Xcel can fix downed coal unit at Pueblo but at what cost?

Cost figures redacted in public report. Colorado PUC tells utility go ahead but at your own risk

by Allen Best

Xcel Energy will be repairing problem-plagued Comanche 3 and the cost will be somewhat less than was feared.

Those estimated costs, however, remain behind the curtain of Colorado Public Utilities Commission proceedings, redacted from the filings submitted by the utility on Jan. 16 in Xcel’s monthly report to the PUC.

The clearest indication of the cost was disclosed by Eric Blank, the chair of the PUC commissioners, at the commission’s weekly meeting on Jan. 21. The “current cost estimate is far lower than at least I feared, and the unit appears capable of coming online before the summer of 2026,” he said.

Xcel, however, must give the PUC commissioners updated cost estimates in coming months. Whether that will be public information is not clear. Xcel had argued — and the commissioners agreed — that having to get approval for repairs prior to the work would delay that work and raise costs.

The commissioners, however, also were clear that Xcel Energy must bear the risk in committing money to those repairs.

“It is probably helpful for us to reiterate our stance from the first decision (issued in December) that this is in no way prejudging the prudency of fixing the plant. Period,” said Commissioner Megan Gilman.

“That’s not an issue that’s come before the commission, I think, intentionally on the part of the company. They have not brought that to us. And so this is at the company’s risk,” Gilman added. “Any fix to the (Comanche 3) plant in terms of who would bear that cost and if it should, in fact, continue operation has not been decided and is not being decided by this in any way, shape, or form.”

Blank and Commissioner Tom Plant agreed.

There’s a chance, some would say slim, that the PUC could ultimately decide that Xcel cannot pass along the repair bill to its customers. Critics of Xcel, including a coalition of environmental groups consisting of Mountain Mamas, 350 Colorado and Western Clean Energy Campaign, among others, contend that Xcel, in its rate increase of $356 million filed last November, already plans to ding its 1.6 million customers in Colorado.

Another element of the discussion was how much generation the two units would be permitted. Under previous agreements, Comanche 2 was to be closed in 2026 and Comanche 3 was to be permitted to produce a maximum of 3.94 million megawatt-hours.

The commissioners voted to lift the cap applying to both units, meaning Unit 2 can be run as Xcel sees fit, with the caveat that it bears the cost risk for doing so. It did vote to keep the cap as it applies only to Unit 3, and at a pro-rated total. It could have generated 3.94 MWh for the entire year. If it’s down for half the year, it can generate only half that amount, for example.

All this and more will be written up in a formal order to be issued in a week or two.

This story began in October. Big Pivots delivered the news first and to subscribers only: Comanche 3 had gone down in August, as it has so many times before. Xcel Energy, its operator and majority owner, did not expect it to be operational again until June 2026.

One lingering question then was whether it was best just to mothball Comanche 3, Colorado’s largest coal-burning unit at 775 megawatts. It had been operational since 2010 — operational, that is, when it wasn’t down for repairs. It has a reputation for unreliability.

The PUC commissioners subsequently agreed in November to let Xcel continue to operate Comanche 2, a unit scheduled since 2018 to be retired by the end of 2025. The unit, smaller at 335 megawatts, had begun operations in 1975.

As for the idea about letting Comanche 3 remain idle, it appears not to have been given serious consideration.

Environmental groups had mixed reactions about the decision. Could have been worse, they said, but could have been better.

“It’s disappointing that Xcel Energy and state agencies under Gov. Polis asked the PUC to remove reasonable limits on Comanche 2, an old coal-fired power plant that wasn’t supposed to operate at all after 2025,” said Margaret Kran-Annexstein, xirector of the Colorado Sierra Club. “This means Colorado ratepayers and taxpayers are funding utilities and state agencies to make arguments to undermine state climate goals and increase air pollution. At a time when the Trump administration is pushing costly and dirty coal on Coloradans, we find it alarming that Polis’s state agencies are also advocating to extend the life of highly polluting coal plants and even opposing reasonable limits. We need state leaders that are going to stand up for Coloradans, not support utilities in their attempts to keep us hooked on coal.”

Also of note during the 45-minute discussion:

Sole or primary?

Partly at issue was whether the outage of Comanche 3 was the “sole” or the “primary” reason for continued operation of Comanche 2. The PUC staff pointed out that prior to the breakdown of Comanche 3, Xcel had never suggested it would need to extend the retirement of Comanche 2 because of factors such as supply chain and geopolitical issues, increasing demand, or changes to the company’s resource accreditation methodology.

Blank leaned toward “primary.” He pointed to the evolving federal policy. Even prior to the break-down of Comanche 3, the Trump administration had signaled it would order Comanche 2 to remain open, as it had plants in Michigan and elsewhere. It cites executive privilege accorded the president by the Federal Power Act in cases of emergency.

The other two commissioners dissented from Blank’s wishes. “It is the sole justification, because we’re addressing resource adequacy in a variety of ways,” said Plant.

What difference does this distinction between “primary” and “sole” make? If the former, as Blank suggested and Xcel wanted, the door would have been opened for Xcel to file for recovery of costs associated with keeping Comanche 2 in operation.

This small episode is best understood as a minor skirmish between the state regulators and Xcel. While fully on board with Colorado’s decarbonization efforts six and seven years ago, of late the utility has raised red flags about rising demand from data centers and questions about having enough generating resources to meet that demand.

Who’s to blame?

If Blank was sympathetic to Xcel because of the potential federal intervention, he was miffed by Xcel’s explanations in its filings that suggested the PUC was a source of its problems.

The PUC more than three years ago had approved Xcel’s desire to get backup gas generation, including as much 400 to 500 megawatts of combustion turbine systems and an equal amount of backup. Blank said he had found no evidence that Xcel had moved forward on this. “I think optionality under conditions of uncertainty is key,” he said.

Xcel, like many other — but not all — utilities have found prices for gas plants rising. Those who moved rapidly were able to get their projects done quickly before supply chains narrowed and prices rose.

Correction: This story’s explanation of production allowed from Comanche 2 and 3 was modified.

Top: Comanche 1 closed in 2022 and Comanche 2 was scheduled to close in December but was allowed to remain open because of the outage — again — of Comanche 3. Photo/Allen Best