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Xcel’s closure of Comanche coal-fired plant challenged by carbon capture proposal

PUEBLO–A report issued this week by the U.S. Department of Energy (DOE) challenges Xcel Energy’s plan to close the Comanche Generating Station near Pueblo, saying that the three-generator plant is an ideal location for integrating carbon capture, utilization, and storage (CCUS) technology.

The report is a “techno-economic case study” of adding CCUS to the plant, which DOE says would substantially increase reductions in CO2 emissions over those predicted for Xcel’s Colorado Energy Plan (CEP) approved last year by the Colorado Public Utilities Commission (PUC).

Additional benefits, says the report, include job creation both statewide and in Pueblo, increased tax revenues for the state, the City of Pueblo and the Pueblo School District, as well as providing lower-cost power for Xcel customers.

The proposal comes at a time when Xcel is facing fresh criticism over the CEP caused by contractors pulling out of bids to build wind farms and solar fields due to underestimation of the actual costs involved.

Xcel’s plan was approved by the PUC based on representations that the cost per kilowatt-hour for renewables selected from among the more than 450 bids submitted would be lower than existing fossil-fuel generation, potentially saving ratepayers as much as $175 million.

In its decision to approve the CEP, the PUC said, “The competitive response to the RFP far exceeded all previous ERP solicitations and provides a rare opportunity to capture some of the lowest resource bids ever experienced in Colorado. We note that the wind bids are exceptionally low as compared to the pricing information provided in Public Service’s previous wind resource proceedings.”

But now it appears that the bids chosen by Xcel were unrealistically low, and some bidders have declined to sign contracts for the projects, leaving Xcel in the position of having to go looking for other bidders.

Besides the claim of lower energy costs for consumers, the PUC approved the plan in part because it proposed to reduce CO2 emissions by closing the coal-fired plant, which the PUC said is “consistent with the state’s public policy objectives, such as giving the fullest possible consideration to cost-effective implementation of new, clean energy technologies.”

But the PUC also said, “There is no dispute that Comanche units 1 and 2 plants are currently in compliance with emissions regulations and are fully operational.”

The DOE report says CCUS can achieve CO2 emissions reductions over 23 years of 460 million metric tonnes, a 65% reduction from the baseline 2005 emission levels. This is 13% more than the claims by Xcel in the CEP.

The report estimates more than $10 billion in revenues can be generated by selling and shipping the extracted CO2 by gas pipelines to Texas, where it is injected into existing wells to pressurize them and increase oil yields, while at the same time sequestering the CO2 far underground and away from the atmosphere.

A big reason DOE chose the Comanche plant is its close proximity to the existing Sheep Mountain gas pipeline. The plan would require the construction of only 37 miles of 20-inch diameter pipeline to connect to the Sheep Mountain network. The construction would take only one year and would not require building compressor stations.

Another benefit of converting the Comanche plant is that it avoids a premature shutdown of an operating plant and the cost to ratepayers who have to still pay for the shutdown prior to enjoying the full value of the plant they also paid to build.

The economic benefits don’t stop with CO2 sales.

The report estimates that from 2020 to 2042, the conversion will create more than three and a half times the number of jobs as the CEP in Pueblo, 11,200 compared to 3,100, and state-wide it would create 18,600 jobs to the CEP’s 13,300.

Wage and salary earnings would increase by more than $500 million in Pueblo, and by more than $900 million in Colorado.

Colorado income tax revenues would increase by $40 million and tax revenues in Pueblo would jump by more than $800 million, or nearly 60%.

The report can be downloaded here.

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