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Xcel invests in 'clean' coal

Gargi Chakrabarty, Rocky Mountain News

Published August 16, 2006 at midnight

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Xcel Energy on Tuesday committed $3.5 million through next year to develop Colorado's first "clean" coal power plant, signaling the utility's keen interest in pursuing the multimillion-dollar project.

The money will be used to conduct engineering studies and project development activities for the 300- to 350-megawatt power plant, which could supply electricity to about 350,000 households.

Xcel wants to build the plant itself rather than open it to competitive bids from independent power producers. The plant could cost between $500 million and $1 billion, depending on the location, size and infrastructure, such as transmission lines, as well as technology.

The utility wants to recover that investment from its 1.3 million electric ratepayers in Colorado, if the state Public Utilities Commission approves the project.

Xcel plans to file an application with the commission as part of its resource plans in the fall of 2007.

Construction would begin as early as 2009. Xcel expects to complete the project around 2013.

"We believe the development and commercial operation of clean-coal technology is needed in Colorado and throughout our nation," said Richard Kelly, president, chairman and chief executive of Xcel Energy.

The plant would use a chemical process to turn coal into a gas, which is then burned in a modified combustion turbine to generate electricity.

The potential benefits of the technology, called integrated gasification combined cycle, or IGCC, include energy efficiency and lower emissions. The technology also helps capture carbon dioxide before it is emitted into the atmosphere and sequesters it in places such as depleted oil wells.

The IGCC technology is used in Florida and Indiana. The technology has never been tried at a high altitude.

Brush, in northeastern Colorado, has emerged as a front-runner for the plant, although Xcel has not announced its decision. Xcel has a coal-fired power plant in Pawnee, outside of Brush, and that location already has the infrastructure for an additional plant.

Environmental groups praised Xcel's commitment to the technology.

"I think this is a landmark project, the first coal-fired plant in the United States that would reduce carbon dioxide emissions by capturing the gas," said John Nielsen, energy program director at Western Resource Advocates. "Leadership like this is crucial to address the serious environmental and economic risks of global warming."

But independent power producers criticized the utility's decision to build the plant itself - saying the risk of cost overruns would be shifted to Colorado electric ratepayers.

"We want a chance to bid on this plant because it's best for ratepayers," said Nick Muller, executive director of the Colorado Independent Energy Association, which represents independent power producers. "Right now, (Xcel) is asking for an open checkbook, and they are saying, 'Trust us.' And that would be a big mistake."

Frank Prager, Xcel's managing director of environmental policy, said Xcel would argue to the PUC that building the plant in-house would make sense for its ratepayers.

"There are ways to build a plant to minimize risk," Prager said. "We'd look at opportunities to work with vendors to reduce risk."

By the numbers

$3.5 million has been committed by Xcel Energy to develop Colorado's first "clean" coal power plant.

350,000 households could receive electricity via the 300- to 350-megawatt power plant.

2009 is the expected start date for construction, if the state Public Utilities Commission approves the project.