Current Direction of Energy Policy and the Energy Market in Colorado

While Colorado seems to have relatively high success in energy production and efficiency, this is not represented to ratepayers in Colorado. According to Michael Sandoval, an energy policy analysist in Denver, “Across all sectors of Colorado the cost of electricity has skyrocketed more than 67 percent between 2001 and 2014, easily exceeding median income growth and the expected rate of inflation for the same period”. The cost of electricity is going up in Colorado, which is not only being pushed onto residential ratepayers, but also industry ratepayers. Increasing electricity and energy costs means that the price of living goes up in that particular region without any particular rise in standard of living. According to Citizens Advice, a network of policy workers and charities in the United Kingdom, increasing prices in energy has grave impacts on “people’s ability to maintain a decent standard of living”.

Furthermore, according to the Colorado Energy Office (CEO), “Colorado is a leader in renewable energy, with investments in wind, solar, biomass, geothermal, small hydroelectric, and other renewable energy resources increasing over the last decade”. The Colorado Energy Office, which is the direct advisor to the governor and state policy makers on energy policy, has the vision to “help Coloradans live more prosperous and healthy lives by promoting innovative energy production and efficient energy consumption practices that are beneficial to the economic and environmental health of the state”.

However, the Colorado Energy Office lists nuclear energy as traditional energy, and not a renewable or clean energy, thus disqualifying it from various state and federal programs and subsidies. The Governor of Colorado, John Hickenlooper, makes many comments and actions in promoting different energy sources and energy policy within Colorado. In August of 2016, when introducing new orders for carbon emission reduction he said “the one thing that we have to accept as a state and a country is that we are going to continue to move toward cleaner energy”. In a Denver Post opinion piece, he says that Colorado, in the spirit of the Obama Administration’s energy agenda, needs to have a diverse and various energy production market, which would include oil, gas, wind, and solar, but makes absolutely no mention of nuclear energy.

Colorado’s current energy focus as of March 2017 has been largely to increase wind and solar farms. One of the largest projects focused on has been Xcel Energy’s Rush Creek Wind Farm. The project consists of a wind farm that has a top capacity of 600 megawatts and a 90 mile transmission line to move the generated electricity. The project will take up about 95,000 acres and cost around $1.1 billion. Xcel plans on being heavily subsidized through production tax credits from the federal government under the Obama Administration’s Omnibus Appropriations Act.

Nuclear Energy: Why Does Colorado Have None?

With the first nuclear reactor, Tennessee Valley Authority’s Bar Unit 2, being connected to the grid on June 3rd since 1996, nuclear energy may be making a comeback. According to the Colorado Department of Natural Resources in 2006, the US produced more than 60% of the world’s nuclear energy production with 103 nuclear reactors, all of which were created before 1996. Compared with all other forms of energy sources (fossil fuels and renewables), nuclear energy sources makes up 20% of electricity generation in the United States.

With Colorado ranked 6th in natural gas production and 7th in total energy production, it would be expected that Colorado would be one of the leaders in nuclear energy production, especially with it being emission-free in production. However, Colorado falls completely flat on this expectation, as it currently does not have any nuclear power plants. Colorado is one of twenty states that does not have a nuclear power plant.

This hasn’t always been the case. Colorado use to have a nuclear power plant, named Fort St. Vrain, near Platteville, Colorado which was built by General Atomics Company and owned by the Public Service Company. The station began construction in 1968, and started generating electricity for the grid in 1976. The station was an early prototype of a high temperature, gas cooled reactor (HTGR). It was the first commercial reactor for electricity to use this gas cooling method, and one of four early HTGRs that used a thorium fuel cycle. All four that used this method have been shut down. According to Tony Kindelspire, writer for the Boulder Daily Camera, “problems plagued the plant from the start.” The plant was shut down in 1989, and has since been made into a natural gas plant.

So why doesn’t Colorado have a nuclear power plant now? In the United States, nuclear power is regulated by the Nuclear Regulatory Commission (NRC), but under the Agreement State Program, which Colorado is one of them, the NRC will relinquish portions of its regulatory jurisdictions to the state. However, a lot of regulatory power is still retained by the NRC. According to the National Conference of State Legislators, Colorado is not one of fifteen states that has regulations or laws against nuclear energy development or production. So it must not be regulatory barriers holding back Colorado’s nuclear potential.

This must mean it is just not economically feasible to create such energy in Colorado. Perhaps it is that the market currently does not favor this kind of production naturally, and energy producers should look elsewhere for energy production.

Nuclear power plants are actually pretty expensive to build. According to the Union of Concerned Scientists, costs rose from 2002 to 2008 from between $2-$4 billion to around $9 billion. However, the cost for the new Bar Unit 2 reactor was at $4.9 billion, and expects to add 1,150 megawatts to its grid. Compare this to the Rush Creek Wind Farm proposed to be built in eastern Colorado which costs $1 billion dollars, plus an additional $443 million accumulated from taxpayers from Production Tax Credits (PTC), and can only produce 600 megawatts if winds were blowing at exactly the correct speeds for 24 hours a day.

While the power plants might be quite expensive to build, the use of nuclear power plants to generate power is relatively cheap. According to the Nuclear Energy Institute, “in 2015, the average total generating cost for nuclear energy was $35.50 per megawatt-hour.” Furthermore, if the plant had more generating units per plant the price could get considerably lower. Compare this to wind energy, which has a generating cost around $40 per megawatt-hour, nuclear energy has cheaper generating costs.

Below is a graph provided by Energy Information Administration comparing the generating cost of different energy sources. Take note that the numbers represented are millions per kilowatt-hour, the hydro-electric category consists of both conventional hydroelectric and pumping storage, and the gas-turbine section is a conglomeration of gas turbines, internal combustion, wind, and photovoltaic. The cost is a total of fuel cost, operation cost, and maintenance cost. The full graph can be found here.

EIATotalGeneration cost

 

If it is the case that nuclear energy is simply too expensive to be a feasible method of producing electricity then so be it. However, it is evident that markets in Colorado are currently unfairly favoring wind and solar energy through subsidies and tax credits. Thus making it unclear if nuclear energy is truly unfavorable in the current market or is just being crowed out by government intrusions on the market. Perhaps skewed markets are the reason we do not see any nuclear power in Colorado. It is a question worth addressing.