Why it still makes sense to retire coal-fired Drake

As a community-owned utility, we’re committed to providing safe, reliable and competitively priced services. And, as a non-profit organization, we don’t profit from the rates we charge to power your home or business. 

Nationally, current natural gas prices have risen to heights not seen since 2000. For example, we’ve seen a 150% increase since December 2021. As a result, City Council has approved an increase to the electric and natural gas cost adjustments. 

As natural gas prices rise, we often hear the question: Why did you decide to retire a coal-fired plant now and move to more natural gas with the high cost of gas these days? 

There are three key reasons for this change:

1.  Extensive research has shown the use of coal would be more expensive than natural gas over the long term.
   
   We use the best mix of energy sources at any given time to meet demand most efficiently. The new natural gas generation units -- which run mainly on natural gas but can also use diesel -- will be significantly less expensive to run and maintain than the coal plant. This analysis was completed as part of the 2020 Electric Integrated Resource Plan.
   
   This is driven by the operations and maintenance expenses necessary for aging coal-fired plants and ever-increasing environmental regulations. For example, the generation units inside Drake have much longer startup times (12-14 hours) when compared with the six, new modular units (less than 15 minutes).
2. The natural gas generation units put us one step closer toward achieving an 80% carbon reduction by 2030 as outlined in our Sustainable Energy Plan.  
   
   Adding more natural gas-fired generation to our portfolio will help provide the high reliability our customers expect while we await advances in utility-scale battery storage for renewable energy.
   
   The decision to decommission Drake and discontinue coal is part of meeting state and federal requirements. It was also made after an extensive 18-month public process.
3.  Even if we were still using coal, rate adjustments would be necessary.
   
   Both the existing generating units inside the Martin Drake Power Plant that will be decommissioned this year and the new six modular natural gas units being installed adjacent to Drake are peak operating units - units that only run during periods of high demand such as the hottest summer days or coldest winter days. They do not supply the day-to-day generation to our community.
   
   Coal generation from Drake was only providing about 6% of our energy last year. About half of our electric generation is fueled by natural gas. So, we would still need cost adjustments because of the significant increase in natural gas prices.

The market for natural gas continues to be volatile, and we understand increased rates comes at a difficult time. Several programs are in place to help customers, including: 

•   Customer assistance programs.
•   Flexible Payment Plans (one-time extensions and installment plans).
•   Efficiency tips and rebates.