January 08, 2024
By Mike Jaffe

Only a nuclear reactor can make Pueblo “whole” after Xcel Energy closes last coal-fired plant, local group says

After a 10-month study, a community-based committee says the only energy technology that can make up for lost jobs, taxes and economic activity is an advanced nuclear power plant

Xcel Energy’s Comanche Generating Station, shown here in a March 7, 2020, photo, is the largest power plant in Colorado. The steam-driven, coal-fueled plant, located in Pueblo, generates 1,410 megawatts of power.
 (Mike Sweeney, Special to The Colorado Sun)

PUEBLO — The only way Pueblo can be “made whole” after the closure of Xcel Energy’s massive, coal-fired Comanche Station is for the utility to replace it with an advanced nuclear power plant, according to a community-based energy committee.

“Comanche has been an economic generator for this community for a long time,” Frances Koncilja, co-chair of the committee, said Friday at a press conference. “The closure is going to have a big economic impact.”

The Pueblo Innovative Energy Committee was formed 10 months ago, with support from Xcel Energy, to look at ways to offset the losses in tax base, jobs and economic activity the 2031 closure of the Comanche 3 unit will bring.

With the shutdown of the first two Comanche units, in 2022 and 2025, tax payments to Pueblo County will have dropped by 21% and when the third unit is shuttered in 2031 tax payments will drop another 69% to $7.1 million.

Xcel Energy has committed to paying $15.9 million annually in lieu of lost taxes through 2040. This “transitional period,” the committee said in its report, “should not be wasted.”

The committee looked at a variety of energy technologies — such as compressed air energy storage, flow batteries and solar — and concluded in its report that from the standpoint of jobs and taxes the only comparable replacement was a modular nuclear plant.

“The only way we don’t feel pain is a nuke,” said Jerry Bellah, a committee member and the vice president for the International Brotherhood of Electrical Workers District 8. The committee was composed of prominent business, labor, education and civic leaders.

The recommendation, however, drew immediate criticism from environmental and clean energy advocates.

“A small handful of people are misleading Pueblo officials into pushing for an untested and outrageously expensive new nuclear reactor,” Noah Rott, a spokesman for the Sierra Club, said in an email.  “Xcel has already said that an advanced nuclear reactor cannot be built in time to replace Comanche 3 — which must close by 2031 — if it could be built at all.”

Ken Danti, chairman of the City of Pueblo Energy Commission, a group formed by the mayor to move the municipality to 100% renewable power by 2025, said that the  energy committee looking for Comanche 3 alternatives is “placing all its eggs in one basket.”

“The technology isn’t going to be available before 2040 and a lot could change before then — new innovations, new technology,” Danti said.

Robert Kenney, president of Xcel Energy’s Colorado subsidiary, welcomed the report and praised the committee, but stopped short of endorsing the idea of a nuclear reactor in Pueblo.

The utility must file an electric resource plan every four years with the Colorado Public Utilities Commission showing how much electricity it needs and how it will supply it. There is an open bidding process to meet those supplies.

Kenney said in future years Xcel Energy may be open to a nuclear plant depending on its competitiveness. “We will see what technology bidders bring forward,” he said.

Nuclear generation in use in Minnesota is not what Pueblo is talking about 

The technology the Pueblo committee is recommending is for a small modular nuclear reactor or SMR. The reactors use prefabricated components and are built in segments, each one for a set number of megawatts.

By using manufactured components and relying on a modular design the goal is for the facilities to be easier and less expensive to construct.

They are also smaller, fewer than 300 megawatts of generating capacity. By way of comparison, Xcel Energy’s traditional, boiling-water reactor in Monticello, Minnesota, is 671 megawatts.

There are no operating SMRs in the U.S. There are SMRs operating in Russia and China. Others are under construction or seeking permitting in five countries, according to the International Atomic Energy Agency.

The U.S. Department of Energy is promoting the technology saying that it has a smaller footprint making siting easier, requires less capital investment and has better security safeguards.

More than $1 billion in private investment and DOE funds have flowed into the sector, according to SMR Start, an industry trade group. Companies such as GE Hitachi and Rolls-Royce are developing reactors.

Nevertheless, critics point to the experience of Portland, Oregon-based NuScale Power Corp., which in February 2023, was the first company to receive the go-ahead from the U.S. Nuclear Regulatory Commission to build an SMR.

NuScale Power, a subsidiary of Fluor Corp., was going to build a 462-MW reactor at the Idaho National Laboratory and supply two dozen members of the Utah Associated Municipal Power Systems with electricity, but the Utah utilities pulled out after the price of the reactor jumped 75% to $9.1 billion, and the estimated price of power rose more than 50% to $89 a megawatt-hour, 

In November 2023, NuScale terminated the project. Higher interest rates and inflation leading to a rising cost of raw material, such as cement and steel, led to the rise in the project’s price tag, the company said.

An analysis by the Natural Resources Defense Council said that the $89 megawatt-hour power cost was based on the project receiving a $1.4 billion DOE subsidy. Without the federal aid the price per megawatt-hour was $100 — or four times the cost of wind or solar.

“Arguments in favor of SMRs are based on many questions as yet unanswered with data from real-world experience with this technology,” the NRDC issue paper said.

What Comanche Station looks like in the financial ledgers

Based on the Pueblo committee’s calculations it will be difficult to find a single energy project other than an SMR that will fill the void left by the Comanche Station, especially unit 3.

Comanche 3 has 77 employees, but according to a study done by Colorado State University – Pueblo, the unit provides indirect employment to 161 and induced employment to 173.

So, when direct employment, jobs associated with servicing the plant from vendors and jobs at local businesses depending on money being spent by workers, Comanche 3 is responsible for 411 jobs – with the high-paying Xcel Energy jobs a driver.

“The jobs at Comanche 3 are valuable to the community,” the IBEW’s Bellah said. “They pay their way.”

Xcel Energy is partnering with Form Energy, a maker of massive battery arrays, for a renewable energy storage project at the Comanche Generating Station in Pueblo. This rendering shows a larger Form storage project,
 but the layout in Pueblo will be similar.     (Rendering courtesy of Form Energy Inc.)

In 2021, the Comanche Station generated $31 million in taxes, with Xcel Energy paying $25 million and the two minor owners of the power plant — CORE Electric Cooperative and Holy Cross Energy — responsible for the other $6 million.

Comanche 3 accounts for $15.9 million of Xcel Energy’s tax bill, and that is the portion the utility has committed to paying until 2040.

“Relying on those continued payments in lieu of the $15.9 million in taxes without a plan as to how to replace those taxes is reckless,” the report said, adding that CORE and Holy Cross have not indicated whether they will continue their payments.

The committee analysis said that an SMR could provide 200 to 300 jobs, with salaries ranging from $60,000 to $200,000 and annual property taxes of $95 million.

A 500-MW solar facility, in comparison, would provide five to 10 jobs, with salaries ranging from $40,000 to $80,000, and property  tax revenues of $1.69 million a year. A facility burning hydrogen as a primary fuel would create 20 to 30 jobs, with salaries of $80,000 to $120,000, and taxes of $1.73 million.

“The only thing that is going to make Pueblo whole after Comanche 3 is advanced nuclear,” said Koncilja, who previously served on the state’s Public Utilities Commission, which regulates Xcel in Colorado..

That conclusion is based on the idea that one single project must replace Comanche 3, Danti, chairman of the city energy committee said. “There is a better way to generate property taxes,” he said. “Going after multiple manufacturing projects would do.”

And that, Danti said, is something the county and city can do now and not have to wait a decade while the SMR technology is being perfected.

“We don’t know if the PUC would even approve something like this,” he said.