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Tri-State to retire mine, coal units decades early

Tri-State Generation and Transmission Association Inc. will close its entire Colorado- and New Mexico-based coal-fired generation fleet decades earlier than the assets' potential end of life and will retire a coal mine in Colorado as the cooperative transitions toward a greater proportion of renewables in its energy mix.

Executives with the nonprofit cooperative said during a Jan. 9 media call that the 247-MW Escalante coal plant in Prewitt, N.M., will now close by the end of 2020, more than two decades earlier than the plant's planned end of life in 2045. Tri-State, which owns 100% of Escalante, will take a one-time impairment loss of about $282 million, which will be recovered via rates through the end of 2045, according to a document the cooperative filed with the U.S. Securities and Exchange Commission. An extra $26 million will be spent on decommissioning and other related expenses through 2022, the document said.

In Colorado, Units 2 and 3 of the Craig coal-fired station in Moffat County, Colo., will now both retire in 2030. Those units were slated to close in 2039 and 2044, respectively, Tri-State CFO Patrick Bridges said during the media call. The early retirement of Unit 1 still will occur by the end of 2025, as previously announced. While Tri-State did not list an impairment loss on the Craig units in the SEC filing, the document noted that the co-op will incur decommissioning and other related costs of about $40 million through 2032.

Escalante has 107 employees, while the Craig station employs 253 people across its three units, according to Tri-State.

The co-op also announced that it will close its Colowyo mine by 2030. The Escalante plant purchased about 602,000 tons of coal in 2019, about 24,000 tons of which came from Colowyo; the remaining tonnage came from Peabody Energy Corp.'s El Segundo mine.

El Segundo served four plants in 2019 and produced about 5.5 million tons in 2018, according to S&P Global Market Intelligence data. Colowyo, however, almost exclusively served the Craig power station in 2019, selling 1.4 million tons to the plant. The Trapper mine, which is co-owned by Tri-State and a few other entities, also primarily sold its coal to Craig in 2019, with tonnage totaling about 1.8 million.

"I can't speak for the Trapper mine as that is a jointly owned mine with a separate board of directors," Tri-State CEO Duane Highley said during the media call. "I guess I would say ... I anticipate that they will have difficulty remaining open when the market for the coal is gone."

Highley teased an upcoming press conference that will detail the co-op's plan to replace the power via the company's "responsible energy plan," which would lead to "significant reinvestment in renewables and beneficial electrification activities to support charging stations in rural areas."

While renewables now comprise about 31% of Tri-State's energy mix, Highley anticipates that figure could be "in excess of 50% by 2024, and moving beyond that as we go toward 2030."

When asked if the early retirement is on the table for coal plants in other states in which Tri-State has some ownership, Highley said Tri-State "does not have the ability to dictate when they close" as it is not the majority owner. Highley said he was not familiar with the terms of the arrangements when asked if Tri-State could pull out of those plants.

These are not the first coal units to be retired in recent Tri-State history. In September 2019, the co-op also retired the Colorado-based Nucla coal-fired station, which initially was set to be retired by the end of 2022.