Facing nearly 300 lawsuits over a wildfire that destroyed 1,084 homes and killed two people, Xcel Energy on Thursday filed a $1.9 billion wildfire mitigation plan aimed at preventing future blazes.
Among the initiatives in the three-year plan are adding hundreds of weather stations and cameras, adding technology to more precisely target planned outages, replacing outdated equipment and increasing line inspections by radar drones.
“These investments are designed to mitigate a risk,” Robert Kenney, CEO of Xcel’s Colorado subsidiary, said in an interview. “We are trying to do everything we can do to tackle this problem and keep our customers safe.”
The plan, which must be approved by the Colorado Public Utilities Commission, would increase the average residential customer’s bill by 9% or $8.88 a month.
Utility-sparked wildfires are becoming more common as power lines are vulnerable to high temperatures and extreme weather, particularly in the West, where recent fires in Texas, California, Oregon and Colorado have caused billions of dollars in damage.
The Marshall fire, driven by high winds on Dec. 30, 2021, swept through unincorporated Boulder County, Superior and Louisville, destroying homes and businesses and causing $2 billion in property damage.
Boulder County officials determined that sparks from an “‘unmoored’ Xcel Energy power line” was one source of the fire. The utility disputes that finding.
In February, Xcel Energy acknowledged that its equipment likely started the Smokehouse Creek fire in the Texas Panhandle. The 1.2 million-acre fire was the largest in the state’s history.
By the end of 2023, about 280 Marshall fire lawsuits had been filed against Xcel Energy, including ones by Target Corp., the Boulder Valley School District, the governments of Superior and Louisville, and 150 insurance companies covering affected homeowners.
Utility companies are making hard decisions without precedent
The challenge for utilities developing wildfire mitigation plans is that this is a new exercise, said Kyri Baker, an assistant professor of systems engineering at the University of Colorado.
“There are a lot of hard decisions to be made without precedent,” Baker said. “There is no roadmap for wildfire mitigation. It is going to be different for every utility in every state.”
“Colorado is unique, our situation is unique, we are a bit more sensitive to wildfire and we have a lot of infrastructure around nature,” she said.
Looking at Xcel Energy’s brief outline of initiatives, Baker said, “some of these upgrades are necessary. I don’t know about $1.9 billion, it sounds like a lot.”
But a utility faces the problem of balancing risk and capital expenditures. “What if you miss one line, and that one downed line causes a fire that destroys a thousand homes?” Baker asked. “It would be a PR nightmare.”
“It is hard to put a price on reliability and resiliency,” she said.
Xcel Energy ranks its wildfire risk areas in three tiers. About 235,000 customers live in Tier 3, the areas with the most fire risk. Another 320,000 live in Tier 2, places with the next highest fire risk. The utility has a total of 1.6 million electricity customers.
The 2025-27 plan expands on an earlier company wildfire mitigation plan and has six key components:
- Installing weather stations and wildfire detection cameras for greater situational awareness.
- Increasing the frequency of technology-enabled inspections of our poles and equipment.
- Implementing infrastructure improvements such as targeted undergrounding of power lines, equipment upgrades and major transmission line rebuilds.
- Accelerating and expanding vegetation management near our infrastructure.
- Adding new equipment and technology to expand the use of our Enhanced Powerline Safety Settings Program and improve the ability of our facilities to react to wildfire risk events.
- A comprehensive Public Safety Power Shutoff Program, including backup energy rebate programs, improved interactive outage maps and active work to educate, prepare and support customers for potential outage events.
The last two elements will help the utility to be effective and “more surgical” in shutting down power lines during extreme weather events, such as high winds or storms, to reduce fire risk, said Anne Sherwood, the area vice president for wildfire mitigation.
In April, Xcel Energy shutdown part of its grid to reduce fire risk in the face of high winds. It was the first time the utility used such a planned outage. But with inadequate notice and information available, the shutdown caused chaos and prompted a PUC investigation.
Xcel Energy said it may use planned shut-offs in the future.
“A starting point has to be trust between the utility and the consumer,” Baker said, adding that better information has to be available.
The proposed $1.9 billion wildfire mitigation plan comes after the PUC greenlighted a $440 million Xcel Energy Clean Heat Plan to cut greenhouse gas emissions; a $264 million Transportation Electrification Plan; and a $12 billion Clean Energy Plan to build renewable energy generation.
All those plans will be paid for by customers through their bills.
As for the $1.9 billion for wildfire mitigation, Kenney said that over three years it comes to less than 30 cents a day on a customer’s bill “and that is adding some pretty sophisticated equipment that is going to make it safer … and more reliant and more resilient.
“We are extracting a lot of value for that $1.9 billion,” he said.