Xcel Energy unveils plan to cut emissions

Xcel Energy coal-to-gas plan cuts CO2, NOx, SO2, and mercury, aligns with Clean Air Act, meets EPA mandates, retires coal units, boosts natural gas generation, trims costs versus scrubbers, with bill impacts in Colorado.

Xcel Energy is proposing to spend $1.3 billion to convert coal-fired power plants to natural gas and close a plant to comply with a new Colorado law aimed at cutting pollution from power plants.

Xcel Energy, Colorado's largest electric utility, said the plan will help meet statewide goals of reducing emissions of nitrogen, carbon dioxide, sulfur dioxide and mercury emissions across Colorado. The company said it will also save $225 million compared to installing pollution-control equipment.

Gov. Bill Ritter campaigned for the law encouraging the use of natural gas to cut pollution and Xcel Energy supported it. The Minneapolis-based utility said switching to natural gas is expected to raise customers' utility bills on average by 1 percent annually.

State regulators will consider the company's proposal during ongoing smart grid hearings in Colorado.

Dick Kelly, Xcel Energy's chairman and chief executive, said the company expects the Environmental Protection Agency over the next several years to require a series of mandates "unprecedented in the history of the Clean Air Act."

"We believe our proposal is the best way to meet new environmental requirements in a manner that preserves reliability and minimizes customer costs," Kelly said.

Xcel Energy plans to reduce emissions by closing a 186-megawatt coal-fired power plant in Boulder by the end of 2017 and switching all four units at its Cherokee plant in Denver to natural gas according to its coal closure timetable for the region. New pollution-control equipment would be installed in other coal plants.

The utility's proposal drew praise from Ritter and environmentalists. Ritter called it the "first major milestone" for Colorado's plan to replace old, inefficient coal-fired power plants with new, cleaner plants.

"Clean air is not a partisan political issue and this effort is the proof-in-the-pudding," said Pete Maysmith, executive director of Colorado Conservation Voters. "Diverse stakeholders, from industry to conservation groups, from Republicans to Democrats, all came together to create this framework for change — and it's time for Washington to take notice."

Critics, which included some GOP lawmakers, objected to the law's preference for natural gas and, like utilities that have resisted pollution-reduction targets elsewhere, questioned the effect on rates because of the volatility of gas prices.

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