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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date earliest event reported) May 21, 1996
Public Service Company of Colorado
(Exact name of registrant as specified in charter)
Colorado
(State or other jurisdiction of
incorporation or organization)
1-3280 84-0296600
(Commission File (IRS Employer
No.) Identification No.)
1225 17th Street, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (303) 571-7511
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Item 5. Other Information
In April 1992, the Company acquired interests in the two generating units
at the Hayden Steam Electric Generating Station located near Hayden, Colorado.
The Company is the operator of the Hayden station and owns an undivided interest
in each of the two generating units at the station which in total average
approximately 53%.
On August 18, 1993, a conservation organization filed a complaint in the
U.S. District Court for the District of Colorado ("U. S. District Court")
pursuant to Section 304 of the Federal Clean Air Act, against the Company and
the other joint owners of the Hayden station. The plaintiff alleged that: 1) the
station exceeded the 20% opacity limitations in excess of 19,000 six minute
intervals during the period extending from the last quarter of 1988 through
mid-1993 based on the data and reports obtained from the station's continuous
opacity monitors ("COMs"), which measure average emission stream opacity in six
minute intervals on a continuous basis, 2) the station was operated for over two
weeks in late 1992 without a functioning electrostatic precipitator which
constituted a modification of the station without the requisite permit from the
Colorado Department of Public Health and Environment ("CDPHE"), and 3) the
owners failed to operate the station in a manner consistent with good air
pollution control practices. The complaint sought, among other things, civil
monetary penalties and injunctive relief. The joint owners of the station
contested all of these claims and contended that there were no violations of the
opacity limitation.
Discovery was completed and oral arguments on summary judgment motions
were heard in mid-May 1995. On July 21, 1995, the U.S. District Court entered
partial summary judgment on liability issues in favor of the plaintiff in
regards to the claims described in items 1) and 3) above and denied the
plaintiff's motion in regards to the claims described in item 2) above. On July
31, 1995, the joint owners filed a petition for an interlocutory appeal with the
10th Circuit Court of Appeals. On August 21, 1995, the joint owners' petition
for permission to appeal was denied. Subsequent to the denial of the joint
owners' petition, the U.S. District Court dismissed the plaintiffs' claims
described in item 2) above.
Additionally, the Company had received and responded to a request from the
EPA for information related to the plant and, on January 18, 1996, the EPA
issued a notice of violation stating that the plant had exceeded the 20% opacity
limitations in excess of 10,000 additional six-minute intervals during the
period extending from mid-1993 to mid-1995.
On May 21, 1996, the Company and the other joint owners of the Hayden
station reached an agreement in principle with the conservation organization,
the CDPHE and the EPA which provides for a complete and final release of all
civil claims for the violations alleged in the complaints filed by the
conservation organization, the EPA and the CDPHE through the date of the
agreement and further addresses future environmental compliance requirements and
issues. The primary provisions of the agreement, subject to certain final
approvals by the EPA, the State of Colorado, the Department of Justice and the
U. S. District Court, include: 1) the installation of pollution control
equipment on both generating units to reduce future particulate (opacity),
sulfur dioxide ("SO2") and nitrogen oxide ("NOx") emissions to be completed
during 1998 and 1999 or conversion of the facility to natural gas as a primary
fuel supply, 2) a payment of $2 million to be paid to the U. S. Treasury, 3) a
contribution of $2 million to a "Land Trust Fund" to be used for the purchase of
land and/or conservation easements in the Yampa Valley to protect and enhance
the air quality in the region, 4) a contribution of $250,000 to be used for the
conversion of vehicles and/or wood burning appliances to natural gas in the
Yampa Valley, and 5) stipulated future penalties for failure to comply with the
terms of the agreement, including specific provisions related to meeting
construction deadlines associated with the installation of additional pollution
control equipment and complying with particulate, SO2 and NOx emissions
limitations. Additionally, the joint owners have agreed that these limitations
will be determined using data from the continuous emissions monitors installed
on each generating unit. The Company will be responsible for approximately 53%
of the costs described above in items 2 - 4 and, in anticipation of such
settlement, the Company made adequate provision for such amounts in the first
quarter of 1996.
The joint owners have begun planning efforts for the installation of
additional pollution control equipment and have up to six months from the date
of the agreement to decide whether to pursue conversion of the Hayden station's
primary fuel source from coal to natural gas. Assuming coal remains the primary
fuel source, the joint owners estimate that the cost of installing pollution
control equipment capable of reducing the emissions to the levels required under
the agreement, consisting of fabric filter dust collectors, lime spray dryers
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and low NOx burners on both units, is approximately $120-$130 million, with the
Company's portion totaling approximately $60-$70 million. At December 31, 1995,
the Company included approximately $46 million in its five year construction
estimates for certain additional pollution control equipment at the Hayden
station. While the alternative of natural gas as a primary fuel source would
eliminate the need for certain additional pollution control equipment, it would
require the construction of a natural gas pipeline to the generating facility as
well as certain boiler changes. In general, assuming natural gas is the primary
fuel source, the initial capital investment in additional pollution control
equipment may be less; however, it is expected that the on-going cost of
operating the facility would be higher.
The Company believes that, consistent with historical regulatory
treatment, any costs for pollution control equipment to comply with pollution
control regulations would be recovered from its customers. However, no assurance
can be given that this practice will continue in the future.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF COLORADO
By: /s/ R. C. Kelly
R. C. Kelly
Senior Vice President, Finance,
Treasurer and Chief Financial Officer
Dated: May 22, 1996
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