November 12, 2024 - Xcel Energy — with the backing of state and consumer officials — is seeking to extend the life of its Comanche 2 coal-fired power plant for 12 more months. The unit is slated to close in December.

The company on Monday asked the Colorado Public Utilities Commission to approve another year’s operation for the 50-year-old plant as the utility scrambles to maintain adequate generation, a situation exacerbated by the breakdown of the Comanche 3 unit.

The request to keep the 335-megawatt Comanche 2 unit, in Pueblo, running is supported by the PUC staff, the Colorado Energy Office and the Colorado Office of the Utility Consumer Advocate.

“We need it for resource adequacy and reliability, underlining that need for reliability and resource adequacy are central issues,” said Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary.

The company had agreed in 2017 to close Comanche 1 in 2022 and Comanche 2 in 2025. The petition seeks to amend that agreement.

The move to keep the unit running was praised by Pueblo officials and union leaders and condemned by environmental groups.

“I am well aware of our community’s deep reliance on the job base at Comanche and I, along with many others, recognize the importance of extending operations at Comanche 2,” Pueblo Mayor Heather Graham said in a statement.

Sierra Club Colorado Director Margaret Kran-Annexstein, however, said, “the administration and Xcel’s proposal would guarantee only one thing: Comanche 2 will run for another year, which means more air pollution in Pueblo and higher electricity bills for everyone.”

4 years of trouble with adequate generation

Xcel Energy has been struggling to develop adequate generation resources for years. In 2022, it sought a PUC waiver to add more capacity telling the commission it faced “resource adequacy challenges” for the summers of 2022 and 2023.

Since then inflation, supply chain problems and, more recently, tariffs have created problems. “Macroeconomic issues have presented challenges to being able to bring on new resources in a timely fashion,” Kenney said.

Kenney said the company will see a “tightness” in capacity for 2026 and 2027.

Xcel Energy is still trying to fill the resource portfolio approved by the PUC in its 2021 resource plan. 

In 2024, the utility sought an increase in the price for approved projects because developers said in the face of inflation and supply chain problems they could not hold to their bid prices. 

“The company has had considerable trouble contracting projects for a long time,” said Joseph Pereira, deputy director of the UCA. “Comanche 3, as a resource adequacy issue, is the straw that broke the camel’s back.”

The 415 MW Comanche 3 unit was a state-of-the-art supercritical, pulverized-coal plant when it opened in 2010, but the unit has been plagued with breakdowns and shutdowns.

The plant has been out of operation for more than 900 days, according to PUC and UCA data, with its most recent shutdown beginning Aug. 12 and expected to last until June.

“It became clear in October that the damage was quite significant and that it will be an extended time period before Comanche 3 could be repaired,” said Will Toor, executive director of the Colorado Energy Office.

“Given that we came to the conclusion that it was prudent to allow Comanche 2 to operate in order to support reliability and minimize exposure of ratepayers to the potential of price spikes,” Toor said.

Significant risks for consumers

Erin Overturf, Western Resource Advocates clean energy director, called Comanche 3 “an albatross around the neck of Xcel ratepayers” and said the request to delay the closure of Comanche 2 will increase costs for utility customers.

While switching from coal to renewable energy might be cheaper, Toor said if Xcel Energy has to buy wholesale power on the open market to fill demand, customers could be vulnerable to sharp swings in price.

“We are very aware of some of the hikes that we have seen in natural gas prices in the past during winter storms and cold winter conditions, and what that can mean for the market price of electricity,” Toor said.

Also driving the reliability and resource adequacy concerns is an increasing demand for electricity. After averaging less than a 1% annual growth in demand for the last decade, Xcel Energy now projects an annual growth of 8% over the next five years.

The utility also expects about two-thirds of its load growth to come from data centers. “We have customers who want to start the process to be interconnected now,” Jack Ihle, Xcel Energy’s regional vice president for regulatory policy, said.

As for meeting the state’s greenhouse gas reduction mandate that the utility cut its carbon dioxide emissions 80% from 2005 levels by 2030, Toor said since Comanche 2 is smaller than Unit 3 there may be some short-term reduction in emissions and that the extension should not impact the 2030 target.

“From our perspective, it is still full steam ahead on the clean energy transition and achieving the state’s greenhouse gas reduction goals,” Toor said.