The battle over just how just a proposed “just transition” for coal communities facing the loss of power plants and mines is being fought out before the Colorado Public Utilities Commission.
Colorado’s push to close all its coal-fired power plants by 2031 — to reduce greenhouse gas emissions — is creating a major economic threat to communities that have relied on jobs and taxes from those plants and the mines that feed them.
The fight at the PUC focuses on four coal-fired plants — located in Pueblo, Routt, Moffat and Morgan counties — operated or owned in part by Xcel Energy’s subsidiary, Public Service Company of Colorado.
There are two other coal-fired plants that are not under PUC jurisdiction: the Rawhide Generating Station, operated by the Platte River Power Authority, and Colorado Springs Utilities’ Ray D. Nixon Power Plant.
Both are slated to close by 2030, although Colorado Springs is considering extending the Nixon unit’s life.
Shutting the Xcel Energy units will put a 10% to 50% hole in the tax base of these communities along with the loss of hundreds of jobs, according to PUC filings by the impacted counties and municipalities.
In November, the commission issued its decision on what Xcel Energy owed the coal communities, including $203 million dollars in payments to make up for lost property taxes. The communities, however, were left unhappy and dissatisfied.
Pueblo city and county, Routt County and the town of Hayden, and Moffat County and the city of Craig are pressing the commission to reconsider its decision. Each is hoping to improve the terms of its just transition package.
The PUC is slated to begin reviewing requests for a rehearing Tuesday.
Morgan County is set to get $20.6 million over six years to soften the impact of the Pawnee Generating Station in Brush shutting its coal operations and switching to natural gas. The county did not seek a rehearing.
There is also a feeling that even though the docket was entitled the “Just Transition Solicitation” the coal communities got short shrift because it turned into a bigger proceeding including Xcel Energy’s electric resource plan, which forecasts the system’s demand and new generation and transmission to meet it.
“It was supposed to be a just transition filing and out of maybe 10 hours of deliberations they spent two focused on just transition,” Routt County Commissioner Sonja Macys said.
“It just feels like an injustice to us that so little time was spent on that piece of what does a just transition look like? What makes these communities whole?” Macys said.
Jaime Valdez, transportation and energy advocate for the community group Green Latinos, said “the just transition issues got overtaken by discussions on data centers and large loads.”
Ratepayers statewide on the hook for the transition from coal
The PUC is trying to balance the revenues coal communities need to navigate the loss of their economic engines and the impact it will have on Xcel Energy customers’ bills.
“This essentially is money being collected from all the Public Service ratepayers as part of their revenue requirement and being distributed to these communities rather than money coming from shareholders or the Public Service Company,” commissioner Megan Gilman said during the hearings.
“It is actually the ratepayers using the vehicle of Public Service paying these communities,” Gilman said.
Routt County’s Macys sees it differently. “I guess my question would be, how is that a consideration?” she said. “How is that in a just transition solicitation there is a consideration for rate payers who do not reside within the communities that are impacted by these power plants?”
“The Xcel ratepayer on the Front Range is benefiting from the power generated by these communities that they have now chosen to abandon,” Macys said. Three of the four coal communities don’t even get their electricity from Xcel Energy.
In 2019, the legislature passed a bill to support the transition of coal communities declaring it a “moral commitment to assist the workers and communities that have powered Colorado for generations.”
The law created the state Office of Just Transition, which received $30 million to help coal communities and workers. That cash, however, is only seed money compared to the hundreds of millions of dollars at stake at the PUC.
So, what did the just transition communities ask for, what did they get, what are still trying to get and what will it cost Xcel Energy’s customers?
The single biggest closure will be the Comanche Generating Station in Pueblo, the largest plant on the Xcel system.
Comanche Unit 1 closed in 2022. Comanche Unit 2 was set to close this month but its operations have been extended for a year due to a breakdown at the Comanche Unit 3, which is slated to close by 2031.
