For its Colorado utility operations, which are now dominated by coal-fired generation, Xcel Energy has told state regulators it expects its natural gas use to grow by 50% in the next eight years, while renewables grow and coal generation declines in smaller percentages.

The Minneapolis-based utility holding company made the estimates as part of a filing with state regulators in response to a landmark Colorado law that is expected to result in Xcel, the state's largest investor-owned utility, replacing 900 MW of coal-fired capacity with natural gas and alternative fuels (see Daily GPI, Aug. 17). Its $1.3 billion plan is still pending at the Colorado Public Utilities Commission and is expected to be acted on in mid-December, a Denver-based Xcel spokesperson told NGI Wednesday.

The "Clean Air, Clean Jobs" legislation was swiftly enacted in March with Xcel's support, along with that of several natural gas producers, bipartisan support in the General Assembly and the blessing of several environmental groups. It requires Xcel to cut nitrous oxide emissions by up to 80% from several Front Range coal plants by the end of 2017, most likely sooner (see Daily GPI, April 20).

Colorado's Clean Air-Clean Jobs Act provides a timeline for Xcel's Public Service Co. of Colorado to retrofit, replace or retire its oldest, least efficient coal-fired generation plants that it now operates in the state in the greater Denver area.

In its filing, Xcel's utility indicated that its current natural gas load of about 50 Bcf annually is expected to rise to 75 Bcf by 2018. Proportionally, today Xcel's fuel mix is heavily coal-based (71%), with gas accounting for 15% of the generation, renewables 12% and the other 2% coming from the wholesale power market.

Xcel told the PUC that mix should see coal reduced to about 50% by 2020, with gas increasing to 30%. Renewables would make up the bulk of the rest (19%), with the open market accounting for 1%.

Xcel noted that the Colorado legislature anticipated an increased use of natural gas to displace coal-fired generation in the state when it passed the new law. Further, the utility told regulators that the rise of shale gas has "changed the game," and it now expects longer periods of stable, low-priced gas supplies.

The gas industry is seeking to expand its market in the power generation sector and gas has the advantage of 55% fewer greenhouse gas (GHG) emissions than coal-fired generation; however, when gas-fired plants operate below a 50% load level, they, too, begin to increase GHG emissions levels, the utility said. "Overall, though, incremental gas requirement provide an opportunity" for Xcel.

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.