Xcel Energy, facing what it says is a shortfall in electricity generating capacity for the next two years, is proposing to run its four coal-fired units until 2030.
Comanche Unit 2, in Pueblo, was supposed to close at the end of 2025. One unit at the Hayden Station is to close in 2027 and the second unit is slated to shut in 2028. Comanche Unit 3 is set to close in 2030.
Comanche 3 suffered turbine damage in August taking the unit offline. Xcel Energy initially said repairs would be completed in June, but in a March 2 report to state regulators the company said it hoped to get the plant running in August.
The Colorado Public Utilities Commission agreed to extend the life of Comanche 2 unit until the end of 2026 to fill in for Unit 3.
Now, however, facing increasing demand and trouble bringing new generation online, the company is suggesting extending the life of the coal plants.
“Near-term, the most likely capacity solutions are continued extensions of existing units — namely, Comanche Unit 2 and, to a lesser extent, the Hayden units,” the company said in its March 2 report to the commission.
The PUC has already approved extending the life of four Xcel Energy natural gas-fired plants — Fruita, Fort Lupton 1 and 2, and Valmont in Boulder County — to 2028. They were scheduled to close in 2026.
“We think that they have had plenty of time to plan for the closure of their coal plants,” said Heidi Leathwood, climate policy analyst with the environmental group 350 Colorado. “They may be trying to capitalize on the federal government’s obsession with keeping coal plants open.”
“This report was meant only to be informative for the Commission and stakeholders regarding these challenges, and the range of options being considered to ensure customers have the safe and reliable power,” the company said in a statement.
The U.S. Department of Energy has issued emergency orders to keep open coal-fired plants in four states, including the Tri-State Generation and Transmission Association’s Craig Station in Colorado. Tri-State has appealed the DOE order.
Colorado Attorney General Phil Weiser has also sued the federal Environmental Protection Agency for its rejection of a state clean air plan that included the closure of the state’s six coal-fired power plants.
Xcel Energy said “a confluence of events including increasing peak demand growth on the company’s electric system and supply chain and geopolitical issues … have delayed the commercial operation of new generation resources.”
Tariffs and inflation have also played a role, the company said.
The same issues were argued by the company in its petition to keep Comanche 2 open, but they were rejected by the PUC.
“We find that Unit 3’s prolonged, unplanned outage is the single justification for extending Unit 2,” the commission said in its decision, adding the other reasons — supply chain and geopolitical issues, changes to the company’s resource accreditation methodology, and increasing peak demand — failed to justify Unit 2’s extension.
The commission in a second decision called Xcel Energy’s arguments “unpersuasive.”
Nevertheless, the utility has seen demand grow by 200 megawatts over the past five years and is projecting a shortfall in generating capacity to meet summer peak load of 77 MW in 2026 and 445 MW in 2027 before shifting into a surplus position in 2028.
In its five-year plan, Xcel Energy said it expects 318 MW of demand just from data centers.
Xcel offered three options
In its report the company proposed three options: operating all coal units to 2030; a one-year extension for Comanche 2 and Hayden units and run Comanche 3 to 2030; keep Comanche 3 offline and extend Comanche 2 and the Hayden units to 2030.
Running all the coal plants would cut the project generating shortfall in 2027 by two-thirds “to a level where we anticipate the remaining short positions could be solved through advanced market purchases,” the company said.
Running all the coal-fired plants would also create a large surplus in generating capacity — more than 1,000 MW — in 2029 and 2030. The second option would also trim the shortfall and provide some surplus capacity.
Keeping Comanche 3 offline, however, creates a bigger deficit for the system. “The absence of Comanche Unit 3 creates a sizable gap that the company is likely unable to solve through market purchases in 2026 and 2027,” the utility said.
Xcel Energy has filled its needs by buying wholesale power from other utilities.
“Relying on other utilities, however, is becoming increasingly challenging, which means we need to ensure Xcel Energy has its own sufficient resources. Currently, we are evaluating all reasonable options and will be filing a follow-up in June, laying out the proposed actions, the company said.
Some critics, however, question whether the situation is as dire as Xcel Energy makes it out to be, since the shortfall also includes a cushion, called the reserve margin.
In the last few months Comanche 3 and the Hayden units were offline. “All three units were down and the lights didn’t go out,” said Eric Frankowski, executive director of the Western Clean Energy Campaign.
“It really stretches the bounds of credulity — and credibility — to fathom a utility with hundreds of megawatts of coal capacity broken down and out of commission thinking about burning more coal as the solution,” Frankowski said.
At the Hayden plant, Unit 1 returned to service at the end of last week and Unit 2 “will partially return to service” by the end of March, the company said.
Xcel Energy has made commitments in settlement agreements, which include environmental groups, on rate cases, electric resource plans and clean energy plans approved by the PUC that require reducing coal-fired capacity and increasing renewable energy.
The company is also required under state statute to cut its carbon emissions by 80% over 2005 levels by 2030.
Xcel Energy conceded that extending the coal plants will “require unwinding several regulatory decisions,” as well as action by the Air Quality Control Commission to address state emissions regulations.
Positioning for a better deal
The proposal to run all the coal plants may just be a negotiating position, said Joseph Pereira, deputy director of the Colorado Office of Utility Consumer Advocate, which represents resident and small commercial customers at the PUC.
“They may be trying to set the stage for extension of Comanche 2,” Pereira said. To unwind those agreements would need the OK from the groups that signed them. Without that it could lead to lawsuits.
Adequate generation resources have been an issue for at least four years. “The commission has been focused on this. Parties have been focused on this. There’s been pretty strong steps to ensure resource adequacy out till the end of the decade,” Pereira said.
The Xcel report outlined 3,150 MW of new solar and storage projects — some company-owned, some under contracts — that are being developed quickly to take advantage of federal tax credits before they expire in 2027.
The company is also bringing online a 600 MW wind farm located in Kit Carson County later this year.
“We know coal plants are expensive to operate and we’ve committed to cheaper, cleaner energy and we have to stay the course,” 350 Colorado’s Leathwood said.