Editor’s note: This story has been updated to clarify details about the timeline for Colorado Springs Utilities’ renewable energy projects and the power purchase agreement for a solar power facility.
Colorado Springs Utilities is seeking alternative paths from the state as rising costs and logistics will keep the agency from meeting the state’s timeline for renewable energy changes.
Colorado’s energy providers have been working to meet the greenhouse gas reduction goals set by Gov. Jared Polis and state lawmakers in 2021. The statewide goals call for an 80% reduction in greenhouse gas emissions from power by 2030 and to have all the state’s power come from renewable sources by 2050.
Utilities CEO Travas Deal said the city-owned utility is slowing the acceptance of new energy projects in an attempt to manage the costs to Colorado Springs residents. Deal said the utility will not move forward with a series of requested projects that have been in the works since 2023 because of the increased cost estimates.
“We can’t sign these long-term contracts. Those are not in the best interest of the Colorado Springs Utilities customers right now. Those are too costly, so what other options do we have in collaboration with the state?” Deal said.
Utilities had achieved a 44% reduction in emissions between 2005 and the end of 2024, and Deal said it would continue to expand its renewable energy options. The closure of the Martin Drake Power Plant and the eventual transition of the Ray Nixon Power Plant away from coal are efforts to show the utility’s compliance with state goals.
The utility issued requests for proposals in June 2023 to pursue a fleet of clean energy projects that would help meet the state energy goals. It asked for proposals that would generate up to 1,500 megawatts of energy from solar, wind and natural gas or store up to 100 megawatts of power for the city’s system.
The projects that have come in over the past six months have carried price tags up to 75% higher than what Deal had originally expected. Supply chain issues had significantly driven up costs for wind turbines and prices across the board were higher because of the increased demand for renewable projects in Colorado and across the country.
“We can’t put all the environmental issues ahead of reliability or cost. We have to find a balance to that,” Deal said.
Utilities spokesman Steve Berry said the other issue with the recent proposals was the timeline for construction. The suggested projects had a multi-year timeline to be brought online instead of returns in the next year or two, which Berry said would not have worked with the 2030 timeline.
Deal said he presented the state “a lot of options, an a la carte of options” for alternative timelines or approaches in the last few months. He said he hoped to receive some direction from Polis’ office by the end of June about what the alternative approaches to the renewable energy goals would look like, which would help Utilities determine its 2026 budget.
“We want a preferred direction from them so we know what our purviews and our parameters are, what they would be comfortable with and what they would not be comfortable with,” Berry said.
Colorado Energy Office spokesperson Ari Rosenblum told The Gazette that utilities in Colorado overall are on track to exceed the 80% reduction target by adding more wind and solar power.
“This is a legislative requirement and the Colorado Energy Office has not been involved in negotiations with any utilities to exempt them from these requirements,” Rosenblum said via email.
Deal argued that the cost impacts of new energy projects would hit Colorado Springs Utilities harder than other major power providers in Colorado. Companies like Xcel Energy can spread the cost of new projects across a broader base of customers than the municipal utility.
Xcel also operates in eight states, which Deal said meant it has already built broader infrastructure to bring in power supplies between states. Colorado Springs Utilities, on the other hand, is a local utility that has historically generated all of its power from within El Paso County.
“All of our generators were close. Now energy is coming from a lot further away and you still need the wires to get it here. For us to build all our own transmissions across the country isn’t economically feasible,” Deal said.
Utilities joined the Southwest Power Pool in 2021 to begin working and connecting to renewable energy providers across the country. The membership will not be finalized to make the power connections official until 2026.
Leaving the requests for new projects unfilled does not affect the current Utilities budget. Deal and staff said the cost of projects approved through the RFPs would be enacted by quarterly cost adjustments to the price of electricity. No budget was set for capital construction or operations of the proposals that have not been accepted.
One upcoming project that would have tied into the proposals was a transmission line extension that would have connected to a potential facility in eastern Colorado. Berry said the budget for that line extension would be reassigned to create lines in partnership with other agencies.
When Utilities staff presented the department’s annual budget and a new five-year rate plan to the Colorado Springs City Council in November, the agency included major renewable energy projects as part of its request for a budget increase. The council approved a 21% budget increase for the agency in 2025.
Utilities has one renewable energy project in the works to sign a power purchase agreement with a solar panel facility and create solar battery storage. Deal said the agency would continue launching new renewable energy projects if the cost and their impact on the city’s overall energy portfolio made sense.
A longer-term option for new clean energy in Colorado Springs could be nuclear power. A bill moving through the legislature would officially declare nuclear power as clean energy in Colorado, opening the door for nuclear plants to serve as an option to reduce emissions.
On Wednesday, the Colorado Springs Utilities Board of Directors approved a plan presented by the Utilities Policy Advisory Committee about the feasibility of nuclear power for the city. The committee will launch a more detailed review in the next two years of adding small modular reactors to the city, including looking at possible locations on Utilities land and opening a new request for proposals to bring in a nuclear consultant.
“Small modular reactors are the technology of the future and I think by choosing to go down this road, I think this is the future to get cleaner energy,” Utility Board member Randy Helms said Wednesday.