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That strategy includes investing $350 million to upgrade pollution controls on its largest coal-burning generator, co-owned with a Wisconsin utility, with the goal of operating it until 2040. The generator is part of the Boswell power plant in Cohasset, Minn., that in 2011 was the state’s second-largest greenhouse gas emitter, according to EPA data.
Xcel Energy, the state’s largest electric utility, also has embraced fuel diversity. It shuttered two old coal plants in the Twin Cities in the past decade and replaced them with natural gas units. It captures the most wind power of any U.S. electric utility and is adding more. Xcel also has extended the life of its two nuclear power plants, which emit no carbon dioxide, and promotes conservation and solar power.
Laura McCarten, an Xcel regional vice president, said the utility is on track to reduce greenhouse gas emissions 30 percent by 2020 from 2005 levels. In fact, one of Xcel’s policy concerns is that it get credit for those early actions if the EPA enacts greenhouse gas restrictions on existing plants.
Relies on coal
Xcel still relies on coal, including an upgraded coal plant in Oak Park Heights that in 2011 was the state’s fifth-largest emitter of greenhouse gas. The company now faces a decision point for its largest power plant — the coal-burning Sherco generators in Becker — the state’s largest emitter of carbon dioxide.
The utility recently began studying the future of the oldest two units at Sherco, which supply about 20 percent of its Minnesota customers’ power. Xcel has invited environmentalists, business groups and others to participate in the study, which must be submitted to state regulators July 1.
A key question is whether Xcel should further invest in the 1970s-era generators, which eventually may need another $350 million in pollution controls. Replacing the units with large natural gas-burning units, for example, likely would cost more than $1 billion.
“These are enormous units and they are a very important part of our overall system,” said Frank Prager, Xcel vice president for environmental policy. “This would be an enormous decision if the units were to shut down. We need to think seriously about whether that makes sense for our customers.’’
One unknown for utilities, ratepayers and investors is how regulators might react a decade from now if utilities seek rate hikes to replace their fleets of upgraded coal burners whose extended lives might become threatened by climate-change regulations.
“When utilities adjust their fleets, customers are going to bear higher costs,” said Travis Miller, a utility analyst for Morningstar in Chicago. “The big risk for utility investors is that regulators will disallow some of those costs because of the rate shock that might occur as we transition to fleets with less greenhouse gas.”
David Shaffer • 612-673-7090