Written by Allie Lowy
In February, Xcel Energy — Colorado’s largest utility — released its latest draft Electric Resource Plan (ERP) outlining its projected resource use for the next twenty years. After several public hearings, Colorado’s Public Utility Commission (PUC) will have the opportunity to review the plan and suggest changes before approving it.
Xcel’s newest ERP contains three main components: (1) carbon-free electricity targets, (2) coal-fired power plant retirement announcements, and (3) resource additions of solar, wind, and energy storage in the next nine years. Per the plan, Xcel aims to have 80 percent carbon-free electricity by 2030 and 100 percent by 2050. The utility commits to retiring all of its coal-fired power plants by 2040, except for Fort Morgan’s Pawnee generating station, which will be converted to natural gas production in 2028. Finally, the ERP includes resource additions of 2,300 megawatts (MW) of wind, 1,600 MW of large-scale solar, 400 MW of storage, 1,300 MW of firm, dispatchable resources, and 1,200 MW of distributed solar by 2030.
(1) Xcel’s carbon-free electricity targets are not nearly ambitious enough to meet local and national climate targets designed to limit end-of-century warming to 1.5 degrees Celsius and avert climate catastrophe.
Xcel’s 2021 ERP falls short of climate targets on the local, state, and national level, and would set Colorado back immensely in achieving its climate goals. The ERP sets a target of 100 percent renewable electricity by 2050, and 80 percent by 2030. These goals pale in comparison to President Biden’s national target of 100 percent carbon-free electricity by 2035. Considering the fact that Xcel provides the majority of electricity generated in Colorado, Xcel’s failure to take bold climate action would set Colorado back on the national stage, and could single handedly prevent the U.S. from achieving its carbon-free electricity goal for fifteen years.
It is important to note that the 100 percent carbon-free electricity by 2050 target is not arbitrary: it is based on a significant body of research indicating that such a target is necessary to allow the U.S. to meet its commitments under the Paris Agreement and achieve net zero by 2050. Electricity generation for both the U.S. and Colorado accounts for about one quarter of total greenhouse gas emissions, thus, 100 percent carbon-free electricity is an essential component of any bold climate plan.
Xcel’s plan is particularly irrational when considered in context of Colorado’s own climate goals: namely, Governor Polis’ target of 100 percent renewable energy by 2040. This goal is not only 10 years earlier than the national target, but since it requires 100 percent renewable energy, rather than “net-zero” emissions (which can include carbon capture and carbon offsets) it is even more ambitious. Thus, Xcel would need to phase out fossil fuel production — and fully replace it with renewable energy generation — by 2040 at the very latest to meet Colorado targets.
Lastly, the PUC should represent the best interest of the public, and require Xcel to align its climate targets with the goals of the municipalities it serves. Several Colorado cities and counties — including Denver, Boulder, Pueblo, Fort Collins, Longmont, Golden, Summit County, Lafayette, Frisco, Aspen, Glenwood Springs, Nederland, and Breckenridge — have set 100 percent renewable electricity targets by 2030 and 2035. Because of Xcel’s prevalence in the state, many of these goals will be untenable if Xcel does not update its ERP to support the renewable energy needs of its customers. It is essential that Xcel works with local governments to support their clean electricity goals, instead of thwarting local progress.
(2) Xcel’s coal plant retirement dates are not early enough, are in direct contradiction to state renewable energy goals, and would put thousands of Coloradans at risk of harmful pollution.
Per the ERP, Xcel plans to continue burning coal until 2040, which would make it the only utility in the state choosing to burn coal after 2030. Since coal is the most carbon-intensive fossil fuel, and it accounts for around 36 percent of Colorado’s electricity generation, it is essential that Colorado phases out coal production as soon as possible. Research suggests that Organization for Economic Cooperation and Development (OECD) countries — like the U.S. — should phase out coal production by 2030 to meet Paris Agreement benchmarks. Furthermore, in order to meet Polis’ goal of 100 percent renewable energy by 2040, coal-fired power plants will need to not only be retired, but replaced by solar, wind or hydropower generation by at least 2035 to meet the heightened energy needs of a growing population. Still, 2035 is too late to stop burning coal, and it would be in Xcel’s best financial interest to convert its energy portfolio to renewables as soon as possible. In Colorado, wind and solar production (including storage) is much cheaper than coal, and, in fact, it would be more expensive to maintain the state’s existing coal fleet than to build new renewable energy generation. To make matters worse, ratepayers bear the hefty cost of fossil fuel-powered electricity: the latest ERP proposes a 12 percent rate increase for residential and commercial customers, at a time when the cost of renewable energy in the state is plummeting. Funds are also available to assist the industry in this transition: a 2021 law allocated $15 million toward funds for a just transition away from coal and a coal worker assistance program.
Continuing to produce coal until 2040 is not only economically and environmentally unviable, but is detrimental to the health of many Coloradans. Because of the Comanche Generating Station — a coal-fired power plant with three units — Pueblo residents have been subject to egregious air quality for decades, which has led to health issues, hospitalizations, and comorbidities that have disportionately fallen on low-income communities and communities of color. Comanche 3 emits large quantities of hazardous pollutants, jeopardizing the health of Pueblo residents. For instance, every year, Comanche 3 (the most recent unit added) emits 41,000 pounds of hydrogen chloride, 31,000 pounds of hydrogen fluoride, 290 pounds per year of nickel, 250 pounds of benzene, 190 pounds selenium, 140 pounds of lead, and 100 pounds of mercury. Comanche 3 also uses an immense amount of water: around 5 million gallons per day, which is nearly 180,000 more gallons of water per day than the top ten water users in Pueblo combined.
