(The Center Square) – A $9.7 billion federal government program will enable a nonprofit wholesale electric cooperative to close a unit at a coal-powered plant in Colorado.

Tri-State Generation and Transmission Association, a network of 42 electric distribution cooperatives and public power districts in four states, announced the closure of Colorado’s Craig Station Unit 3 by January 1, 2028. Tri-State also announced closure of a unit at the Springerville Station in Arizona September 15, 2031.

Tri-state previously announced two other units at Craig Station will close by September 30, 2028. 

The association’s 2023 Electric Resource Plan, filed with the Colorado Public Utilities Commission, incorporates federal money to accelerate reductions of emissions and an 89 percent reduction in greenhouse gas emissions in the state by 2030. The funds will be allocated through the Inflation Reduction Act and channeled through the U.S. Department of Agriculture’s Empowering Rural America program.

“Our ambitious plan, with federal funding, can accelerate clean energy investment and significant greenhouse gas emissions reductions at a lower cost than alternative scenarios, all while exceeding both industry-standard and heightened extreme weather reliability criteria,” Duane Highley, chief executive officer of Tri-State, said in a statement.

The utility projects it will reduce costs to its members by $1.8 billion through 2043 under the plan.

“If they do get that money, it will certainly help reduce costs for this transition,” Jake Fogleman, an analyst in energy and environmental policy with the Independence Institute, said. “But federal subsidies and federal loans are tax dollars. So it's not actually reducing costs. It's just spreading those costs among taxpayers instead of just the local co-op suppliers that would be purchasing power.”

Western Resource Advocates, a nonprofit organization that focuses on climate change and its impacts, said in a media release it worked with Tri-State to develop the plan and encouraged other utility companies to pursue similar paths.

“Tri-State should be commended for proposing a transformational electric resource plan, which will reduce carbon pollution across the West and provide economic benefits for its member cooperatives,” Stacy Tellinghuisen, deputy director of policy development for Western Resource Advocates, said in a statement. “We encourage other utilities to take advantage of this once-in-a-generation opportunity to use federal funds to replace expensive, polluting plants with cleaner resources.”

Unit 3 was originally supposed to close by the end of 2029, according to the group.

While federal money will help the transition to renewable energy, Fogleman said current financial market conditions and inflation could negatively impact the change.

“The current financial environment is not very conducive for these sort of capital expenditures and big investments in replacement power and decommissioning old power,” Fogleman said. “Interest rates are much higher and we’re seeing that affect energy projects all over the country. Commodities inflation – the materials you need to build these replacement renewables – is getting a lot more expensive and it's getting harder to finance.”