The Comanche Station generates nearly $31 million a year in property taxes — 10.5% of all the taxes Pueblo County collects. If Comanche 3 had operated until its original 2070 closure date it would have pumped $1 billion into the county.
“If I knew I wasn’t losing that taxbase I’d sleep better at night,” said Jeff Shaw, CEO of the Pueblo Economic Development Corp.
The 77 jobs at Comanche 3 provide $11.2 million in wages annually and the unit creates indirect employment for 160 workers, according to an economic impact analysis done for the county.
“The Pueblo community has paid a huge price in this transition to reduce emissions. The commission should recognize those sacrifices and contributions to the state of Colorado,” the county, the city and PEDCO said in their joint request for reconsideration.
In an earlier PUC proceeding, Xcel Energy and the Pueblo community negotiated a deal for payments of $16.2 million a year for 10 years to make up for the loss of Comanche 3 property taxes.
That amount could be reduced if new energy facilities decide to locate in Pueblo increasing the tax base.
Two cooperatives — Holy Cross Energy and CORE Electric — have fractional ownership in Comanche 3 and pay a total of $6 million a year in taxes. Neither has offered to compensate Pueblo for their share of taxes, according to a PUC filing.
The second part of that settlement was an agreement by Xcel Energy to look at siting a comparable energy facility in Pueblo.
A study done by a community-based energy committee and funded by the utility concluded that only a natural gas-fired plant with carbon capture or a small modular nuclear reactor would make Pueblo “whole.”
A reactor could create more than 200 jobs and $95 million in property taxes, the study estimated. A 500-MW solar installation might create 10 jobs and $1.7 million in property taxes.
“Losing a big part of your tax base creates urgency to swing for the fences and try to replace it quickly,” Shaw said.
No firm commitment, however, has been made by either Xcel Energy or the PUC to place such a facility in Pueblo.
Xcel Energy proposed a credit for locating a generating facility in a transition community and a second bonus credit for creating jobs. Pueblo supports both.
The tax payments, the bonuses and a $100 million fund to explore advanced technologies are Xcel Energy’s three strategies for “creating a long-term new energy ecosystem in the affected communities,” Jack Ihle, the company’s regional vice president for regulatory, said in PUC testimony.
However, power plant developers, environmental groups and the PUC staff warned that overly generous bonuses could lead to more expensive projects.
“If the credits are enough to tip the scales such that one or more projects is selected, that would mean that ratepayers would be paying more than they would have if these bonus credits were not used,” Tyler Comings, an economist testifying on behalf of the Sierra Club told the PUC.
Water storage rights also in play
The Colorado Independent Energy Association, which represents independent power producers, estimates with the credits Xcel Energy customers could pay $4.5 million more for a 50-megawatt project or up to $32.5 million more for a 300-MW project located in a just transition community.
Trying to “strike the right balance between the benefits to just transition communities and the cost to ratepayers,” the PUC removed the bonus jobs credit. Pueblo hopes to get it restored as key to getting a big project with many jobs.
“The closure of Comanche 3 in Pueblo will be catastrophic to Pueblo, unless there is a path to replacement generation that will create a large number of good family supporting jobs as well as the millions of dollars of tax payments,” Pueblo said in its filing.
In Northwestern Colorado, the debate over what a just transition package should include is colored by something that did not happen at the PUC.
Moffat County and the City of Craig struck a deal with Tri-State Generation and Transmission Association which is shutting the Craig Generation Station and the Colowyo Mine that provides its fuel.
Tri-State is a nonprofit providing wholesale electricity to 41 rural cooperatives in Nebraska, Wyoming, Colorado and New Mexico.
The Craig Station is operated by Tri-State, with several utilities having fractional ownership, including Xcel Energy. It is set to shut in 2028. Tri-State’s Colowyo Mine, which supplies the power plant, is closing this month and firing 133 employees
In 2023, the power plant and mine provided 43% of property tax revenues for the county and accounted for 437 high-paying jobs. They also contribute $321 million to the regional gross domestic product, according to a Colorado Mesa University study.
