The Issues

Here’s what Xcel Energy’s plan for MN power plants means for you

Minnesota energy regulators are set to rule on Xcel Energy’s plan to cut carbon emissions and boost renewable energy in the coming decades, which would include shutting down two units of its coal-fired Sherco Plant.

Xcel announced a year ago it intends to close units 1 and 2 at Sherco in Becker, Minnesota, by 2026, while boosting renewable energy sources as it looks to meet carbon emission targets set out in the government’s Clean Power Act.

On Friday, the Minnesota Public Utilities Commission will hold the second half of its hearing on Xcel’s “Integrated Resources Plan 2016–30,” which has generated more than 10,000 comments from members of the public – most of them in support, according to these PUC briefing papers.

Here’s what you need to know about Xcel’s plan:

Changes to its energy generation

Key points of the proposal are as follows:

  • Xcel will retire 1500 megawatts (MW) of energy generation by shutting down two units of the Sherburne County Generating Station, known as Sherco, by 2026.
  • Generating an extra 1,800MW from wind power and 1,400MW from large solar farms by 2030 (though some of this large solar capacity may be reduced depending on the success of its smaller-scale “Community Solar Garden” program, which is expected to generate 650MW by 2020).
  • Softening the blow from the shutdown of the Sherco units by constructing an almost 800MW natural gas plant on the existing Sherco site by 2026.
  • Building a 230MW natural gas combustion turbine in Fargo by 2025.
  • Continuing to operate its Prairie Island and Monticello nuclear plants through the end of their operating licenses in the early 2030s.

What environmental impact will this have?

Xcel plans to generate 40 percent of its energy from renewable sources by 2030, at the same time reducing its carbon emissions by 60 percent.

This goes beyond the government’s Clean Power Plan, which aims to reduce emissions from power plants – which account for 40 percent of all U.S. carbon emissions – by 32 percent by 2030, compared to 2005 levels.

Coal is considered the dirtiest form of energy generation in terms of carbon emissions and pollution, according to Scientific American, and so closing two units of Sherco will go a long way to reducing Xcel’s carbon output.

What impact will there be on electricity bills?

The PUC briefing paper has a table on what the impact on customers will be over the next four years, broken down by customer class.

PUC utilities Xcel plan

So this looks a little confusing, but basically Xcel’s preferred plan would increase residential energy bills by 4.51 percent a year, which the PUC says would lead to people paying an extra $21.39 per month on average above current levels by 2020.

Now this is a significant amount of money, but the PUC briefing says that this is only for the first five years, when Xcel would be undertaking significant infrastructure investments to increase its renewable capacity.

The briefing paper notes: “It is not surprising that moving more expenditures up will increase rates in the near term,” but adds that Xcel’s changes is more likely to “minimize rates in the long-term” compared to continuing with its current energy portfolio.

Are there any objections?

Feedback from various cities, organizations and business has largely been positive, the PUC document says.

But one organization that has a complaint is St. Paul based Fresh Energy, which according to its news outlet Midwest Energy News is 95 percent in favor of Xcel’s plan but one sticking point is its intention to build the gas-fired plant at Sherco.

The company cites advocates who argue that with renewable technology changing rapidly, and reducing in cost, “locking into a natural gas plant a decade prior to its opening could hurt ratepayers.”

Its science policy director J. Drake Hamilton said that energy companies must under Minnesota law show that the construction of new non-renewable energy plants is “in the public interest,” but she argues: “Xcel has not done that … we have to see that no alternative is cheaper.”

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