Rebuilding Craig
Agreement helps carve a path forward for town long dependent on coal

by Allen Best 

Think your fingers aren’t smudged with black coal dust? Even in the Roaring Fork Valley and Boulder County, places with no smokestacks currently in use, residents still rely upon coal power. Coal has made the lives of nearly all Coloradans easier.

That’s why the recent agreement that could result in more than $70 million being paid to a city and county in northwestern Colorado deserves attention. It is the strongest evidence yet of Colorado’s commitment to a just energy transition.

In 2019, Colorado targeted dramatic reductions in greenhouse gas emissions, the first milestone being a 50% reduction in emissions by 2030. Replacing coal-burning plants with cheaper, cleaner wind and solar backstopped by natural gas was the easiest route. The state is on track to have that task nearly completed by 2028.

State legislators also adopted a just transition law in 2019 that so far remains unique to Colorado. The law declared a “moral commitment to assist the workers and communities that have powered Colorado for generations.”

Noble intention. What does it mean in practice?

Our most concrete example comes from Craig, a city of 9,000 set amid the sagebrush of the Yampa River Valley. Nearby are three coal-burning units supplied by two local coal mines. Together they deliver 43% of the property tax base for Craig and Moffat County as well as hundreds of reasonably well-paying jobs.

Other Colorado communities will also lose jobs but with lesser impact. Moffat County’s job loss will be 5.1 times that of nearby Routt County, 16.8 times the projected percentage loss in Morgan County in northeastern Colorado and 33.7 times that of Pueblo County.

Perhaps no other place in Colorado depends so much on one industry and one employer than Craig. Even ski towns, which depend greatly upon ski area operators, long ago began diversifying their economies. Crested Butte in the 1990s began having more lucrative months in summer than in winter. Differences in sales tax revenues between good and poor snow years vary, but not by all that much.

The settlement reached among Craig and Moffat County, environmental groups, and roughly a dozen others is complex, requiring a year-long negotiation. Notable is the voluntary participation of Tri-State Generation and Transmission, the operator of all three of Craig’s coal-burning units and owner of one of the mines.

In Colorado, Tri-State is second only to Xcel Energy in electrical generation, but it has a different business model. It’s a cooperative, owned by its members, 41 electrical cooperatives in Colorado and three other states. It argued that as a legal principle, it was not obligated to assist the communities where it is leaving coal behind. Arguably, that was true. Unlike Xcel Energy, no state law specifically mentions Tri-State. 

But there is little doubt that Colorado lawmakers thought utilities – and by extension you and me – had the obligation to ease the glide path for coal-dependent communities. In the end, Tri-State stepped up. It’s a two-tiered package. Four years of payments totaling $22 million will start in 2026. Tri-State also committed to paying $48 million beginning in 2028, but that money is conditional. If Tri-State reinvests in Moffat County, such as with a new natural gas plant, the tax revenue will be deducted from those payments.

There’s also a water component: an award to Moffat County for augmentation of water rights valued by the county up to $3 million.

These payments won’t make Craig economically whole. The town and its various school, fire and other taxing districts need to figure out how to reinvent their economic fabric. Improved rail to the Yampa Valley, as identified by state legislation earlier this year, could make a difference. 

What does this mean for Pueblo and Hayden, where Xcel Energy has coal-burning plants that will be retired, and at Brush, where the Pawnee plant will be converted to gas? 

Xcel Energy has already agreed to pay property taxes until 2040 on Comanche 3, the coal unit in Pueblo originally scheduled to burn coal until 2070. It is now slated to close in 2031. What else Xcel Energy may need to deliver at Pueblo and Hayden will be the subject of discussions for the next year or two. It is scheduled to deliver its thinking to state regulators by Aug. 1.

Why does this matter? This speaks to who we want to be. We can no longer afford coal. It costs more than renewables. There’s also a much greater cost, the enormous risk of climate instability. But we need to honor the coal miners and coal towns and help them move on to new careers.

Allen Best publishes Big Pivots, which chronicles the energy and water transitions in Colorado. This was drawn from a much longer analysis at BigPivots.com