Right now, Xcel Energy’s draft Electric Resource Plan is under review by the Colorado Public Utilities Commission (PUC). This plan will determine how the state’s largest utility will provide electricity to Colorado communities between now and 2050. Last week, just one week before the PUC was set to hear from Coloradans on the proposed plan in a public hearing, Xcel Energy proposed some expensive changes as part of a settlement made behind closed doors with the Colorado Oil & Gas Association, State agencies, and city representatives.
Xcel’s proposed plan is a corporate giveaway that is bad for our climate and unfair to Xcel customers. It allows Xcel to continue its dependence on dirty, expensive fossil fuels, and further delay the transition to affordable clean energy. If the plan were to pass as is, Xcel’s customers would be forced to pay more for electricity to benefit Xcel shareholders -- while continuing to have to endure the health problems stemming from fossil fuel pollution. This winter, the PUC has the opportunity to reject or significantly alter the settlement to protect Coloradans.
Here’s what you need to know about the proposal:
- It allows Xcel Energy to burn coal for far too long, which would impose unnecessary costs on its customers:
The settlement would require the Comanche 3 coal plant to burn coal until 2035-- five years longer than any other coal plant in Colorado. The Comanche 3 coal plant is the most unreliable power plant in the state, and has been plagued by operational problems, including being offline for nearly all of 2020 because of poor maintenance practices. Why should Comanche 3, the least reliable of Xcel’s power plants, run longer than any other coal unit in Colorado?
Additionally, the coal plant is the largest source of climate pollution in the state and is located in Pueblo, a low-income, Latino community. This community doesn’t even get the electricity from the plant -- just the pollution. When the PUC held a hearing in Pueblo in October 2021, residents expressed overwhelming support for retiring the coal plant by 2030 at the latest.
The settlement also allows Xcel to continue to use its other coal units--Pawnee, Craig, and Hayden--when they are not economic to do so, thereby increasing costs and harmful pollution. Xcel uses a practice called “must-run designations”, in which coal units are required to operate even when they are not economic to operate. The settlement allows Xcel to continue to use this reckless practice for the Pawnee, Craig, and Hayden coal units--even though Xcel commits to ending this senseless practice at Comanche 3.
- It helps Xcel Energy make its shareholders rich on the backs of Colorado ratepayers:
The settlement guarantees Xcel cost recovery for the entire remaining balance of the Comanche 3 coal plant when it retires at the end of 2034. Xcel estimates the undepreciated balance (ie, the costs that customers have not yet paid) on the coal plant will still be $658 million at that time. So Xcel customers will be on the hook to pay Xcel $658 million for Xcel’s bad business decisions and mismanagement of Comanche 3 even after it retires.
The settlement also guarantees Xcel at least $626 million in new company-owned electric generation resources to replace the Comanche 3 coal plant after 2035. The more resources Xcel builds and owns, such as new wind turbines, solar panels, or gas plants, the more money their shareholders make. Typically, Xcel has to engage in what’s called an open source solicitation process that allows private companies to bid into with proposals. This process forces Xcel, a monopoly, to compete against private companies to build new power plants. The result of this competition is lower prices for clean energy, which enables us to transition away from fossil fuels more affordably than if Xcel is allowed to exclude competitors. Unfortunately, the settlement mandates that Xcel gets to own at least $626 million worth of these replacement resources--a huge loss for Xcel customers who could save money with a fair solicitation process that ensures customers are getting the best deal possible.
- It could result in new gas plants that burn gas for decades to come:
The settlement allows Xcel to build new gas plants and burn gas at them for as long as they want by assuming that new gas plants will run for at least 40 years -- long after 2050, the date by which Xcel says it is aiming to be carbon-free. Allowing Xcel to build new gas plants will only make it harder for Colorado cities like Denver and Boulder to reach their goals of running on 100 percent renewable energy by 2030, and will make it harder to achieve Governor Polis’ goal of 100% renewable energy in Colorado by 2040.
This settlement proposal is just one of many options in front of the PUC right now regarding Xcel’s energy future. Notably, no one has modeled the customer costs or pollution associated with 2035 retirement of Comanche 3 and other provisions of the settlement. We don’t know exactly how much this backroom deal would cost Coloradans -- financially or in terms of their health -- but we do know that Xcel will be guaranteed hundreds of millions of dollars of rate recovery and new investments to line shareholder pockets.
Colorado should demand more from Xcel, which is a legally protected monopoly. This is the PUC’s chance to require Xcel to do its part to combat the climate crisis by cleaning up its energy portfolio and delivering Coloradans with low-cost renewable energy and storage solutions.
If you’re interested in making your voice heard on this issue, you can sign up to give a verbal public comment to the PUC on December 2 HERE or submit a written public comment to the PUC HERE.