A landmark agreement with Tri-State Generation and Transmission is on track to pump tens of millions of dollars into Craig and Moffat County over the next decade — seeding a trust fund that perpetually supports local economic development.

Officials in Moffat County and Craig are praising the agreement in which Tri-State has committed to creating a community economic development trust fund with $22 million in direct payments from 2026-29.

Beyond the $22 million, the wholesale power supplier has offered to backstop property tax revenue by providing minimum payments of lost property tax revenues up to $48 million from 2028-38.

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“I think it’s trend-setting; I think it’s huge for our community,” Craig mayor Chris Nichols said of the agreement. “I think Tri-State really stepped up to the table, you know, and guaranteed they want to be part of our future and partners into the future.”

The agreement comes as the wholesale power provider plans to shut down the Craig Station coal-fired power plant by 2028 to meet clean energy goals. The closure is expected to happen in phases, with each of the plant’s three units ceasing operation from 2025-28.

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The closure of Craig Station — along with the nearby coal mines that fuel it — is forecast to do widespread harm in Craig and Moffat County, which could lose more than 400 high-paying jobs and 44-47% of local taxing districts’ tax revenue as a result.

City and county officials are still working out how the new trust fund will be managed, but the money will be earmarked for economic growth, and Nichols said it will be crucial for the community moving forward.

“The trust fund will start off with the $22 million and any remainder of the backstop payments will also go into that trust fund … enabling us, yes, the intent is to live off the interest payments alone,” Nichols said.

In addition to the $22 million in direct payments and a commitment to offset lost property taxes up to $48 million until 2038 for the city and county, the settlement agreement will also allow Moffat County to secure new water rights.

Getting Tri-State to give the county the Craig Station’s water rights for the Lower Yampa River Augmentation Plan was another big piece of the settlement, Nichols said, because the Yampa River has been designated as over-appropriated, which has prevented digging new wells or expanding existing ones without an augmentation plan.

In another important aspect of the agreement, Moffat County also will get a lock on the bidding process should Tri-State decide to build a new dispatchable gas power plant in Colorado.

The mayor said that, by getting Tri-State to agree to solicit bids for a new natural gas power plant only in Moffat, that could lead to new investments in the community that would extend far beyond when the property tax payments sunset in 2038.

Based in Westminster, Tri-State also has already purchased a 145-megawatt solar project under development in Moffat County that’s scheduled to come online late next year. Nichols explained that, based on the agreement, the amount Tri-State pays in lost property taxes can be offset by new investments.

“You know, they didn’t have to do this,” Nichols said. “I just think that demonstrates they want to be partners with us down the road, and any investment that they do make, say a dispatchable natural gas plant, will far outlive these backstop payments. Those would be 20 to 30 years generating tax revenue and jobs.”

Since January, city and county officials have been participating in Tri-State’s 2023 Electric Resource Plan proceeding before the Colorado Public Utilities Commission, hoping to ensure Tri-State doesn’t overlook what could happen to Craig and Moffat County as Craig Station shuts down.

Now, local and company officials are applauding the settlement agreement spelled out in the first phase of the plan, saying it’s a first-of-its-kind deal with a power provider in Colorado and, more importantly, will aid Craig and Moffat County during and after the power plant closes in 2028.

“We have been very fortunate to be able to operate in Moffat County and be part of the Moffat County and Craig Community,” Tri-State Vice President of Communications Lee Boughey said over the phone Thursday evening. “We want to ensure that, as Craig Station retires in 2028, that we can continue to help do our part to sustain a vibrant Northwest Colorado, and so we’re very pleased with where the entire settlement in the first phase of the ERP is including the community assistance.”

In a special meeting Wednesday, Craig City Council authorized Nichols to enter into the settlement agreement with Tri-State. The decision was 5-0 after a closed-door executive session that lasted a little over 30 minutes.

Upon coming out of the executive session, City Council members took action supporting the agreement, and Nichols offered a few remarks praising the settlement agreement and Tri-State through the negotiating process.

On Thursday, Moffat County commissioner Melody Villard also expressed satisfaction with the agreement.

“It would be hard to overstate how truly groundbreaking this agreement is,” Villard said in a statement. “The commitments made by Tri-State ensure that the communities are not left behind in the energy transition. We will now have reliable long-term resources to drive our own transition and determine the trajectory of Moffat County’s economy after coal.”

According to a news release issued by Criag city officials, the communities of Hayden, Pueblo, Morgan County and Nucla have also been promised or received assistance with the closures or planned closures of their local coal-fired power plants. However, Moffat County and Craig were reported to be the first coal communities in the state to receive direct funding dedicated to an economic development fund that allows the communities to invest in projects in perpetuity.

In their own news release, Tri-State officials touted how the power provider’s Electric Resource Plan is seeking 1,250 megawatts of new renewable energy and energy storage resources, while also supporting Northwest Colorado communities in the transition away from coal.

The Colorado Public Utilities Commission must approve the plan, though Tri-State said the settlement is unopposed.

If approved by the commission, Tri-State said it will begin “the procurement process for new resources, leading to an 89% reduction in its greenhouse gas emissions in Colorado and 70% clean energy used by its members systemwide in 2030.”

Even though an agreement has been reached, city officials still expect the Public Utilities Commission will hold an in-person public comment hearing from 3-7 p.m. July 9 at the Moffat County High School Auditorium (900 Finley Lane) in Craig.

The hearing will conclude upon completion of public comments no earlier than 6:30 p.m. A virtual public comment hearing will be July 11 from 4-7 p.m.