An agreement that would have locked in 12 more years of life for Xcel Energy’s troubled Comanche 3 coal-fired power plant was rejected by the Colorado Public Utilities Commission on Monday.
All three commissioners voiced opposition to the deal, citing concerns over the plant’s reliability, the fact that early closure might be cheaper for consumers and that the agreement would preclude future utilities commissions from revisiting the plant’s closure date.
The commissioners agreed to ask Xcel Energy to do a more complete analysis of a 2029 closure of the coal-fired plant.
There was not, however, a formal vote on the settlement which was struck in November between Xcel Energy and interested parties, including the PUC staff, the Utility Consumer Advocate and the Colorado Energy Office.
The PUC decision comes as the 750-megawatt Comanche 3 unit has been shut down since January by equipment failures. The $1.3 billion plant has been plagued by problems and 700 days of unplanned shutdowns since it opened in 2010.
Comanche is also the most expensive of the company’s coal-fired plants to operate, according to a company filing with the PUC, at $46.32 for each megawatt-hour generated. By way of comparison the four wind farms that Xcel brought online in 2020 average $15.86 for each megawatt-hour.
“I am skeptical that we can find in total that the settlement agreement is in the public interest,” Commissioner Megan Gilman said. Keeping Comanche 3 running longer, she said, could be a case of having the “ratepayer pay more to pollute more.”
Commissioner John Gavin said he was “looking at it through the lens of reliability … I have major concerns about reliability.”
“Having an unreliable asset in your dispatch stack may be worse than not having it there at all,” Gavin said.
Xcel originally sought to run Comanche 3 until 2040, but in the settlement, the utility agreed to close the unit by the end of 2034 and start ramping down its use beginning in the summer of 2022. The agreement also would have locked in the Dec. 31, 2034, closure date.
“It’s not reasonable to bind future commissions out 12 years,” PUC Chairman Eric Blank said, adding that the PUC has to have flexibility to address changes in legislation, technology and the environment.
The debate over the fate of Comanche 3 is part of the commission’s review of Xcel Energy’s Electric Resource Plan and Clean Energy Plan. The resource plan, submitted every four years, projects electricity demand and the generating resources needed to meet it and insure reliable delivery of electricity.
The Clean Energy Plan outlines how the utility will meet its statutory target of an 80% reduction in carbon dioxide emissions as part of the state’s Greenhouse Gas Reduction Roadmap.
“The decision on Comanche 3 is going to drive so many other things,” said Ellen Howard Kutzer, an attorney with Western Resource Advocates, an environmental policy group. “How are you going to replace that generation if you retire Comanche 3? Are we on track with emission reductions?”
Comanche 3 is the largest single source of carbon dioxide emissions in Colorado, according to the U.S. Environmental Protection Agency.
The PUC debate over Comanche 3’s closure date comes as the plant has been shut down since Jan. 28 by equipment failures.
In a Feb. 23 federal filing, Xcel said that it would take two months to repair the damage and that the company, not customers, would pay for the estimated $10 million to buy power to replace the plant’s output.
On March 11, Xcel filed an update with the PUC indicating that it did not know when Comanche 3 would be back in operation because it was having difficulty finding replacement retaining rings.
“Generator-rotor retaining rings, which rotate with the rotor and are typically made of nonmagnetic steel alloys, are the most highly stressed components in the entire turbine and generator-rotor system,” according to a report from the industry-backed Electric Power Research Institute.
“The retaining rings are essential and only a handful of places in the world can produce them,” Michelle Aguayo, an Xcel spokeswoman, said in a statement. “That is why we’re taking global supply chain issues into consideration when it comes to manufacturing and shipping of the parts needed.”
She said the cost of the repairs will be covered by insurance, Aguayo said.
The PUC decided that it would seek more detailed modeling and cost comparisons from Xcel Energy on the difference between 2034 and 2029 Comanche 3 closures. Gilman said the company in its analysis had focused too heavily on its preferred scenario, shutting down in 2034.
“I don’t want to see 2029 play second fiddle to 2034,” Gilman said. “I want 2029 to be thoroughly vetted.”
Gavin said there is already enough data to move forward with setting a closure date without additional modeling.
Blank was more circumspect. “Be cautious in selecting a retirement date,” he said. “Forcing an early retirement of unit 3 over the company’s objection could be shifting reliability to us. … The commission doesn’t want to own reliability, that’s on the company.”
Still Comanche 3 poses a challenge. “There are real reliability concerns with Unit 3,” Blank told his fellow commissioners. “I take your point.”