MINNEAPOLIS (AP) — Xcel Energy plans to keep burning coal in the two oldest units at its Sherburne County power plant near the central Minnesota community of Becker, at least until the future of environmental regulations becomes clearer.
In a report to regulators Monday, Xcel said that for now, sticking with coal is the smartest course, rather than switching to natural gas.
“We looked at a broad spectrum of alternatives,” said Jim Alders, the regulatory strategy consultant for Xcel. He said the study looked at building a series of natural gas plants as well as a combination of renewable energy and natural gas plants, and also examined energy conservation measures.
“In each case, the Sherco 1 and 2 Units compared very favorably and appeared to be more economical,” Alders said.
Xcel concluded it would cost about $1.7 billion to replace units 1 and 2 with natural gas equipment. Installing top-shelf pollution control equipment in both units would cost nearly $400 million. Either move would have a significant impact on customer rates.
The report came a week after President Barack Obama announced new rules aimed at reducing power plant emissions that contribute to climate change.
“The big unknown, of course, is what kind of public policy is going to develop around climate change and carbon emissions,” Alders said. “We don’t have a good feeling of what’s going to be established by when.”
Kevin Reuther, legal director at the Minnesota Center for Environmental Advocacy, said he wasn’t surprised by Xcel’s decision to stick with coal for now, but that the report shows that it won’t make sense to keep operating the plant on coal under Obama’s plan.
“The report says that once there’s an appropriate fee on carbon, which there needs to be and there will be, it doesn’t make a whole lot of sense to continue to operate Sherco on coal,” Reuther said.
Sherco is Xcel’s largest power plant in the Upper Midwest, generating enough energy for 2 million homes. Built in the 1970s, Sherco 1 and 2 produce about 20 percent of the electricity used by Xcel’s 1.2 million customers in Minnesota. Its newest unit, Sherco 3, remains down for repairs.
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