By KEVIN WALKER
Michigan Correspondent

DENVER, Colo. — A teleconference last week made up of a financial services firm, an environmentalist, a renewable energy advocate and energy association officials highlighted a report that stresses the problems of expanding coal energy.

The report, Tri-State’s coal plans come with significant financial risks, was made available just after the conference. It argues that Tri-State Generation and Transmission’s plans to expand its portfolio of coal-powered plants is not sustainable and will end up being expensive for consumers. The report emphasizes that a new Democratic administration in Washington will seek to enact a “carbon-constrained” energy system.

“Consensus within the utility industry indicates that federal legislation on climate change is impending. President-elect Barack Obama has pledged to implement an economy-wide, cap-and-trade program to reduce greenhouse gas emissions by 80 percent by 2050,” the report states.

Tri-State would like to add a coal-powered plant in Kansas and is seeking financing to expand its service capacity in the states that it serves now. Democrat Gov. Kathleen Sebelius recently vetoed a bill in Kansas that would have allowed two new coal-generating units in that state, one of which would be owned by Tri-State. The company currently serves 1.4 million customers in Colorado, Nebraska, New Mexico and Wyoming.

“This doesn’t bode well for the four-state region, particularly in those rural parts of the states that are being hit the hardest from the current economic crisis,” said Eric Kane, a senior analyst at Innovest and the report’s author.

“All the economic indicators are telling us that diversifying our energy portfolios with alternatives to coal is the best way to hedge against these future risks.”

The argument the authors make in the report is that a federal cap-and-trade system under an Obama administration will make it too expensive to expand coal generating capacity, at least for Tri-State, which gets most of its capacity from coal.

“Given Tri-State’s position as a consumer owned electricity supplier, its ratepayers would bear the burden of these potential future carbon costs,” the report states.

Theodore Spencer, an analyst with the Natural Resources Defense Council, was at the conference and echoed these sentiments.
“Tri-State’s plans don’t bode well from a regulatory point of view,” Spencer said. “There is a legal wave rising with regard to CO2 emissions. EPA will be able to regulate those emissions right away.”
Jim VanSomeren, a spokesman for Tri-State, objected to the study’s conclusions.

“Tri-State continuously looks at all risks, including potential regulatory and financial risks associated with carbon regulation, as we evaluate new resources,” VanSomeren said in a separate interview. “We look at all resource options and their associated risks and costs, and we also look at the risk of not having enough energy to meet growing demands.”

Dan McClendon, general manager of the Delta-Montrose Electric Assoc., a member of the Tri-State cooperative, was also at the teleconference. When asked by a reporter why the company would do such a risky, “stupid” thing as to expand its coal capacity, McClendon said that he thought Tri-State officials don’t really know what else to do and that this is what they’ve always done. Yet McClendon had praise for the company, too, which boasts a network of 44 electricity cooperatives.

“They’ve done a great job for many years,” McClendon said. “They have an obligation to their members to provide their power.”