Utilities

Municipal utilities have helped drive an electricity-generation shift in which the state’s reliance on coal- and oil-fired for electricity has dropped to 2 percent from 35 percent 20 years ago.

As coal-fired power plants close across the Four Corners region of Arizona and New Mexico, the president of Navajo Nation is championing a regulatory initiative requiring utilities to reinvest locally.

In pushing for early retirement of coal plants, the utility behemoth Xcel is making a calculated move driven in no small part by ever-growing populist attitudes.

As part of a growing national wave of coal-plant retirements, Montana-Dakota Utilities’ closings will include a 54-year-old plant encumbered by uncompetitive operating and maintenance costs.

PG&E’s bankruptcy was fanned by more than wildfires: “The traditional business model of electric utilities is under siege as homeowners, corporations and new community groups seek to generate or purchase power for themselves.”

The utility behemoth Xcel Energy, among several power generators adopting a similar strategy, is accelerating its shift away from coal-fired generation in the eight states in which it does business.

The Public Service Commission has given the biggest utility in New Mexico the green light to close the state’s largest coal-fired power plant and to liquidate its stake in another.

By seizing the day rather than fighting the tide, utilities can profitably harness the trend away from coal-fired power generation—and to the simultaneous benefit of ratepayers and investors alike. 

One of the biggest electricity companies in the western U.S. says that half its 22-plant coal-fired fleet is more expensive to run than what gas- or renewables-powered generation would cost.

Xcel Energy, which has 3.6 million customers in eight states, becomes “the first major U.S. utility to pledge to go completely carbon-free” by announcing plans to go entirely to renewables.

An Indiana utility’s rapid evolution on energy policy signals broader change on the way: “That this shift happened over the course of just three years is remarkable,” writes one analyst.

A western Colorado electric co-op that is seeking to sever ties with an energy supplier disproportionately reliant on coal is typical of small electricity providers nationally who are investing in other forms of generation. “You can politicize it all you want, but in the end economics is really what drives it,” said the president of the co-op. “It is really going from being a utility-defined market to a customer-defined market.”

The Delta-Montrose Electric Association in western Colorado is seeking to buy out its contract with Tri-State Generation and Transmission Association, a regional supplier heavily dependent on coal-fired generation. The move follows a decision by Kit Carson Electric Cooperative to pay $37 million to break its contract with Tri-State, a Denver-based company that sells electricity in Colorado, New Mexico, Nebraska and Wyoming. “I think it’s fair to say it’s economics, but also for diversification, a more diverse power supply,” said Virginia Harman, Delta-Montrose’s chief operating officer.

A survey of utility industry executives reveals an industrywide reluctance to keep aging coal plants alive or to invest further in coal-fired power generation. "We will continue to focus on retiring older, less-efficient, coal-fueled units; building advanced-technology natural gas units; and investing in cost-effective, zero-carbon renewable generation,” said one utility representative in a comment that was typical of responses nationally.

Three forces are driving a national shift from coal to other forms of power generation, says an executive for Xcel Energy, a Minneapolis-based company that provides electricity to almost for million customers through subsidiaries in Colorado, Minnesota, New Mexico, North Dakota, Texas, South Dakota and Wisconsin. “It fundamentally comes down to economics,” said Jonathan Adelman, an Xcel vice president. “The secondary driver is customer expectations. Lastly, policy both at a state and federal level.”

Pueblo, Colo., nicknamed “Steel City” for its industrial past, is investing in a renewable energy industry expansion around the presence of Vesta Wind Systems, a turbine-tower manufacturer that employees 4,000 people along the Front Range of the Colorado Rockies. Xcel Energy is pushing for approval of a power-generation transition that would include wind and solar, and several renewable energy companies are looking to move to the area because of its wind and solar resources and its proximity to major regional transmission lines. The city is “poised to become the renewable energy hub for Colorado and likely the region,” one economic-development official said.

Utility heavyweights that include American Electric Power, Duke Energy, Southern Company and Xcel Energy continue to invest heavily in a move away from coal-fired electricity generation. Executives at such companies say the trend will continue, regardless of recent federal policy moves to thwart it. “Reducing reliance on coal, leveraging cleaner natural gas energy and expanding renewables on our system is part of our long-term investment strategy to continue to drive carbon out of our system,” said a spokesman for Duke.

A regional executive for Dominion Energy, one of the biggest investor-owned utility companies in the country, told the West Virginia Chamber of Commerce this week that the state would do well to look beyond coal as an economic mainstay. Dominion, headquartered in Virginia, has six million customers nationally. “For years, coal was the base of everything we did,” said Bob Orndorff, a state policy director for the company. “It still has a role, but we need to talk about wind. We need to talk about solar, because the Procter & Gambles of the world want that.”