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Tri-State to close Escalante coal plant

Copyright © 2020 Albuquerque Journal

Tri-State Generation and Transmission Association will shut down its 253 megawatt coal-fired generating station near Grants by the end of 2020 as part of the wholesale electric supplier’s efforts to transition to a clean energy grid over the next decade, according to a Thursday announcement.

The closure will eliminate 107 jobs at the plant, and potentially scores more at a nearby coal mine that supplies fuel for the generating station.

The association has run the Escalante plant in Prewitt since 2000, after it merged with Plains Electric Generation and Transmission Cooperative, which constructed and opened the plant in 1984. Escalante was built to operate through 2045, but Tri-State is closing it 25 years early as part of a broad plan to eliminate all the association’s coal-fired generation in New Mexico and Colorado to meet new regulations in both states that mandate a transition to a carbon-free grid.

Apart from Escalante, the association also announced plans Thursday to completely shut all operations by 2030 at the Craig Station in Colorado, a 1,285 MW coal plant that Tri-State operates to supply electricity to its member cooperatives, and to other utilities that co-own two of the Craig plant’s three generating units.

Tri-State is a wholesale association that sells electricity to 43 distribution cooperatives in four states, including 11 in New Mexico.

The association informed employees at Escalante and Craig of the shutdown plans Thursday morning.

“We understand it’s a shock for our employees,” said Tri-State CEO Duane Highley in a conference call with reporters Thursday afternoon. “We will work with them and the local communities where they work to help minimize the negative impacts.”

Tri-State said employees will receive “generous” severance packages, opportunities to apply for vacancies at other Tri-State facilities, supplemental funding for health benefits, and educational and financial planning assistance.

The association will also provide $5 million in local community support in New Mexico, Highley told reporters. The association has been working with Gov. Michelle Lujan Grisham’s office and with state legislators to collaborate on assistance programs and retraining for workers, he said.

“We hope the state will provide matching funds as well,” Highley told reporters.

Workforce Solutions Cabinet Secretary Bill McCamley said his office will meet with local officials and workers next week to assess needs and ways the state can help.

“The governor cares deeply about an economy that works for everyone, and that means we have to do everything in our power to help the workers and communities affected by this closure,” McCamley said in a prepared statement.

Energy, Minerals and Natural Resources Department Secretary Sarah Cottrell Propst said the government will work with Tri-State to help locate renewable generation facilities that replace Escalante in the affected communities, if possible, to offset some of the economic impacts there.

Apart from 107 employees at the Escalante plant, it’s unclear how many workers could lose their jobs at the nearby coal mine, which is run by Peabody Coal Co. But Robert Castillo, CEO of Continental Divide Electric Cooperative in Grants, said mine layoffs will likely double the impact.

“The mine will lay people off as well, I was told to the tune of about 100 people,” Castillo told the Journal. “We don’t have concrete numbers, but the projections are devastating.”

The impact will be felt throughout the state’s northwestern region, since it comes on top of the partial shutdown of the coal-fired Four Corners Power Plant near Farmington and current efforts to completely close the nearby San Juan Generating Station, Castillo said.

“The problem is much broader, because it’s not just the Grants area,” Castillo said. “We’re talking about the whole northwest quadrant of New Mexico with the Four Corners plant, San Juan, and now Escalante. The whole area is going to be in bad shape.”

Castillo, who is also a board member of the Cibola Communities Economic Development Foundation, said local leaders want to work with state government to recruit more industry to the area. That’s critical for economic development assistance to have an impact, since retraining workers is only effective if alternative jobs are available.

“If you retrain those people and there’s no other industry here, you’re essentially just training them to leave the area,” Castillo said.

Tri-State said closing Escalante will help the association meet New Mexico’s new Energy Transition Act, which requires state electric cooperatives to derive 50% of their electricity from renewable resources by 2030, and from 100% renewable and carbon-free generation by 2050.

Tri-State expects to meet the 50% renewable milestone by 2024, six years in advance of the 2030 deadline. Currently, about 30% of its electricity comes from renewables.

Rapidly declining prices for solar and wind generation will greatly offset the costs of shutting down coal operations, allowing Tri-State to maintain moderate prices – and possibly even lower its rates – for member cooperatives going forward, Highley said.

“We have new requests for proposals for additional renewable resources and the costs are coming in at such low rates that it allows us to save money even while accelerating the write-off of coal assets,” Highley said.

Tri-State will make announcements about replacement resources next week.

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