Xcel Energy plans to shutter its two remaining coal plants in the Upper Midwest a decade earlier than scheduled - a move that will make the utility coal-free in the region by 2030.
Officials said Monday that the Allen S. King plant in Oak Park Heights will close in 2028; Sherco 3, in Becker, Minn., will close two years later.
The utility plans to expand its generation of wind and solar power, use natural gas, and keep its nuclear power plant in Monticello, Minn., operating until at least 2040 - a process that requires approvals at state and federal levels.
"This is a significant step forward as we are on track to reduce carbon emissions more than 80 percent by 2030 and transform the way we deliver energy to our customers," said Chris Clark, president of Xcel's operations in Minnesota and the Dakotas.
The utility plans to be producing "100 percent carbon-free electricity" by 2050 and will complete a major wind expansion by 2020 and a major solar expansion by 2030, Clark said. By 2030, more than half of Xcel's customers' energy will come from renewables, he said.
The closings would lead to the loss of about 180 jobs, 90 at each plant, Xcel CEO Ben Fowke said. Xcel announced earlier that it would close the two other Sherco coal generators at Becker over the next few years.
Many of those employees will be reaching retirement age at the time of the closings; those who aren't planning on retiring will be retrained, Fowke said. "We will work very hard to find other opportunities within Xcel for them to continue their employment," he said. "We really appreciate their service and what they've done. I want to make sure we do everything we can to make sure that those who continue to need to work have good jobs at Xcel Energy."
The plan should not lead to higher utility bills, Fowke said.
"Rates should stay at or below the cost of CPI or inflation," he said. "For this to be successful, it needs to be affordable and, of course, not compromise reliability. Our plan does all that. This plan compares very favorably to other less environmentally friendly alternative plans."
Move lauded by conservation groups
Environmentalists hailed the news Monday.
"Minnesotans have been calling for a transition from coal to clean energy for more than a decade, and we just took one huge step closer to a coal-free Minnesota," the Sierra Club's Jessica Tritsch said in a statement.
Xcel worked with a coalition of business, union, government and environmental groups such as the Sierra Club, Fresh Energy and the Minnesota Center for Environmental Advocacy over the past 18 months to create its Upper Midwest Energy Plan. The plan must be approved by the Minnesota Public Utilities Commission; Xcel officials plan to submit it to the PUC on July 1.
The agreement was entered into as part of Xcel's application to purchase the Mankato, Minn., Energy Center, a natural gas-fired power plant. Under the terms of the agreement, Sierra Club officials agreed to withdraw the group's official comments filed in opposition to Xcel's purchase of the plant; Xcel is already locked into the purchase of 100% of the electricity from the Mankato plant through long-term contracts, according to the Sierra Club.
Oak Park Heights will take financial hit
The King plant, built in 1968, pays $6.1 million in property taxes. The news that it will close in nine years had Oak Park Heights officials reeling on Monday.
The 120-acre plant provides about 35% of the city's tax base. The city, with a population of 4,800, has an annual budget of $5.5 million.
"It was 2040, and then it got pushed up to 2037," said Mayor Mary McComber. "Then just last week, we heard it was going to be earlier. But 2028? That's a surprise. We knew we were going to have to scramble for 2037. Nine years is ... not that far out. We're going to have to figure out where we're going to come up with those millions of dollars."
Oak Park Heights officials are working with state legislators to approve a program that would provide grants to cities facing plant closures to support planning and "economic-development opportunities ... that are tax-base positive," City Administrator Eric Johnson said. In addition, they are investigating cost-cutting measures the city can "make over the next nine years to make a soft landing."
"I think we'll be just fine," Johnson said. "We're working on a plan to come up with a plan. We're planning the planning. We're very early in the process, in understanding all the players. We'll get there. By the end of the summer, we'll probably know a lot more. Let's just see how it all unfolds. We're not starting flat-footed, but we're at step six out of 403."
Reimagining prime location
The King plant sits on 150 acres of prime real estate on the St. Croix River, which is protected by the National Wild and Scenic Rivers Act.
What kind of redevelopment could occur at the site depends on Xcel's plans, McComber said.
"People have said, 'I'd love a marina,' 'I'd love a condo,' or 'I'd love this,'" she said. "There are lots of questions we don't have answers to yet until we know what Xcel's plan is for reuse or teardown."
Some of the questions include: Will the 785-foot smokestack, home to peregrine falcon nesting boxes since 1989, remain? Will the train tracks be taken out? Will the transmission lines be removed?
Xcel officials said Monday that details on the decommissioning of the plant will be worked out in the coming years, but nothing specific has been determined. The smokestack, though, will eventually be demolished, Fowke said. The company will work to develop a plan to save the nesting-box program, he added, noting "It is a great educational tool for school kids."
Thinking about the redevelopment of the site - which includes an estimated 35-acre coal pile - is the "fun part," Johnson said.
"This isn't all doom and gloom," Johnson said. "This is a tremendous opportunity for redevelopment and renewal of our portion of the river."
Where will the power come from?
Xcel's plan calls for the Monticello nuclear plant to continue operation through at least 2040. The plant's current license expires in 2030. Xcel also operates two carbon-free nuclear reactors at Prairie Island, near Red Wing, which are licensed through 2033 and 2034. Their fates will be decided later.
Xcel plans to complete the company's largest-ever wind expansion in 2022, adding 1,850 megawatts of wind. More than 30 percent of Xcel's customers' energy in the Upper Midwest Xcel also plans a major expansion of solar energy, with more than 3,000 megawatts of new solar added by 2030. Xcel currently has about 775 megawatts of solar available, including just over 500 megawatts through Minnesota's Community Solar Garden program.
While conservative think-tank Center of the American Experiment's policy fellow Isaac Orr called the coal plants closures "bad news for Minnesota families and businesses who have seen their electricity bills continually increase since the state began to mandate ever-increasing quantities of renewable energy," Xcel CEO Fowke told reporters the changes will not lead to significantly higher utility bills, Minnesota Public Radio News reported.
"We think we can do this at or below the cost of inflation," Fowke said. "It's not going to be free, but it's going to be inexpensive and importantly, it compares very well to other alternative plans."