Tri-State has agreed to put $5.5 million a year into an economic development fund between 2026 and 2029, for a total of $22 million. The association will also pay up to $48 million in backstop funding to help offset taxes between 2028 and 2038.
The backstop contribution could be reduced by state or federal aid received by the county or city.
The association is also ceding a water storage right in the Elkhead Reservoir to the county and is committed to putting a 307-MW natural gas-fired power plant on the site of the Craig Station, as well as 200-MW of battery storage.
“It was a long negotiation but we got there,” said Shannon Scott, the economic development director for the city. Scott is also vice president of the development authority set up to handle the $70 million from Tri-State.
The authority’s goal, Scott said, will be to “help incentivize companies coming and creating the jobs we’ll be losing.”
Pueblo agreement defined payments in Routt County
In the PUC proceedings this is being called the “Moffat Model” and communities are pressing for similar economic development and infrastructure commitments.
“How is it that Xcel doesn’t get held to that same standard of reinvesting in economic development, reinvesting in the time that it takes to rebuild communities?” Routt County’s Macys said.
Xcel Energy was not party to the negotiations, owning a 9.2% share of the Craig Station in Moffat County, and did not commit to backstop its share of the taxes. The PUC, however, ordered the utility to pay a total of $3.9 million in tax payments over six years.
Still, Moffat and Craig are seeking to extend the Xcel Energy payments to 10 years and for $14.8 million in community assistance funds.
Neighboring Routt County and the Town of Hayden were not part of negotiations that fixed the terms for property tax compensation for Pueblo, but in those talks the payments for Xcel Energy’s Hayden Station were set at $2.7 million a year for six years.
While Comanche 3 went into operation in 2010, Hayden Unit 1 is 60 years old and Unit 2 is 49 years old. Xcel Energy said it based the payments on the life of the plants. Unit 1 is set to close in 2027 and Unit 2 the following year.
On Nov. 29, Unit 2 was shut after part of its air pollution control equipment buckled. It is awaiting repairs.
The Hayden Station shutting down will make only a small dent in county revenues, which are fueled by the tourist economy in Steamboat Springs, but the loss of the $4.4 million in taxes will create a major hit for the 11 other taxing authorities.
The Hayden School District will lose 38% of its tax revenue, the West Routt Fire Protection District 44%, the West Routt Library District 38%.
This will be exacerbated if the county’s Twentymile Mine closes. It pays about $617,000 annually in taxes to seven communities in the rural, southern part of the county.
Routt County and Hayden initially argued that they should receive 10 years of payments, like Pueblo, and $89 million in tax and development funds. The PUC did not agree and left the term at six years. The town and county are now pressing the commission to reconsider.
“Our argument was that we should not be subjected to an agreement that we did not negotiate,” Routt County’s Macys said. “We were not at the table.”
The county and Hayden are now seeking the extra four years of backstop payments for lost taxes and $11.5 million in direct economic assistance payments over three years. They have also lobbied for a utility-scale geothermal plant to replace the Hayden Station.
“Our position all along has been that each just transition community deserves what makes it whole, and that each should argue for its own points,” Macys said.
The PUC did direct Xcel Energy to give the community the plant’s rail spur, any unused water rights after 2050 and the plant’s pump station.
“There was some progress there,” said John Bristol, executive director of the Routt County Economic Development Partnership. “It’s certainly not what folks were hoping for, but it is a start.”
The rail spur is near the Yampa Valley Airport, where Hayden has developed a 58-acre business park to lure new economic activity. The pump station, currently managed by Colorado Parks and Wildlife, will give the community river access and an opportunity to develop recreation-based activities.
Depending on what the PUC decides, including whether to entertain the coal communities’ requests, Xcel customers face paying more than $240 million for a just transition.
The Colorado Office of Utility Consumer Advocate, which represents residential and small commercial customers, in PUC proceedings is supporting the coal communities ask.
“The request is fair given the contributions these communities have made to the state relative to the size of the JTS,” Joseph Pereira, the UCA deputy director, said in a statement.