Xcel Energy reaches agreement to close Pueblo’s Comanche 3 power plant by 2035

Xcel Energy has agreed to close Pueblo County’s Comanche 3 coal-fired power plant by 2035, decades ahead of its original 2070 closure date. 

The agreement comes as the Public Utilities Commission considers how Colorado’s largest coal-fired power plant fits into statewide emission reduction and clean energy goals. 

The company filed the plan Wednesday afternoon as an agreement that is supported by staff from the PUC, the Colorado Energy Office, the Colorado Office of the Utility Consumer Advocate, as well as the municipal governments of Pueblo, Denver and Boulder. Pueblo County’s board of commissioners still needs to formally approve the plan in a meeting next week.

Labor groups including the International Brotherhood of Electrical Workers, the Rocky Mountain Environmental Labor Coalition and the Colorado Solar and Storage Association also signed on to the agreement. 

Walmart, which is listed as a customer interest, was also a signatory.  

“The substantive outcomes reached in the Settlement Agreement will further the public interest by providing a path forward for the Company to proceed with projects critically needed to achieve the State’s 2030 emission reduction goals while establishing reasonable customer protections,” the agreement text reads. 

Utilities must cut their greenhouse gas emissions by 80% over 2005 levels by 2030 under state law. 

No environmental groups signed on to the plan. Sierra Club, Western Resource Advocates and the Natural Resources Defense Council have been involved in the proceedings to figure out Comanche 3’s future. 

“While we see significant value in the settlement’s effort to provide early emission reductions for our state as well as benefits to the Pueblo community, which will be impacted by the future retirement of Comanche 3, we are concerned that the settlement terms provide insufficient certainty for emissions reductions and could commit Xcel to new long-term investments in fossil-fuel resources and operations, when Colorado needs to capture low-cost opportunities to reduce carbon emissions and meet our state’s climate targets,” Gwen Farnsworth, Western Resource Advocates’ managing senior policy advisor in Colorado, said in a statement. 

Under the proposed settlement, Xcel will still pay taxes to Pueblo County through 2040 as part of a “just transition” approach. Comanche 3 provides a significant tax base for the county, which it factors into various capital improvement projects.

Comanche 3 will also undergo reduced operations in the lead-up to its closure: running at 60% capacity in 2025, 50% capacity in 2027 and 33% in 2029. 

A remaining question is whether Xcel will try to replace Comanche 3’s output with alternative energy sources, such as green hydrogen or nuclear power, which Pueblo County officials have recently pushed for. Xcel plans to solicit proposals for energy and capacity replacement, according to the settlement. 

“This process will occur on a standalone basis in an effort to ensure the Pueblo community and benefits to the community are the focus of the replacement portfolio, simultaneously seeking just transition benefits and the procurement of innovative technologies to help the Company progress towards a carbon-free future,” the settlement text reads. 

PUC hearings on the plan will begin in early December.