Cutting Carbon and Increasing Savings: A Win-Win for Minnesotans

This blog post was originally published on January 21, 2020, and was updated on June 5, 2020, to reflect new developments around Xcel Energy’s coal plant operations.

Fresh Energy’s work to cut carbon pollution in Minnesota started strong in 2020, with exciting results from more than a year of effort by our energy markets team.

Allen S. King Generating Station, photo by Xcel Energy

In early 2020, Xcel Energy has announced that it will change how it operates two of its Minnesota coal plants throughout the year, which Xcel projects will result in a 60-90% reduction in carbon emissions at these plants and millions of dollars in savings for customers. Closing coal plants and replacing them with renewables, efficiency, and other clean energy is a core goal for Fresh Energy —and running coal plants less in the near-term demonstrates significant progress.

Specifically, Xcel planned to move two of its remaining four Minnesota coal plants (Allen S. King and Sherco 2 in Bayport and Becker, respectively) to a seasonal operations strategy – not running the units at all in the spring or fall. We’re pleased to announce that on May 21, 2020, the Minnesota Public Utilities Commission approved Xcel’s proposal.

This is the first time Minnesota coal plants have been operated seasonally and is the first major announcement to be made following Fresh Energy’s investigation into the widespread practice of “must running” coal plants all year long.

As was pointed out by commissioner Joe Sullivan at a Public Utilities Commission hearing, the change will reduce emissions dramatically – achieving 20% of the state’s climate goal in one fell swoop.

This move will also save customers $90-130 million, which customers will start noticing on their bills next year. Xcel announced at the hearing that, in fact, the Allen S. King plant had not operated since January due to low market prices, so savings may be even greater than anticipated.

In addition to the change at the Sherco 2 and Allen S King plants, Xcel is considering changing the way it operates its 11 other coal plants across the country. With this move, Xcel is positioning itself as an industry leader in the Midwest and across the country as the electricity sector transitions away from coal.

Sherco Generating Station, photo by Xcel Energy

“Xcel’s plan demonstrates how utilities can have an impact on carbon emissions immediately, even before their coal plants are scheduled to retire. Best of all, Xcel’s proposal is a win for carbon reductions and consumers’ bottom lines,” says Allen Gleckner, senior director of energy markets and regulatory affairs. “It was a rewarding culmination of hundreds of hours the Fresh Energy energy markets team spent over the past eighteen months working with utilities and other stakeholders and providing in-depth analysis and advocacy at the Public Utilities Commission.”

Let’s take a closer look at Xcel’s announcement. In projections Xcel provided with its plan to change coal plant operations, it forecasts that carbon emissions will drop between 60-90% annually—the equivalent of the yearly emissions from more than a million cars. This represents a 30% drop in carbon emissions from Xcel’s entire Minnesota footprint and will save customers $87 to $130 million.  The savings will take the form of both immediate fuel and operations savings of $8.5 to $28 million per year and $50 million in longer-term savings from reductions in maintenance and future plant investment. Xcel customers will notice these savings when they look at their bills, both in the near-term and over the next eight years.

While this is great news, the icing on the cake is that Xcel’s change in coal plant operations is largely replicable across Minnesota, the Midwest, and the country. In fact, we’re already seeing news articles pop up questioning coal plant practices in other states, as well as inquiries by utilities, regulators, and stakeholders throughout the Midwest.  We see this as a big first step in a much larger process. In March 2020, other Minnesota utilities will file details on their coal plant operations with the Public Utilities Commission and Fresh Energy is committed to continuing to lead on data analysis and regulatory advocacy throughout the summer with the goal of  reducing coal plant operations in other Minnesota coal plants, that will result in even deeper carbon and consumer savings. We’ll keep you posted as we learn more.

In addition to all of this, Xcel is in the process working on its Integrated Resource Plan which will outline its proposed investments in electricity generation over the next 15 years, including transitioning away from coal completely. Xcel will release its updated draft plan in April at which point we’ll do a deep dive into the fine print and will encourage folks to weigh in on that plan during the public comment period that will run through October.

Fresh Energy is continuing to advocate for all Minnesota utilities to operate their coal plants more efficiently as we work to phase out coal for good. We hope to see additional announcements about reduced coal operations later this year.

The clean energy market is moving fast and undergoing lots of change. Stay tuned to Fresh Energy’s Clean Power blog, Facebook, and Twitter for the latest news. And subscribe to “Decarbonize,” our clean energy podcast. Find it online here or on major podcast providers including Apple Podcasts, Spotify, and more.

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