In a much-anticipated report, an energy consulting firm is recommending that City Water, Light and Power retire three of its four coal-fired power generators “as soon as feasible” while offering the utility a roadmap to a less coal-dependent future.

The Energy Authority (TEA), which was retained by the city last year to map out a plan for the utility’s power generation for the next 20 years, released the 84-page “integrated resource plan” on Monday and gave a presentation to members of the Springfield City Council.

The firm recommended that CWLP retire Dallman units 1, 2 and 3 by as early as 2020 after finding that “no scenario economically retained these units.”

The results are not much of a surprise given the age of the units and the current state of the energy market, which has been upended by the rise of natural gas and the increasing affordability of renewable energy. For coal-dependent utilities like CWLP, it has not been easy to keep up.

“One of the things that we've been saying for quite some time is that coal-fired units basically can't compete very well in the market, they're not competitive in the current market,” said CWLP chief utility engineer Doug Brown. “So this report basically confirms all of that."

Dallman 1 and 2, which have been in service since 1968 and 1972 respectively, only combine to generate about 19 percent of the CWLP’s total power and “are not needed for capacity,” the report states. And while Dallman 3, in service since 1978, provides needed capacity, TEA concluded replacing it is much more economical than the $210 million that would have to be spent over the next 20 years to maintain it.

Yet at the same time, the report recommends maintaining the 10-year-old Dallman 4 unit “until at least the next IRP cycle begins in three to five years,” labeling it the more risk-averse option than getting rid of coal completely.

The firm identified several scenarios where Dallman 4 should be retired, with much of it riding on the price of coal. But, given that a replacement gas plant would cost about $120 million, the report recommended postponing the plant’s retirement for now instead of committing to technology that may be obsolete in a few years.

“What we see is that the long-term viability of Dallman 4 is a function of CWLP's ability to negotiate favorable coal contracts now and out into the future,” said Kevin Galke, manager of portfolio analytics for TEA.

But the long-term picture the report painted was clear: renewable energy is the future.

The report recommends issuing requests for proposals to meet the energy needs that arise from retiring coal-based power units. While the firm said CWLP could look at non-renewable power purchasing agreements, the majority of lower-cost PPAs are backed by renewable energy.

“So now what we're seeing increasingly across the utility-planning process is that renewables are no longer just a social conscience play, they are an economic piece of energy portfolios in the utility space,” Galke said.

According to Galke, the cost of solar energy has declined 88 percent since 2009, while the cost of wind energy has declined 69 percent.

Additionally, the firm recommends constructing a two-megawatt solar facility that would be eligible to receive funding from the Future Energy Jobs Act program, to fund existing energy efficiency programs and to maintain peaking units.

If CWLP follows TEA's recommendations, renewables would account for 53 percent of the power generated in 2031.

While CWLP ratepayers have been burned in the past by renewable energy, Brown believes people will be open to the concept given how much more affordable it is than just a few years ago.

"Prices are dropping," Brown said. "So I think if we can show that renewables are just as cheap as purchasing regular power on the market, then they'll be more inclined to take on those renewable contracts."

City officials, however, emphasized the report was full of recommendations and not necessarily what the utility will ultimately pursue.

CWLP is planning to accept public comment on the recommendations and will hold an open house from 5-7 p.m. May 20 at Lincoln Library before eventually settling on an action plan.

Whatever that plan ends up being, Brown said there will definitely be a diversification of the utility's energy portfolio.

"It's really good to have a diverse portfolio, too, because that helps you manage risk in the market," Brown said. "We're really heavily coal-dependent now, so that's going to change obviously. That's going to help us be more diversified going forward."



Ward 1 Ald. Chuck Redpath, who chairs the city council's Public Utilities Committee, said he has not had a chance to read the full report yet, but said the findings outlined in the group's presentation weren't "much of a surprise."

“This is an informational meeting for us, so it gives us ideas on how we can make our utility viable and how we're going to proceed in the future,” Redpath said. “Honestly, I believe that we're going to come up with a decent plan. We got a lot of things to consider, not just shutting down the utility, but how we're going to transition our employees and make sure that they're taken care of?”

Contact Brenden Moore: 788-1526, brenden.moore@sj-r.com, twitter.com/brendenmoore13.





