Xcel plan would retire part of coal power plant by 2026

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Smokestacks as tall as skyscrapers at Sherco
Smokestacks at Sherco, Sept. 21, 2015
Matt Sepic | MPR News

Updated: 5:27 p.m. | Posted: 2:42 p.m.

Xcel Energy on Friday filed plans with state regulators that would shut down part of the state's largest coal-fired power plant.

Sherco's two older units would retire in 2023 and 2026 as part of the plan, which also calls for 1,200 megawatts of renewable energy, including a new 50 megawatt solar installation at the site of the Sherco plant in Becker.

"Our plan provides great certainty, focuses on the future and is the right commitment for our customers and our communities," said Chris Clark, president of Xcel's operations in Minnesota, North Dakota and South Dakota.

Clark said Xcel would see a 60 percent reduction in carbon emissions by 2030 under the plan.

The plan is a dramatic change from the one Xcel officials filed with regulators in January. Back then, the utility said it preferred to keep all of Sherco's units burning coal through 2030. But Clark said several things have changed since then, including the U.S. Environmental Protection Agency's Clean Power Plan, which aims to reduce carbon emissions from power plants 32 percent by 2030.

In addition, Clark said the utility wanted to avoid retiring too many of its larger power plants within a short period of time. While two of Sherco's three coal units will retire, Xcel plans to keep running its two nuclear plants at Monticello and Prairie Island through 2030.

The reaction from Gov. Mark Dayton, clean energy advocates and others was swift and positive. Just one day before, advocates filed more than 11,000 comments urging state regulators and Xcel to retire the Sherco units.

"We're really excited by this," said Kevin Reuther, legal director for the Minnesota Center for Environmental Advocacy. "The governor has repeatedly said that he wants to get Minnesota off coal, that he wants to get us back on track to reduce the carbon emissions goals that are in state statute, and this is a significant step forward in that direction."

Reuther says he hopes other utilities will follow Xcel's lead and realize there's a cost to keep burning coal in old power plants that will continue to face regulatory and maintenance costs. Meanwhile, wind and solar are getting cheaper.

Xcel officials say the plan would result in a 2 percent increase in costs to customers, on top of expected increased costs for electricity that could come regardless of the transition away from coal.

But Xcel's proposal wasn't welcomed by everyone. State Rep. Pat Garofalo (R-Farmington) says that in addition to higher energy bills, he's concerned that Xcel says permanent jobs at the plant will drop by about half. As chair of the House energy committee, he held a hearing last month in Becker, Minn., on the future of Sherco under the federal carbon regulations. He says he's not against replacing coal with renewable energy.

"It's a good policy if you replace assets that have reached the end of their lifetime," Garofalo said. "But that's not what's happening here. These assets are being retired early."

Becker Mayor Jerome Kleis says he's also concerned about the loss of roughly 150 jobs, but says he's pleased Xcel is communicating early about its plans so that city officials can look to the future.

"Yes, we would love to have Xcel continue to run their coal plant in Becker just the way they are, but unfortunately you know how times change," Kleis said.

Energy-intensive businesses, rate payers and others will weigh in on the plan before state regulators. It could take more than a year before the plan is finalized.