Xcel Energy’s Comanche 2 coal-fired power plant — slated to close at the end of this month — got a new lease on life Wednesday, but state regulators warned that the future of its damaged sister unit, Comanche 3, may be in doubt.
Facing tight generation capacity exacerbated by the Comanche 3 breakdown, Xcel Energy — the state’s largest electricity provider with 1.6 million customers — petitioned to keep the 50-year-old Comanche 2 unit running.
The Colorado Public Utilities Commission approved the extension at its weekly meeting Wednesday with some limitations, and also cautioned that the company wouldn’t have a blank check for repairs to Comanche 3, which is set to close in 2031.
To date, Xcel Energy’s subsidiary, Public Service Company of Colorado, has not offered an estimate of what the repairs will cost.
“I do find it a little bit bizarre that the company can come forward and say, we know what needs to be fixed, and we’re going to have it fixed by June, and, oh, we have no idea what those costs are,” commissioner Tom Plant said.
“How do you go into a project like this, a multimillion dollar project, without even a ballpark estimate of what your costs are going to be, with the assumption that it’s just going to be approved and passed on to ratepayers?” Plant said. “I just find that mind-boggling.”
The $1.3 billion Comanche 3 plant has been riddled with breakdowns and operating problems since the 750-megawatt unit went online in 2010. It has been shut down for repairs for more than 900 days over its lifetime.
The most recent outage started Aug. 12 when “elevated vibrations” tripped the turbine offline, leading to “notable damage.” Xcel Energy estimates that it will take until June to repair the unit.
Xcel Energy said that the electric supply problems were also being caused by supply chain problems in getting new equipment and increasing electricity demands from large-load customers, mainly data centers.
The commission, however, focused the problem on the damaged coal-fired unit.
“We have a PUC that saw through Xcel’s attempts to deflect blame for its inability to keep the largest and newest coal-burning facility in Colorado from repeatedly breaking down,” Eric Frankowski, executive director of the Western Clean Energy Campaign, said in a statement.
“The commission has sent a strong message that Xcel risks having to bear the burden of fixing the plant instead of passing the buck to customers,” Frankowski said.
Are demands really growing that quickly?
While the company’s petition was supported by the PUC staff, the Colorado Energy Office and the Colorado Office of Utility Consumer Advocate, conservation and business groups sought to limit the impacts of the plan.
“The joint petition calls into question whether Public Service has prudently managed its system,” the environmental policy group Western Resource Advocates said in a filing. The group also questioned whether the utility was overstating its electricity demands.
WRA and three other environmental groups called for an alternative plan limiting the operations of the coal plants. The City of Boulder sought to have Comanche 3 removed from customer rates until it is back up and running.
Colorado Energy Consumers, which represents major industrial and commercial customers, argued in a filing that all costs associated with Comanche 2 and Comanche 3 repairs should not automatically be considered recoverable from ratepayers. CEC said Xcel Energy should also foot the bill for all replacement power costs.
The commission adopted the petition as filed, which includes a two-step process with a report in January, monthly operation, progress and repair cost reports, and a final report and tally in June.
One restriction that the commission did place on the units was that if Comanche 3 is up and running by midyear, together they could not exceed the generating limit — 3.9 million megawatt-hours — set for Comanche 3, since the rationale for extending Unit 2’s life was to fill in for Unit 3.
The fate of Unit 3, however, was left up in the air as the commission said that the company should not assume that anything it spent on repairing the plant would be deemed “prudent” and therefore recoverable in rates.
“I really want reporting on the projected capital costs of fixing three on a monthly basis before they are obligated,” PUC chairperson Eric Blank said. “I’m not interested in seeing very large capital expenditures on an after-the-fact prudency review fight.”
In January 2020, a turbine was damaged by vibrations and it cost $4.2 million to repair it. When it was turned back on a valve failure led to the turbine overheating and another $20.4 million in repairs.
“They’re saying they’re going to have it up and running again in June,” Plant said. “At that point, we’re four-and-a-half years left before it closes. So the question is, how much do you spend to generate four-and-a half-years of production?