Electric cooperative serves Xcel Energy notice that it wants out of troubled coal plant

The latest development in the saga of Xcel Energy-Colorado’s chronically troubled Comanche 3 coal plant is an electric cooperative’s move to force the utility to buy its 25% share in the plant.

CORE Electric Cooperative said Tuesday that it’s exercising its right under agreements with Xcel Energy to withdraw its ownership in the coal plant in Pueblo. CORE, the state’s largest electric cooperative, sued Xcel last year, claiming the plant’s operational problems have cost the cooperative tens of millions of dollars through the years.

A trial on the lawsuit is scheduled for October 2023.

Comanche 3 was originally supposed to operate until 2070. However, pressure has built to close it much earlier as its operational problems have piled up and the move against coal-generated electricity has intensified.

Speeding up the plant’s closure was a major point of contention in negotiations of Xcel Energy’s new electric resource plan, approved in August by the Colorado Public Utilities Commission. The plan says Comanche 3 will close by Jan. 1, 2031. The plant’s capacity will be ratcheted down leading up to its closure.

A 2021 report by the PUC said the coal unit averaged 91.5 days per year of outages over a decade and was out of commission for all but a handful of days in 2020. Problems with a generator knocked it offline for several months this year.

The unit began operating in 2010.

“Our fundamental claim is that through many of these instances over the years, they have failed to prudently operate the plant,” said Jeff Baudier, CEO of CORE.

That failure amounts to a default of the cooperative’s agreements with Xcel Energy, triggering CORE’s right to end its ownership in Comanche 3 and to be paid by Xcel for its share, the cooperative said in a notice to the utility in August.

Comanche 3’s closure will end Xcel Energy’s coal-fired generation in Colorado. The utility has pledged to provide carbon-free electricity across the eight states it serves by 2050.

“We disagree with CORE’s claims and expect to address them through the legal process. Generation at Comanche 3 is very important for all customers and we value all our partners who help provide safe, reliable and affordable energy,” Xcel Energy spokeswoman Michelle Aguayo said in an email.

Baudier said the buyout price the cooperative is seeking will be based on the plant’s appraised value and multiplied by CORE’s 25% stake. He said the cooperative will keep receiving power from Xcel Energy under an agreement that runs until 2026.

“We will not lose any available power as a result of pulling out of Comanche 3 because the power still has to be supplied,” Baudier said. “Because of all the operational issues we’ve had with Comanche, the costs have been higher. We expect ultimately to reduce power costs as a result of our exit from Comanche.”

CORE, formerly named the Intermountain Rural Electric Association, is securing other sources of power, such as wind and solar energy, that will help it meet the state’s requirements for cutting greenhouse-gas emissions, Baudier added.

CORE, based in Sedalia, has about 300,000 members, or customers, across Colorado.

During negotiations over Xcel Energy’s new electric resource plan, some environmental and community organizations argued for closing Comanche 3 before January 2031. They cited the impacts on climate change and said Xcel Energy should not have built a new coal plant in 2010 because of ongoing efforts to reduce heat-trapping pollution.

The fact that Xcel Energy, Colorado’s largest electric utility, will recover its costs for Comanche 3 through charges to customers has fueled debate. The utility has estimated the costs to be $732 million, including the plant’s value and decommissioning expenses.

The Colorado Office of the Utility Consumer Advocate is reviewing the potential impacts on Xcel Energy customers if the utility’s share of ownership in the plant increases. Joseph Pereira, deputy director, said the office presumes the matter would have to go to the PUC.