Regulators: Xcel must study Sherco coal-fired power plant retirement

Xcel Energy must take a detailed look at the future of its largest coal-fired power plant next year and study how soon its two oldest units could be retired, the Minnesota Public Utilities Commission said Thursday.

The Sherburne County Generating Station — Sherco — supplies enough electricity to power more than 2 million homes and businesses. But coal-fired power emits carbon dioxide, a greenhouse gas linked to climate change, making Sherco a target of environmentalists.

The question of Sherco's future generated more than 10,000 public comments this year, and the vast majority of them urged the commission to put pressure on Xcel to replace Sherco's two oldest units with clean energy. The Sierra Club and several other environmental groups worked on a public awareness campaign surrounding the issue.

The commission on Thursday decided Xcel should study various retirement scenarios starting in 2020 for its next electricity resource plan due in July 2014. Xcel officials said they didn't object to studying retirement and acknowledged that an earlier study on Sherco found that depending on the future cost of carbon dioxide emissions and other factors, retirement could at some point make the most financial sense.

But there is disagreement on how soon Sherco should be retired and whether Minnesota should act faster than other states and the federal government in taking a stand against coal-fired power. Environmentalists had wanted the Public Utilities Commission to adopt stronger language that would have required Xcel to assume a 2020 retirement date for Sherco in its overall resource plan.

Although the majority of those who testified at a hearing Thursday favored retiring Sherco 1 & 2, several people who live near the plant near Becker said closing it would have adverse effects on jobs and the community.

"If we close down Sherco 1 & 2 in 2020, in six years from now, we are looking at an economic catastrophe," said Rep. Jim Newberger, R-Becker.

Newberger said the loss of any of the 350 current permanent jobs at the plant would have a ripple effect in the community. "Every church, every school, every business, every community in this area is going to be hit and it's going to be hit hard," he said.

But climate change activists testified that Minnesota isn't doing enough to reduce the carbon dioxide emissions linked to climate change. Attorney Barbara Freese said it makes sense to target Sherco in the quest to reduce carbon emissions.

"Sherco 1 and 2 are starting to look a lot like low-hanging fruit. Their retirement would yield us millions of tons of carbon reductions annually at what looks like a relatively low cost or even a cost savings," she said. "Opportunities to cut carbon this good and this big are incredibly rare."