Although previously committed to replacing its coal-fired power plants with natural gas generation in Colorado, Minneapolis-based Xcel Energy said Thursday it is buying another 200 MW of wind-generated electricity supplies as part of efforts to meet the state’s 2020 renewable portfolio standard (RPS) goal of 30%.

CEO of Xcel’s Public Service Co. of Colorado utility, David Eves, called the utility’s latest proposed wind source “the lowest-priced we’ve seen, making it competitive with other energy sources,” presumably including natural gas. Late last year in responding to Colorado’s Clean Air, Clean Jobs initiative, Xcel utility executives told state regulators they expected the utility’s natural gas use to grow by 50% in the next eight years, while renewables grow and coal generation declines in smaller percentages (see Daily GPI, Nov. 19, 2010).

On Thursday Xcel’s utility filed with the Colorado Public Utilities Commission (PUC) seeking the regulators’ approval for Public Service Co. to purchase supplies from NextEra Energy Resources LLC’s Limon Wind Energy Center II. The turbines are proposed for Lincoln County near the town of Limon.

“Even though Xcel is ahead of schedule to meet Colorado’s 30% RPS, we can take advantage of historically low wind prices to give our customers more choice in the source of the energy powering their homes and businesses,” the company said. Xcel CEO Ben Fowke characterized the prospective project with NextEra as a good business deal “that makes good economic sense,” taking advantage of federal production tax credits.

Xcel said this was the first of two applications its Colorado utility is making to the PUC. A second one, expected within 45 days, will discuss how to get some of the new low-cost wind supplies into the utility’s ongoing green energy resource buying program for customers. It is called Windsource and has customers voluntarily agreeing to pay extra for clean energy. It is offered in three other states where Xcel has utility operations in addition to Colorado (New Mexico, Minnesota and Wisconsin).

If the PUC approves the latest NextEra deal, construction could begin early next year, an Xcel spokesperson said. Completion would be expected before the end of 2012. This additional wind purchase would push Xcel’s wind totals in Colorado to 2,100 MW, the utility said.

In the meantime, under the landmark Colorado law, Xcel as the state’s largest investor-owned utility, is expected to ultimately replace 900 MW of coal-fired capacity with natural gas and alternative fuels. It’s a $1.3 billion plan that the PUC approved late last year (see Daily GPI, Dec. 17, 2010).

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