At long last, Xcel sets Retirement Dates for Sherco Units 1 & 2

Xcel's E-Docket filing on Friday October 2^nd, 2015 had a particularly big news item regarding the highest profile issue in their 2016-2030 Integrated Resource Plan. Xcel has set a time table to cease coal generation at Sherco Unit 1 & 2 in 2026 and 2023 respectively and replace them with a new natural gas plant and solar generation on the same site. This is a huge shift from back in January when Xcel officials filed with regulators a preferred plan to keep all of Sherco's units burning coal through 2030 (though somehow at a lower pace). In response, the PUC ordered Xcel Energy to evaluate the scenarios for retiring Sherco resulting in filing on March 16th that has been picked apart for the several month-long comment period- and now stands as corrected. Click Here to read my comments on it. 

This decision on Sherco may seem groundbreaking and dramatic when viewed from from the usual central station perspective of utility systems. “In reality, though, from the perspective of what is technologically possible, economically cost-effective, and publicly desirably, Xcel or any other utility could be retiring Sherco 1 & 2 in 4 and 5 years rather than 8 & 10 years. There is a big chance Xcel will find that it is much easier to do much more, more quickly than they initially think. 

This important victory come thanks in a large part due to the North Star Sierra Club’s Beyond Coal Campaign collecting and filing more than 11,000 comments from Minnesota residents. The 11,000 comments the Sierra Club filed with the PUC were petition cards filled out by Minnesota residents asking for both Sherco units to be retired by 2021 and 2024 and replaced with wind and solar.

Back in July, a group of environmental and energy organizations submitted a Clean Energy Plan to the PUC showing how Sherco 1 & 2 could be retired without a significant impact to electric grid reliability while offsetting $1.2 billion in prevented environmental and health costs.

As a result, Xcel now anticipates that Sherco 1 and 2 will indefinitely and continually be under environmental pressure. For that reason Xcel management came to the conclusion that benefits of certainty provided by setting retirement dates outweighed any strategic value Xcel saw in keeping Sherco on the table as a future bargaining chip.

It did not make much sense to sink investment into expensive pollution control upgrades to the decades-old Sherco units, when the 2030 carbon-reduction targets under the Clean Power Plan would prompt a retirement of the coal burners anyway. There is no mathematical way to reach the 40 percent mandated reduction in CO2 emissions the EPA has for Minnesota without retiring coal plants.

The campaign to retire Sherco is not without its share of controversy. On September 21^st, the House Energy Committee Chair Rep. Pat Garofalo along with Rep. Jim Newberger, who represents Becker, MN held a hearing on the Sherco plant’s employment and tax base importance to the town and surrounding area. Xcel opted for an eight to ten year retirement timetable allegedly to provide an ample transition period for workers at Sherco and to study using natural gas and solar generation at the same site.

 Xcel also mentioned plans to build a natural gas-fired generating unit in North Dakota by 2025. While adding new natural gas plants is controversial from and environmental and price volatility perspective, Xcel says their new proposal contains enough energy efficiency programs and renewable energy additions to save them the costs of having to add three additional combined-cycle gas plants. 

 The Public Utilities Commission will either approve or reject Xcel’s proposal, most likely next year. Xcel plans to file more detailed information about the proposal no later than January 29th.