Colorado Springs Utilities ratepayers: Read some accurate information regarding your company. On March 10, Springs Utilities issued a statement titled, Neumann System right decision for Drake. In response to the March 2, 2014 article in The Gazette regarding emissions control at the Martin Drake Power Plant, I want to provide the following points to clarify several inaccurate and misleading statements: The NeuStream scrubber is the correct option for Drake Power Plant to comply with emissions control requirements. * It is cheaper and more efficient than competing scrubbers; * Compared to other technologies NeuStream works best for the facilitys unique space requirements; * It has lower capital, operating and maintenance costs, and * Uses less water and power than conventional systems. The cost of the Neumann system on which the 2011 decision was made was $121 million, which includes required plant upgrades (due to inflation current total cost projections are $131 million) compared to an independent study estimate of $168 million for conventional technology (including plant upgrades). Cost estimates quoted before 2011 are not pertinent as there was no design work done and no agreement to build scrubbers at that point. Our 3-year testing process showed that the NSG system reliably removes 97 percent of sulfur dioxide from plant exhaust compared to 90 percent removal for conventional technology. In addition, an Electric Power Research Institute (EPRI) study was performed which verified the system was scalable to the level needed and provided realistic cost estimates. Early testing indicated that the NSG scrubber could also remove nitrogen oxides and carbon dioxide, but we chose to go only with SOx removal based on regulatory requirements and financial considerations. The royalties on future sales were not a factor in the decision to move forward with NeuStream. We are confident that a market exists for the scrubber, and such proceeds would always be an added benefit. Using the NSG scrubber is a sound business decision for our community even if no future sales are made. Bruce McCormick Chief Energy Services Officer Colorado Springs Utilities Recent news coverage about an emissions control project at the Drake power plant has lacked complete information, and Colorado Springs Utilities would like to share the facts about the approach we are taking to meet new EPA mandates by the end of 2017. Colorado Springs Utilities and its board selected a wet scrubber process, called NeuStream in 2011 - a technology developed by local business Neumann Systems Group (NSG). The NSG technology has been rigorously tested and is proven to control sulfur dioxide emissions. Springs Utilities recommended and the Board has supported this solution because it will allow us to meet strict federal regulations, cost less than other technologies, and accommodate the unique construction requirements of the Drake plant. A Sound Decision Colorado Springs Utilities is moving forward with construction of the NSG project. Our goal is to hire as many local contractors/vendors as possible to build the system, providing needed economic stimulus for the local economy. Changing direction at this point is not in our customers best interest. Springs Utilities has already made the majority of the required investment in the NSG project. And based upon extensive testing, we remain confident that the NSG technology remains the best approach for Drake. Facts about Drake Drake reliably generates about one-third of our electricity and is a key reason we can deliver cost effective electric service to our customers. Colorado Springs Utilities electric rates for residential and commercial customers are lower than both Xcel and Blackhills Energy in all categories. Additionally, Drake and all of our power plants meet or exceed all EPA air quality standards. Answers to frequently asked questions Answers to Frequently Asked Questions Has the price increased? The cost of the Neumann scrubber on which the 2011 decision was made was $111.8 million. When accounting for required and expected site improvements (necessary for any type of scrubber), as well as price escalation for construction and materials, the 2013 projection is $131 million. Cost estimates quoted before 2011 are not representative as there was no design work done and no agreement to build scrubbers at that point. Does it work? The 3-year testing process, verified by an independent 3rd party, demonstrated that the NSG system is capable of reliably removing 97 percent of sulfur dioxide from plant exhaust. An Electric Power Research Institute (EPRI) study was performed which verified the system was scalable to the level needed and provided realistic cost estimates. NSG system components are commonly used in a wide variety of applications, including power plants. The proprietary NSG process has been effectively used in other applications as well. Did NSG originally expect removal of all emissions? Early testing demonstrated positive results for removal of SOx, NOx, particulates and CO2, and NSG believes there is market potential for removing these substances. However, Colorado Springs Utilities purchased only SOx removal to meet regulatory compliance requirements at the lowest cost for the following key reasons: Particulate removal and mercury standards are already being met with existing emissions control equipment; NOx removal can be achieved at lower cost using other methods, so NOx was not purchased from NSG; and No regulatory mandate currently exists for CO2 removal. Has Colorado Springs Utilities benefitted from the sales of NSG to other customers? Using the NSG scrubber is a sound business decision for our community even if no future sales are made. We believe that a market exists for the scrubber, although, no other company has purchased the technology at this point. As scrubbers are sold, our agreement with the vendor allows for proceeds to benefit our customers. Why invest $131 million on an aging coal plant? While the Martin Drake site has been in operation for over 80 years, the three units currently in operation are units 5, 6 and 7, built in 1962, 1968 and 1974, respectively. The Drake power plant has been well maintained over the years to operate efficiently and reliably while meeting regulatory requirements. The units have had continuous runs exceeding 100 days several times in recent years, which is an industry benchmark of excellence. The plant complies with all EPA environmental regulations. The Drake facility provides about one third of the communitys electricity needs. Shutting the plant down would require purchasing power from for-profit utilities or spending hundreds of millions of dollars on a new power plant, which would have adverse rate impacts for our customers. The Utilities Board and our customers are currently reviewing a third-party study on decommissioning options and will make a recommendation on the future of the plant.
Posted on: Wed, 02 Apr 2014 22:48:28 +0000