New Xcel Energy-Colorado chief says utility well positioned to lead clean-energy transition

Robert Kenney took over as president of Xcel Energy-Colorado while the utility was seeking approval from state regulators for rate increases, a new clean-energy plan and a proposal to cut emissions from its natural gas system.

“It has been a very jam-packed four months, both personally and professionally,” Kenney said during an interview in his office in Xcel Energy’s building in downtown Denver.

“There’s a lot to absorb. I knew that coming into it, but it’s been a good four months,” added Kenney, who started on the job June 6.

Kenney figures his time at the Pacific Gas and Electric Co., where he led the utility’s regulatory strategy and execution, helped prepare him for “just about anything.” Before joining PG&E, he was chairman of the Missouri Public Service Commission, where he led a 190-person agency.

At Xcel Energy, Kenney will lead the company through its ongoing transition from power generation dominated by coal and other fossil fuels to the use of more renewable energy sources and the push for greater energy efficiency. He succeeds Alice Jackson, who moved into the new position of Xcel senior vice president overseeing system strategy and planning.

Kenney said California, where he previously worked, and Colorado are both leaders in driving the clean-energy transition and setting bold targets for addressing climate change.

Xcel Energy, Colorado’s largest electric utility, is based in Minneapolis and serves eight states. In 2018, the company announced plans to deliver carbon-free electricity by 2050. In 2021, Xcel Energy-Colorado pledged to slash its greenhouse-gas emissions 85% by 2030.

Xcel and other utilities in Colorado are striving to meet their own goals and keep in line with those set by state lawmakers. The Colorado General Assembly’s plan is to cut heat-trapping emissions statewide 26% by 2025; 50% by 2030; and 90% by 2050, compared to a 2005 baseline.

In 2021, Xcel Energy-Colorado’s fuel mix was 33% wind; 32% coal; 29% natural gas; and 5% solar. Xcel expects to be at more than 80% renewables by 2030.

“These are very aggressive outcomes that we expect to achieve,” Kenney said. “One of the areas I want to make sure we’re focusing on is that we’re doing it in a way that doesn’t leave any of our communities behind and doing it in ways that are affordable.”

Energy transition

To help meet the targets for renewable energy and emissions reductions, Xcel is phasing out its coal-fired power plants. The last one scheduled to be online is the third unit at the Comanche Generating Station in Pueblo. Comanche 3’s retirement date is no later than Jan. 1, 2031.

Critics of coal in general and Comanche 3 in particular said in recent Colorado Public Utilities Commission hearings that the plants should be shut down sooner. Comanche 3 has had chronic problems since its start in 2010. It was out of commission for all but a few days in 2020 and several months earlier this year.

Xcel Energy customers will help pay off the coal plants set to be shuttered earlier than planned.

Speakers in recent hearings criticized the company’s proposed investments in natural gas. They said as with the coal plants, customers will be paying for gas plants and pipelines long after they’re needed. They said instead, the move to renewable energy should be speeded up.

“We’ve got a billion dollars worth of coal plants that are stranded and now Xcel is trying to do the same thing on their gas system,” Leslie Glustrom, a Boulder resident with the nonprofit Clean Energy Action, said in a September hearing.

Critics contend that as more people install solar to take advantage of declining costs, customers who remain on Xcel’s system will end up paying a bigger share of the overall expense.

“Those who can least afford it, especially the disproportionately affected communities, will be stuck paying the bills instead of the business and affluent customers who can get off the grid,” said Bill Levis, a former director of what is now the Colorado Office of the Utility Consumer Advocate.

Kenney acknowledged that Xcel Energy’s investments in natural gas were a big topic of conversation in recent hearings before the PUC. “I think that’s an important conversation for us to be having and the commission has a variety of different proceedings in which we will have that conversation.”

However, Kenney sees natural gas remaining part of Xcel’s system for the foreseeable future.

“Even as we bring more renewables onto the system, and we will continue to do that, we do need 24/7 dispatchable resources,” Kenney added. “I think the important thing to remember is that our climate here in Colorado is such that we have real winters and natural gas is an efficient heating fuel.”

The company is focused on reducing methane emissions across its system, Kenney said. Methane, the main component of natural gas, is a more potent greenhouse gas in the short term than carbon dioxide.

Xcel Energy is buying gas from companies that use a third party to monitor emissions during production.

Xcel Energy gas bills rose Oct. 1 because of the higher costs it’s paying for the fuel. At the time, the company said wholesale natural gas prices hit a 15-year high.

To blunt the continuing increases, the company buys gas early and stores it so it doesn’t have to pay higher prices on the spot market, Kenney said. Xcel is also signing longer-term contracts as a hedge against volatility in the market.

A deep freeze in February 2020 that stretched from Texas to the Midwest drove up natural gas prices as utilities rushed to bulk up supplies. Xcel Energy got approval to add a temporary rider to customers’ bills to recoup about $500 million in storm-related expenses.

Pathway to the future

Earlier this year, the PUC started discussions with utilities as well as water and climate experts about the challenges of keeping the lights and power on in the face of increasingly extreme weather. There was speculation at the start of the summer whether utilities, especially in the drought-stricken West, would have to resort to rolling power outages if soaring temperatures strained the system.

Planned outages didn’t occur because people were prepared, Kenney said.

“And I expect that we will be prepared again,” he said. “We’ll make sure, first of all, that we have adequate resources, either through our own plants or through purchased resources.”

Xcel Energy will also schedule maintenance before high temperatures set in. Kenney said the company will communicate with customers so they can conserve energy when demand starts surging.

The utility has taken steps to prepare for the longer term as well. The PUC has approved the plan for most of Colorado’s Power Pathway, a transmission project that will cost up to $2 billion and consist of up to 650 miles of high-voltage lines. The project is seen as critical to delivering more renewable energy and improving the electric grid’s resilience.

“It is really going to be a game-changing infrastructure project. I think the process we were able to go through is a testament to how quickly we can get projects approved and moving along here in Colorado,” Kenney said.

The approval process took about 18 months. Xcel Energy will have to get approval for permits from local governments, most of them on the Eastern Plains.

A beefed-up electric grid will help power the new electric vehicles Xcel Energy and the state of Colorado hope to see on the roads. Xcel’s goal is to be able to accommodate 1.5 million electric vehicles across its eight-state territory. Gov. Jared Polis wants to see about 940,000 of the vehicles on Colorado roads by 2030.

“We’re well positioned to build the infrastructure that will enable that to happen,” Kenney said.

Source: Read Full Article