping greenhouse gas.
1978 law at center of case
The pivot for this decision is the Public Utility Regulatory Policy Act, a law passed by Congress in 1978 in response to the oil shortages. PURPA intended to encourage a shift from petroleum to coal, nuclear and also renewables. The law, explains Karl Kumli, an energy law attorney in Boulder who represented Percheron, addressed the needs of small-energy developers who faced tall barriers to market entry.
“What’s really interesting is that we’re now seeing a second driver for PURPA,” says Kumli. “The original driver was energy independence, and for this generation of developers, I believe that the underlying motivation is renewable energy to address climate change.”
FERC’s ruling doesn’t give renewable energy developers carte blanche. Costs must be reasonably close to what the local co-op pays Tri-State. But there’s more latitude.
In Montrose, local electrical generation has been framed like a chamber of commerce shop-local campaign. Keep the dollars at home, goes the argument. The co-op estimates that the hydro generation keeps $2 million in the local economy that would otherwise be paid to Westminster-based Tri-State.
It’s also an issue of economic equity, says Ed Marston, who, until earlier this year, burned coal to heat his home near Paonia. “There’s no way that Craig can live off Delta and Montrose counties forever,” says Marston, a former member of the Delta-Montrose board of directors. “We raise our own food, and we would like to raise our own electricity.”
Tri-State is majority owner of the Craig Generating Station, a behemoth of power production in Colorado, second only to Pueblo’s Comanche complex. Craig can generate 1,339 megawatts of electricity year round, compared to Percheron’s proposed 990 kilowatts on South Canal for just half the year.
Centralized power sources will continue to provide the bulk of our electricity, says Delta-Montrose’s Heneghan. Over time, though, local solar, hydro and other sources will become collectively more important. One wild card, he says, is whether affordable battery storage, such as auto manufacturer Tesla seeks to provide, becomes viable.
This sounds distant. But when Craig coal plants were completed in 1984, few people had computers or cell phones, let alone a smart phone. Change sometimes occurs slowly—and then in a rush.
This essay/report was originally published in the Oct. 25 issue of The Denver Post and, in different form, in the e-magazine of Mountain Town News distributed to subscribers in August. Subscriptions are $45 a year.