CO Xcel Can Cut Emissions 90%, Accelerate Just Transition
As the Colorado Public Utilities Commission looks to approve a new resource plan for the state’s largest electric utility, Xcel Energy, Colorado has an opportunity to boost community assistance and allow coal communities and workers to properly plan for the energy transition that is already underway.
As the Colorado Public Utilities Commission looks to approve a new resource plan for the state’s largest electric utility, Xcel Energy, Colorado has an opportunity to boost community assistance and allow coal communities and workers to properly plan for the energy transition that is already underway. Providing much-needed clarity around the utility’s future will make it possible for these communities to plan for what’s next and access state and federal funding to ease that transition.
The clean energy transition has already begun
Colorado has some of the boldest carbon emission reduction and clean energy investment plans in the country: the state has a statutory target of 50% emissions reduction by 2030, and Xcel must cut power generation emissions by at least 80% in the same timeframe. These targets mean big changes and opportunities in the clean energy transition. As we work toward these goals by producing even more electricity from wind, solar, and other renewable resources, our need for fossil fuels will continue to decrease. We can see this transition clearly in Colorado job numbers: in 2020, more than 58,000 Coloradans worked in the clean energy economy—more than double the amount employed in fossil fuel industries. In 2019, clean energy jobs grew five times faster than fossil fuel jobs in the state.
We’re already seeing operators of coal-fired power plants in nearby states make the decision to shut off entirely or convert the plants to other fuel sources that make more economic sense. For example, in 2019, the operator of the Navajo Generating Station in Arizona shut down all three units after determining that operating the plant no longer made financial sense. That same year, New Mexico’s largest electricity provider, PNM, showed the long-term financial benefits of moving away from coal and proposed retiring the San Juan generating plant by 2022.
It’s time for Xcel to begin planning support for the future of Colorado’s coal workers and communities
Colorado is not immune from the economic forces causing the early retirement of coal across the West, and the state and utility’s ambitious clean electricity goals reinforce this need to transition from fossil fuels to renewable resources. Already, the Comanche Generating Station is no longer a cost-effective way for Xcel to generate electricity, mirroring the trend we’ve seen in nearby states. It’s time for Xcel to begin working toward a more prosperous future for coal workers and communities—and that starts with setting a realistic retirement date for all remaining coal. Unfortunately, while the utility has identified many cost effective strategies to cut emissions, they propose to run, and continue to profit from coal at Comanche 3 through 2040. By doing so, Xcel risks delaying the community assistance and workforce transition planning that is so critical to Pueblo’s economic stability.
It’s nearly impossible to imagine a scenario where Xcel relies on Comanche 3 for 20 more years. Since the plant is already uneconomic and has suffered major outages, it will probably make sense to use the plant less and less. Ultimately, the utility will very likely follow its peers in other states in deciding, for economic reasons, on early retirement. Failing to set a realistic date for retirement now will deny coal workers and the broader Pueblo community the certainty they deserve and delay much-needed state and federal investments for a just transition.
Independent analysis done for NRDC and the Sierra Club’s intervention in the resource plan shows that the Colorado Public Utilities Commission can provide certainty and open the door to investment by requiring Xcel to retire and replace Comanche 3 by the end of 2027 and repower the Pawnee Generating Station to run on gas by the end of 2024, leaving open the possibility of replacing it with even cleaner fuels in the future. The decision will also save Xcel customers over $1 billion compared to the utility’s proposal, when accounting for the social costs of carbon.* Given that Comanche 3 is the single largest stationary source of greenhouse gas emissions in the state, the environmental benefits of this decision would be profound, cutting the utility’s emissions by 90% from 2005 levels; a reduction of 16 million more tons than the Xcel proposal between 2021 and 2030.
Establishing this timeline now is the first step in the just transition process. These accelerated retirement dates will trigger a provision in state legislation that requires a community assistance plan as well as a workforce transition plan for affected workers. This means that the Public Utilities Commission and Xcel can begin making resource and economic planning decisions to ensure reliable, affordable power. Xcel will also begin working with stakeholders to secure funds to support these coal communities as they transition to alternative sources of revenue and local investment.
Colorado is well-prepared to support a just transition to a clean energy economy
Colorado led the nation in creating the first Office of Just Transition, developing the first statewide just transition plan, and requiring that utilities planning to retire coal plants generate workforce transition plans. Colorado’s coal communities also have a variety of funding sources available to support just transition work, in addition to private capital. For example, Colorado legislation passed in the 2021 legislative session provides $15 million for coal communities and workers, and the federal government has up to $300 million in funding through the Economic Development Administration. Securitizing the Comanche 3 plant could unlock an additional $100 million in customer savings, some or all of which could also help support the energy transition.
Ultimately, this transition will benefit all Coloradans. Research shows that reducing emissions from the electric sector is the most affordable way to work toward climate goals. Additionally, generating electricity from renewable sources is critical to reducing emissions in other sectors, like buildings and transportation. For example, as Coloradans make the switch from gas-powered cars to electric vehicles, this climate-friendly choice can have an even more positive impact when the electricity powering that car comes from solar and wind. If Xcel doesn’t select this affordable path to meeting its ambitious climate goals, the utility will either fail to reach those critical benchmarks or choose more expensive options that result in higher costs for customers.
And the benefits of clean energy transition extend past affordability and reduced emissions: burning fossil fuels in our buildings and vehicles contributes to dirty air inside and outside, and generating fossil fuels impacts the health of communities near those power plants. Addressing the health needs of coal communities isn’t just the right thing to do—it’s required by law. Colorado legislation requires the Public Utilities Commission to “consider how best to provide equity, minimize impacts, and prioritize benefits to disproportionately impacted communities and address historical inequalities.”
By proactively addressing the future of coal communities and workers through this Integrated Resource Plan, Xcel and the Public Utilities Commission can be leaders in Colorado’s just transition and set the state on the path to a healthier, more environmentally-friendly, and more economically-stable economic future.
*This blog was updated to reflect modelling corrections.