The Consumers Plan: $1 billion savings with cleaner energy for Xcel customers

Published February 11, 2021. Updated July 7, 2021

Minnesota regulators are currently considering Xcel Energy’s plan for how it will generate electricity over the next 15 years. For Xcel customers, this plan largely decides how much of your energy will come from coal, gas, wind, solar, and nuclear, as well as a great deal about the programs that Xcel will offer for energy conservation and similar opportunities. 

Although Xcel’s proposed plan offers good steps toward a clean energy transition, CUB has found that Xcel can meet its customers’ electricity needs at an annual cost to customers of $1 billion less than Xcel’s plan, with less pollution and no risky investments in fossil fuel generation. We presented our detailed utility system modeling and recommendations to state regulators today in CUB’s Consumers Plan.

Below, I’ll share more details about the Consumers Plan, the IRP process, and how you can participate. This post covers:

 

The Consumers Plan

CUB analyzed Xcel’s options and developed the Consumers Plan: an alternative that will save customers millions of dollars while reducing emissions faster than Xcel’s proposal. 

We found that Xcel should rely more heavily on renewable energy: in particular, much more wind power and distributed solar generation that is located close to where its customers use power. Xcel should help its customers switch from fossil fuel to electricity use for space heating, water heating, and vehicles, in the many instances that it is cost effective to do so. It should close its coal plants sooner. Importantly, Xcel should not build the new Sherco gas plant, a proposed 835-megawatt combined cycle gas plant located at the site of Xcel’s soon-to-retire Sherco coal plant in Becker, Minnesota. It can meet customers’ needs reliably and more affordably without doing so, and without building any new fossil fuel plants, which will need major modifications or face early closure in order to meet promise to produce 100% carbon-free electricity by 2050.

Altogether, the Consumers Plan costs Xcel customers $1 billion less each year than Xcel’s proposal.

You can read CUB’s Consumers Plan and our complete technical report.

We developed and are advocating for this plan with the support of a team of national experts from Vibrant Clean Energy, GridLab, and Keyes & Fox.

 

The integrated resource plan process

Electricity utilities like Xcel are required by Minnesota law to submit integrated resource plans (IRPs) regularly to the state Public Utilities Commission (PUC). An IRP is a roadmap that public utilities use to project customers’ electricity demand and identify the combination of power generation sources, energy efficiency, and other options to best meet that demand. Minnesota utilities are regulated monopoly companies, so their plans must be approved by the PUC. 

The process started when Xcel filed its analysis and its preferred plan. Like all PUC proceedings, the IRP is a public process. Any group or individual may intervene, putting evidence on the record to support Xcel’s proposed plan or suggest changes. CUB is one of many parties who are intervening, along with the Minnesota Department of Commerce, environmental and clean energy advocates, Xcel’s large industrial customers, and others.

On February 11, intervenors filed formal comments laying out their positions. The parties and Xcel have a chance to respond to each other’s filings in reply comments on June 25. Any member of the public may comment, too. (See below.) Finally, the PUC will hold a hearing (open to the public) and issue an order setting Xcel’s resource plan based on all of the evidence that has been presented. Most likely, the PUC will accept some portions of Xcel’s proposal and require changes to other portions in line with the intervenors’ arguments.

 

Xcel’s new Alternate Plan: No Sherco gas plant

On June 25, 2021, Xcel filed an “Alternate Plan” with major changes from its earlier proposal. The new plan will result in lower greenhouse gas emissions and significantly more wind and solar power than previously proposed, and is a major step forward.

The biggest change is the elimination of the Sherco gas power plant. Xcel said it heard strong opposition to the plant (including from CUB) and took another look to find an alternative. Modeling conducted by CUB, a coalition of Clean Energy Organizations, Sierra Club, and the Minnesota Department of Commerce each – independently – showed that the plant was not the best investment, and in fact could put Xcel customers on the hook for hundreds of millions in unnecessary costs, not to mention greenhouse gas emissions. Several parties (including CUB) also noted that building a brand new natural gas plant is inconsistent with federal and state emissions reduction goals, and Xcel’s own commitment to produce 100% carbon-free electricity by 2050. With its new plan, Xcel is no longer asking to build the plant.

Instead, the Alternate Plan includes a lot more wind and solar generation. It would construct two new in-state transmission lines, which would allow more renewable generation to be interconnected onto its system and the regional grid It would continue the plan to retire its remaining coal plants by 2030, to substantially invest in energy efficiency, and to continue to operate the two nuclear plants Xcel owns in Minnesota. All of this aligns pretty well with what CUB has recommended.

Xcel also proposes building a lot more natural gas generation in its new plan, though these generators would operate rarely. The new plan proposes two new, 400-MW combustion turbine plants in Lyon County, MN and Fargo, ND. In addition, Xcel would update two existing combustion turbine plants to keep them operating for years to come. Unlike the Sherco plant, which Xcel estimated would run at 80% of its full capacity, these plants would be “peakers,” running only occasionally, averaging a 5% capacity factor to meet demand peaks. Xcel also notes that it may need substantial additional gas generator capacity down the road, but that need could be met with another type of power resource.

CUB is still examining the new plan. Our modeling demonstrated that Xcel could reliably meet its customers’ needs without any new gas generation, so we want to take a particularly hard look at the proposed new and refurbished gas plants. Additionally, Xcel’s plan includes very little distributed solar, an important resource for keeping costs and emissions down. And CUB’s modeling found that Xcel could benefit from a significant amount of battery storage; Xcel’s new plan adds a small amount, but not until 2030. Finally, Xcel says that its new plan costs less than its previous plan. This comports with CUB’s modeling, showing that eliminating the Sherco plant would save customers money, but we’d like to better understand Xcel’s calculations and precisely which costs are included (or not).

This new direction is an excellent step for Xcel customers and the environment. However, we recognize that it will be challenging for the workers and surrounding community at the existing Sherco coal plant. The plant employs 300 people at an average salary of over $88,000, and it contributes 77% of the tax base for the city of Becker, according to a study by Center for Energy and Environment. We understand that many in the community had been hopeful that the new gas plant would provide some ongoing plant jobs and property tax revenues, and the new proposal will be seen as a loss to many in the area. Recognizing this, Xcel noted that it is working with stakeholders to attract new economic development to the area and that it guarantees all of its current employees will continue to have jobs, but it will undoubtedly require more effort to help the area transition.

Make a public comment

You can support the Consumers Plan by submitting a public comment to the PUC. With the new proposal from Xcel, the PUC has extended the deadline for comments to August 13 at 4:30 p.m. Use the form below or submit a comment by email, mail, or other means.  

Make sure to reference PUC Docket No. 19-368, and please note that everything in your comment, including your name and email address, will become a part of the public record. Your address will not be shared.

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Author: Annie Levenson-Falk

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