The Colorado Public Utilities Commission approved Xcel Energy’s plan to shutter two coal plants and commit $2.5 billion for acquiring new electrical power sources, most of it wind, solar and battery storage systems.
The PUC commissioners endorsed Xcel’s Colorado Energy Plan in a Monday vote, ending more than a year of planning and hearings.
“We face, for the first time, the possibility that a least-cost [energy] portfolio is not a fossil-based one,” said Jeffrey Ackermann, chairman of the PUC commissioners.
Xcel plans to mothball the Comanche 1 and Comanche 2 coal-fired power plants in Pueblo by 2022 and 2025, respectively, while keeping its newer Comanche 3 power plant there running.
To replace the retired coal plants, Xcel plans to commission and switch to 1,031 megawattas of wind power, 770 megawatts of new solar power from large plants and 275 megawatts of battery storage associated with the solar projects. Xcel also plans to buy existing natural gas power plants that produce 383 mega-watts and from which the utility already buys power.
The utility had to bring on 450 megawatts of added electrical power – enough to power 495,000 typical homes – by 2026 to meet forecast demand due to population growth and increased consumption.
“This is a really big deal for Colorado,” said Alice Jackson, president of Xcel Energy Colorado after the PUC vote. “We’ll have 55 percent of our electricity from renewable sources, which is more than any other state in the continental U.S. We’re doing some really advanced stuff in Colorado.”
Although the company is based in Minneapolis, Xcel Energy Colorado is the state’s biggest power utility, serving 1.5 million electrical customers, most of them in the Denver metro area.
Monday’s oral ruling by the PUC commissioners precedes a final written order due out next week.
The approval is significant for renewable energy adoption and for the state, said Erin Overturf, director of clean energy programs for Western Resource Advocates, an environmental policy group.
“It restores Colorado’s reputation nationally in terms of clean energy,” Overturf said, especially given Xcel’s decision to include large-scale battery storage alongside solar panel plants. “This is a first example of what I think will be the start of a national trend.”
The PUC required that what Xcel proposed for its power plan wouldn’t raise customers’ electricity rates and, if possible, should save money.
Xcels plan collected the favored projects from among 437 bids received by Xcel, about 350 of them renewable energy projects. The process revealed the 1.5 million-customer power utility could acquire large-scale renewable energy at unprecedented low rates.
Switching to more natural gas and renewables does require $2.5 billion worth of investment, $1 billion of its own money and power purchases from third-parties committing to build the rest. Xcel predicted the plan will save $213 million compared to keeping Comanche 1 and 2 running.
The PUC’s staff expressed some skepticism of Xcel’s numbers. Odds are even that the utility could require increased rates for customers in the near term before the savings from some of the new power sources truly kick in after 2034, the staff’s summary concluded.
Critics of Xcel’s plan urged the PUC to reject the utility’s accounting.
“They haven’t proven, from our perspective and from other groups’ perspectives, that their plan pencils out,” said Amy Oliver Cooke, director of the Coalition of Ratepayers, a group representing small business customers of Xcel Energy and that has ties to the Independence Institute. ”The cost will be passed on to ratepayers.”
The coalition wanted the PUC Commissioners to keep Comanche 1 and Comanche 2 running, and asked the PUC to seek better modeling from Xcel in the future.
The PUC’s commissioners Monday thanked the coalition for its scrutiny of Xcel’s accounting but unanimously sided with closing two power plants early.
Steering Xcel away from the renewable fuel projects it assembled might miss a one-time chance to take advantage of such low-cost bids, said Ackermann, PUC Commission chairman.
PUC Commissioner Wendy Moser expressed unease at the amount of jobs that could be lost closing the coal plants, and at the idea that the closures will occur without cost.
“The customers of Xcel Energy will pay for the retirement of these plants,” Moser said. “Don’t think that this is free.”
She ultimately favored shuttering the coal plants, given the fuel-cost savings of switching to natural gas and the coal plants’ lack of modern nitrogen and sulfur oxides pollution controls.
Xcel has experience closing two coal plants before, Valmont in Boulder and its Arapahoe plant in Denver. All but two of the positions eliminated in those closures occurred by attrition, Jackson said. There are several years before the Comanche plants are slated to close, she said, and the company is optimistic about transitioning to jobs at the Pueblo solar and battery facilities that will take their place.
The commissioners waffled about whether to include a 250-megawatt solar plant with 125-megawatt battery storage project in Pueblo alongside two other solar and battery storage projects Xcel proposeed, another one in Pueblo and one north of Denver.
Moser favored a less ambitious approach to solar and battery storage and argued for saving $20 million and reducing the number of battery-storage projects in the plan to two. Ackermann and Koncilja voted to include it, approving all three of the solar and battery storage projects proposed.
The Monday vote did not include Xcel’s proposed agreement with the EVRAZ steel plant in Pueblo, which would lock in rates until 2041. The mill also plans a 240-mega-watt solar plant in its property by 2024.
The Pueblo steel mill is Xcel Energy’s biggest customer and has said it would close the plant in Pueblo without a long-term power agreement.
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