Rapid City, SD-based Black Hills Corp.’s utility, Black Hills Energy-Colorado Electric, has vowed to fight a state regulatory judge’s recommendation to deny a proposal to build an 88 MW natural gas-fired peaking generation plant to replace a coal-fired plant that is mandated to close. The proposed plant is part of a multi-party settlement.
In an initial recommendation, administrative law judge (ALJ) Mana Jennings-Fader advised the Colorado Public Utilities Commission (PUC) to deny the utility’s request for a certificate of public convenience and necessity to replace the coal-fired W.N. Clark facility — as mandated by Colorado’s Clean Air-Clean Jobs Act (HB 1365) — with an LMS100 gas-fired turbine. Jennings-Fader concluded that Black Hills failed to provide sufficient proof of the need for the added generation and also did not demonstrate that it had looked at alternatives as required by Colorado’s power plant siting laws.
Last March the utility filed with the PUC for permission to build the $102 million gas-fired replacement plant in accordance with an order from state regulators approving retirement of the coal-fired generation facility in Pueblo in 2013 (see Daily GPI, March 16). The PUC action also granted the “presumption of need” for 42 MW to replace the Clark capacity, “which the utility has the right to own as granted by the Clean Air-Clean Jobs Act,” Black Hills said.
On Oct. 4 Black Hills filed a settlement agreement reached with the Colorado Office of Consumer Counsel, Board of Water Works of Pueblo, Fountain Valley Authority, Noble Energy Inc. and EnCana Oil & Gas Inc. to construct and operate the LMS100 and own 42 MW of the turbine’s output. The remaining 46 MW of capacity would be be sold to a third party, and a seven-year power purchase agreement would be executed in which Black Hills Energy would use the sold capacity to serve 94,000 customers in southern Colorado. After seven years, the utility would get full ownership of the turbine.
Jennings-Fader’s recommended decision does not include the settlement itself because that agreement assumes Black Hills would get PUC approval of the project’s need.
Black Hills has sought approval to build a third gas-fired unit at its Pueblo Airport Generation Station in Pueblo, CO. The utility would then close the W.N. Clark facility.
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