To make matters worse, Comanche 3 is costly, unreliable and extremely carbon-intensive. It has required extensive repairs so frequently that it has been offline for a quarter of its life, including during 2020, a repair that cost customers $12 million. It is essential that Xcel decommission its coal-fired power plants by 2025 at the latest, and that it devotes substantial resources to just transition planning and workforce development in Pueblo. Xcel has announced that it may replace Comanche 3 with a nuclear plant, but it is crucial for the PUC to bar them from doing so. Although nuclear energy itself is renewable, producing it requires mining a very rare type of uranium, which is far from renewable. Further, nuclear plants pose the risk of nuclear accidents, and produce toxic radioactive waste that can jeopardize the health in neighboring communities and contaminate water supplies. Pueblo has been used as a sacrifice zone for Colorado’s energy for far too long, and it is time for Xcel to put an end to these egregious environmental justice violations.
Finally, the Pawnee Generating Station should be decommissioned immediately, not converted to burn natural gas. While it is less carbon-intensive than coal, natural gas is a fossil fuel, so burning it is methane-intensive, and can be caustic to air quality, water quality, and human health. Furthermore, the process of fracking natural gas leads to bad ozone days, contaminates water supplies, decimates wildlife habitat, and threatens human health. Colorado is currently the seventh-largest fracked gas producing state in the country, and, in 2019, accounted for nearly forty percent of coalbed methane production in the U.S. It would be imprudent to create new natural gas generation at a time when natural gas needs to be rapidly phased out to meet local, state, and national climate benchmarks. Xcel must decommission all coal-fired power plants in Colorado by 2030 at the latest, and replace them with renewable energy generation.
(3) The Public Utilities Commission should hold Xcel financially responsible for its investments in oil and gas generation capacity at a time when they are not economically and environmentally feasible.
The Polis administration has permitted 4,300 new oil and gas wells since Polis was elected, and plans to increase fracked gas production by 86 percent in the next decade. Because of accelerated fossil fuel production at a time when the climate emergency is imminent, Colorado is on track to meet only 5 percent of its emission reduction targets by 2030, which does not bode well for 100 percent renewable energy by 2040. Worse yet, this will leave taxpayers with a 8 billion dollar liability in the form of insufficient financial assurances for the plugging and remediation of 110,000 oil and gas wells. Colorado taxpayers should not be penalized for these imprudent fossil fuel investments that worsened their air quality, threatened their health, and increased their electricity bills at a time when their own cities were passing bold climate targets, and their utility refused to listen. To make matters worse, Xcel’s current plan to securitize Comanche 3 by 2039 would leave future generations bearing the cost of the plant.
“Xcel’s current plan for Comanche 3 is privatizing the profits, and ‘socializing’ the risks,” said Leslie Glustrom, Senior Advisor to the Boulder-based environmental group Clean Energy Action. “Xcel has profited over half a billion dollars from Comanche 3 and, in twenty years, taxpayers who were only children when Comanche 3 was approved will have to pay for this mistake.”
Furthermore, high discount rates make it so that the current cost of coal doesn’t reflect its true cost (for example, the social cost of carbon emissions from coal production).
“The way that the Public Utilities Commission is doing analysis right now is discounting the future — discounting future costs, discounting the impact on future generations,” Glustrom said. “It is unreasonable for future generations to be left paying for our costly mistakes. We need to lower the discount rate to stop discounting the future.”
Xcel must bear the cost of the plugging and remediation of its oil and gas wells, and must invest in assisting the communities it serves with a just economic transition to renewables. Furthermore, the ERP includes 1,300 MW of “flexible dispatchable resources” that will likely be used for gas turbines, depending on the results of Xcel’s open source bidding process in the spring. It is essential that Xcel uses these 1,300 MW of dispatchable resources to invest heavily in renewable energy projects.
In conclusion, Xcel’s 2021 ERP will need significant revision to reflect the needs of Colorado communities and meet state and national targets to limit emissions and avert climate catastrophe. Xcel should invest in the maximum amount of renewable energy and energy storage as quickly as possible, and the financial cost savings should be passed on to the ratepayers.
Xcel must set a 100 percent renewable electricity goal by 2040 at the very latest — to align itself with Colorado targets — and plan to phase out its coal and natural gas generation immediately, with a deadline of 2030. Further, the PUC must hold Xcel financially responsible for its imprudent fossil fuel investments, and should require Xcel to invest heavily in funds to support a just transition to renewables for Colorado communities.
Call to action
Want to take action and tell the Public Utilities Commission to hold Xcel accountable to meeting Colorado’s climate targets? Here are some ways you can help.
- Send the Public Utilities Commission a one-click letter to emphasize how Xcel’s ERP could be improved.
- Attend — and give public comment – at the Public Utilities Commission meeting on December 2 from 4-7.
- Join 350 Colorado and the Sierra Club to phonebank for clean energy, notifying local communities about Xcel’s ERP and how they can get involved in the decisionmaking process: every Wednesday from 6-8 pm until December 2.