Earlier this month, Xcel Energy announced its plans to shut down Sherco units 1 and 2 in Becker by 2026 as part of its transition to cleaner energy sources. Last week, Laura McCarten, regional vice president for state affairs, told members of the county board Xcel is confident the transition will be a benefit to all its customers and the community.

 

“We see what our customers want - an increasing trend to a cleaner energy mix,” she said. “They want it without sacrificing reliability and they want it at a reasonable cost. The plan that we put forward, we believe accomplishes that - moves us along towards our cleaner energy mix but does it with a 10-year time frame.”

 

Sherco Unit 2 will be shut down in 2023. Three years later, Unit 1 will be shut down. Currently, the two coal-fired plants generate 1500 megawatts of power. As part of Xcel’s transition plan, Sherco 3, which produces 900 megawatts, will remain open.

 

“Our proposal is to keep operating Sherco 3 and rely on that through the 2020s. But going forward beyond that, the transition away from coal seems to be the direction the country is on,” said McCarten. “If there is new technology that can cost-effectively capture Co2 emissions from existing power plants by then, than that could be a game-changer.”

 

Xcel plans to build a new natural gas-fueled power plant at the same site. McCarten said Xcel will also be expanding more into renewable energy sources. 

 

“We’ll be advancing the addition of renewable energy on our system at the same time to capture the best prices we can, which are very favorable for wind and getting better for solar,” she said. “And we’ll be building a new natural gas plant in North Dakota.”

 

McCarten said the decision to shut down the Sherco plants, build new gas-fired plants and expand its renewable energy program is just part of a long-range plan that will take place over decades.

 

“As we looked at our 15-year time frame for resource planning, we saw that many of our large power plants that we consider the base core of our system, including Monticello, Prairie Island and our other coal plants, they’re all coming up on decision points on whether to keep operating them,” she said. 

 

“The nuclear plants would reach the end of their 60-year extended license period. Then the question is, can you continue to operate them and can you  license them for additional operation?”

 

McCarten said all those decisions are coming up in the early 2030s. 

 

“We felt that with that time frame, dealing with Sherco Units 1 and 2 now would put us in a better position to manage those big decisions in 2030,” she said. “We wouldn’t have as much on our plate in 2030.”

 

McCarten said Xcel’s proposal still has to be approved by the Public Utilities Commission (PUC), and there have already been comments to accelerate the shutdown.

 

“During the course of the resource plan, there were some parties that proposed shutdown in 2019 or 2021,” she said. “We felt that was not a wise course of action. So as we go through this process, there will be agencies that will provide input to the commission. Other parties will respond to our proposed plan. Some may say go faster. We are going to hold with the plan we put out. We don’t need to go  faster. We’re already a leader in the country with low carbon and with renewables.” 

 

McCarten said there has also been talk about skyrocketing utility rates as the result of the switch from coal to gas. She said there will be some increases as Xcel upgrades all of its plants. But they are estimating the shutdown and new gas-fired plant will result in about a two percent rate increase.

 

“We have ongoing investments with transmission and at nuclear plants. Those sort of investments will require some increase in rates,” she said. “Based upon the big picture - the long-range analysis that we have done, the proposal we’ve filed might add another two percent. We think that’s reasonable.”

 

As far as long-term rates, McCarten said  the switch will diversify the type of fuel, creating a safety net in case of a natural gas increase. By 2030, Xcel expects to generate 35% of its energy using renewable sources.

 

“Because we have that diversity of fuel mix, our customers would be protected against the full brunt of a spike in natural gas prices,” she said.

 

McCarten said in addition to hearing public comment about the proposed transition plan, one of Xcel’s next moves would be preparing for the new gas-fueled plant.

 

“Some time in 2016, we would anticipate starting the regulatory process for the new replacement plant at the Sherco site,” she said.