In a year that has already seen record heat and early demands for air conditioning, Xcel Energy is signaling how it will fill its growing power gap for peak summer months and beyond: Coal, gas, gas and more coal.
Environmental groups protest the state’s largest utility is backsliding on its commitment to switching to clean, renewable energy as Xcel suffers a series of power plant breakdowns that leave the company far short of what it is likely to need to supply Colorado.
Xcel is warning state regulators it may fall up to 608 MW short of peak summer power needs this year. Ideas floated to fill the gap for the for-profit, shareholder-owned utility include contracting for more coal energy from a Craig plant, and restoring full capacity at a compromised Hayden coal unit.
In filings at the Public Utilities Commission on how it will fill power gaps, Xcel has also said it wants to extend the life of natural gas-fired turbines, utilize mobile gas turbines in certain spots, and extend the lives of other coal plants that had long been scheduled to close over the next four years to meet Colorado’s climate change goals.
Environmental advocates denounced Xcel’s doubling down on fossil fuels at a time when extended drought and record low snowpack and high heat send loud warnings to Colorado to keep attacking climate change with greenhouse gas cuts.
Moreover, they say, Xcel’s maintenance problems and poor planning are what caused the looming power gap, but the company wants Colorado residents to pay for its mistakes with higher electricity charges and more pollution. Xcel is asking the PUC to allow for $100 million in new charges to customers to help pay for closing the resource gap, on top of other requested increases to the rate base.
“Adding more capacity at other coal plants is not the solution to Xcel’s largest coal unit being out of service yet again. We are disappointed that Xcel is proposing to walk back its commitment to transition away from coal to clean energy,” said Colorado Sierra Club director Margaret Kran-Annexstein. She called Xcel’s gap-closing proposals decisions “that will not only harm the health of Coloradans, and exacerbate climate change in the face of record-breaking drought and heat waves, but will also likely add huge cost to ratepayers. All this at the same time that Xcel is actively courting data centers, which will only increase energy needs.”
Eric Frankowski, executive director of the Western Clean Energy Campaign, said “Xcel keeps signaling it wants to sink more money and resources into gas and coal when those are precisely the things causing the problems.” Taken together, Frankowski said, “all of this has to raise serious, serious concerns about how adequately power resources and the grid are being managed by Xcel.”
Xcel is in this predicament because of multiple plant failures, which have led to a growing gap between the power that the company can generate or buy from others and this summer’s projected peak demands.
In August 2025, the breakdown-prone Comanche 3 Unit in Pueblo was damaged by “severe vibrations.” The 750-MW unit was scheduled to be back in service by June, and Xcel Energy then estimated it was facing a 77-MW generating shortfall.
By March, the start date for Comanche 3 had been pushed back to this coming August, so that the unit would be little help in meeting the projected summer peak of 7,534 MW. The gap had grown to 472 MW.
Other failures added to the problem.
In late November, Hayden Units 1 and 2 both went offline due to a partial collapse of a portion of a scrubber removing pollutants from emissions. After repairs, the 98 MW Unit 1 was brought back online in March. Unit 2 is slated to return to operation this month — but only at 75% of its 135-MW capacity.
If additional repairs are approved they could bring Unit 2 back to full capacity, Xcel told the PUC. The price of those repairs, however, was blacked out in the company’s filing.
Xcel’s Cabin Creek Pump Storage Project and its 93 MW of power suffered a turbine failure in February. “The return to service date is not known at this time and may impact summer 2026 operations,” the company said in its resource adequacy plan.
Xcel Energy now says Comanche 3 will be back in service in July with repairs projected to cost $15 million to $26 million. The company’s share after insurance and payments from co-owners is about $4.9 million.
Still, Xcel now estimates its generation gap could total 608 MW.
The utility has already floated the idea of extending the life of Comanche Unit 2 and the Hayden units until 2030.
Comanche 2 was scheduled to close at the end of 2025, but due to failure at Comanche 3, the PUC is allowing it to run till the end of 2026 in order to provide adequate on-call power for the grid. One of the Hayden units is slated to close in 2027 and the second to close in 2028.
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 are taking proactive steps to maintain reliable service for our customers in Colorado as we plan for the high-demand summer seasons of 2026 and 2027,” Michelle Aguayo, a spokesperson for Xcel Energy, said in a statement.
The utility is looking for “cost-effective, short-term solutions,” Aguayo said, while it continues to address long-term needs. She added that resource adequacy has been a growing risk for several years.
“We recognize the importance of balancing reliability with affordability, and we are committed to acting responsibly and in the best interest of our customers. We will also continue to work with the PUC on longer-term resource planning efforts to support the state’s continued growth and clean energy goals,” Aguayo said, in an emailed statement.
Xcel’s hopes for the Craig plant are complicated by a host of conflicting regulatory and legal issues. Tri-State Generation, which owns most of the plant’s capacity and manages it, had planned to shut down Craig Unit 1 for good by December 2025.
The Trump administration ordered Tri-State to keep Craig open and available to the Western grid, saying growing national demands for energy constituted an emergency. Tri-State, the Colorado attorney general and environmental groups are challenging those orders in court, but for now Craig Unit 1 is operable but idle since no one has demanded the power.
“Given that several regional utilities — including Xcel Energy — have reached out to Tri-State to inquire about potential excess capacity, it is not surprising that Xcel Energy referenced these initial conversations in its filing,” Tri-State spokesperson Mark Stutz said.
“Tri-State continues to engage in discussions with regional utilities, and where it has been in the best interest of our members, and allowed us to assist other utilities in addressing capacity shortfalls, we have entered into agreements,” he said. “At this time, however, Tri-State does not have an agreement with Xcel Energy related to any effort, by Xcel Energy, to meet resource needs through use of Craig Station Unit 1.”
Advocates like the Sierra Club want Xcel to close its generating gap through cleaner methods, including signing up more customers for “demand response” that offers discounts if customers cut or shift their power use away from peak demand. They also favor more spending on “distributed generation,” where customers with solar panels and two-way meters or storage such as Tesla’s Power Wall get credits to put that energy out onto the grid at peak times.
“What we would like the company to do is to take another look,” Sierra Club energy analyst Matt Gerhart said. “If it took the money that it was going to spend on mobile natural gas units and instead designated that towards demand response and virtual power plants and dispatchable distributed generation, could it get that same amount of capacity for a much lower cost and much lower emissions?”
Xcel’s proposal to fill the peak demand gap does include up to $15 million to increase payments for demand response programs.
Environmental groups, consumer advocates and other parties can comment on Xcel’s filed plan this month, and the PUC will take up the proposal at the end of April, Gerhart said.
“The problem with fossil fuel resources is that they break down, right?” said Noah Rott, Sierra Club’s Colorado deputy press secretary. “Which is the whole reason we’re in this situation in the first place.”