Watchdog organization Colorado Public Interest Research Group believes Xcel’s proposal to replace the Comanche 3 coal plant in Pueblo will result in unnecessary costs to customers. The group's executive director Danny Katz, says the proposal is too big for southern Colorado as his organization calls on the Colorado Public Utilities Commission to pare back the proposal.
According to Xcel’s filings with the PUC, the utility wants to replace energy production from Comanche 3’s coal units with a mix of wind, solar and natural gas along with battery and storage capabilities. Advocates who testified at the PUC, including CoPIRG, would have preferred to see all-renewable generation at the site.
The filings show that Xcel's new energy plant would generate over fourteen times the electricity that Comanche 3 currently produces, which Katz says is far too high.
The plan also includes funds for investment in new technologies and equipment that CoPIRG says are untested and could result in significant payments to customers.
“There's a number of things in this proposal that make it too costly,” Katz says. “At this point, while we still think whatever replaces it should be 100 percent renewable, we also want to make sure we're making the case that it shouldn't be too big.”
Xcel is required to retire all coal units by 2030 to meet state emission reduction goals. Along with Comanche, the Hayden and Craig coal plants will be closed in the next five years. Other coal plant retirements caused ire after Xcel attempted to recover the costs of closing plants early from customers, a move that environmental and consumer advocates strongly opposed.
Xcel spokesperson Michelle Aguayo says the company is working to keep bills low through the process of transitioning away from coal power.
“This is happening as we anticipate significant increases in electricity demand from electric vehicles, building electrification, oil and gas production electrification, growth from economic development in the Denver area and new demands from data centers,” Aguyao says.
Some of those growing energy needs are what has CoPIRG alarmed. The coal plant currently generates around 750 megawatts of electricity, and the new proposal would generate up to 14 gigawatts of electricity, according to filings with the PUC.
“Some of that is because there may need to be more energy capacity based on the way we're shifting to electric vehicles and all that, but a lot of it is being driven by data centers,” Katz says.
According to Katz, only around a third of the size of the proposal is due to anticipation of new electric vehicles, heat pumps and other all-electric buildings. The rest is due to an increase in data centers and other businesses that add large loads to the energy grid.
Data centers are warehouses containing computers that power technologies from basic internet functions to cryptocurrency mining and artificial intelligence.
“The more computing power you need, the more computers and data centers you need,” Katz says. “AI is the biggest contributor right now. ...Every data center at this point uses a lot of energy, and they use a lot of water.”
Because computers begin to overheat as they are used, data centers use large amounts of water and electrically powered cooling units to cool the computers in addition to the vast amounts of energy needed for the computers to operate. Pointing to water issues, Katz argues that the state should re-examine how many data centers and high-capacity power plants should be built in Colorado.
“We shouldn't just assume, because there's a projection, that we're going to need more of them and that's going to come to fruition,” Katz says. “History has shown there's been moments in our country where we've predicted huge energy growth and it hasn't come to pass.”
Aguayo says the higher rate of energy generation isn’t just due to data center predictions. According to Xcel, one megawatt of coal-fired generation can be used for more homes than one megawatt of other types of electricity generation, like renewable sources.
Xcel is looking at alternative power sources to replace some of Comanche 3's energy generation.
xcelenergy.com
“This oversized plan can be quite costly, not just to us as consumers and ratepayers, but costly to our health and our ability to reduce air pollution in our state, as well,” Katz says. “If it's oversized, it's going to be costly, and we want the PUC to right-size this plan.”
The public interest group also wants the PUC to examine two funds included in the plan. One fund, dubbed the Carbon Free Future Development Fund, directs customer money into experimentation and investment surrounding new technologies, like hydrogen, nuclear and geothermal power as well as carbon capture.
“Some of those things are untested or they've been proven to be expensive in other places,” Katz says. “I don't think ratepayers should be on the hook for some of those research dollars until or unless we know we're going to get value. ... We want to make sure ratepayers are not paying for things that that may be risky or unwarranted.”
Katz says the fund was originally capped at $100 million, but Xcel is now proposing no cap on the fund at all. Xcel says the carbon fund is needed to develop new clean energy resources.
The other fund CoPIRG takes issue with is the Strategic Resilience Reserve Fund, which is contemplated as a $500 million fund for Xcel to pre-purchase equipment before it is needed. Should Xcel ever sell that equipment, Xcel shareholders would get 50 percent of the profit despite customers funding 100 percent of the fund.
“On the face of it, it can be seen as fiscally prudent to buy something while costs are lower, because most people anticipate costs of equipment are going to go up over the next decade,” Katz says. “But there's a risk to it, especially if we're buying stuff that we know we don't necessarily need. If they needed it, that would just be included in their normal proposal.”
Xcel says the proposal doesn’t include unneeded technology or equipment, arguing that both funds will help serve customers. The resilience fund is aimed at addressing supply chain constraints, according to Aguayo.
“With extraordinary demand for needed equipment from utilities around the country, as well as large commercial and industrial customers, private equity and others, we need a way to help us acquire this equipment in a timely manner,” she says.
But Katz worries that these investments won’t pay off and utility customers will end up paying for millions of dollars worth of funding that don’t serve them or their bank accounts. There is not an exact calculation yet of the affect on utility bills — the PUC must approve the plan first before a second process in which cost recovery will be negotiated — but Xcel has previously estimated that bills could increase by 2.4 percent as a direct result of the plan. Other estimates go as high as 50 percent; Katz says that estimate's foundation isn't clear and emerged during Xcel testimony at the PUC over several cases.
“Clearly, whatever we agree to build now will cost us as consumers,” he says. “Common sense tells us if we build a lot more, then we're going to have to pay for all of that, and that means costs will go up. By exactly how much? We won't know until a year from now, but now is the time to make sure we're only building what we need so it's not too costly.”
The PUC is expected to make a decision in August. Until then, citizens can still continue to comment using the PUC website, asking the commission to decrease the size of the proposal.
