Colorado Readies 'Just Transition' Strategy for Communities Losing Coal-Fired Plants

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land Texas)

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Summary

Colorado's Public Utility Commission and Xcel Energy have funds available to communities losing coal-fired power plants.

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Increased Funds

After receiving multiple complaints from Colorado communities regarding exactly how "just" the Colorado Public Service Commission (PUC) and Xcel Energy's (Minneapolis, Minnesota) "Just Transition" strategy actually is in supporting areas losing coal-fired power plants, the PUC last week upped the total available funds by 13% to more than $230 million. Whether that will be adequate to appease some of the more vocal community members remains to be seen.

Colorado Coal Closures

Colorado has six remaining coal-fired power plants. All of these are planned to close by 2031, removing operations that contribute significantly to cities' and counties' tax bases and employment rolls.

The Just Transition strategy affects four of those plants, all of which are owned or operated at least in part by Xcel subsidiary Public Service Company of Colorado (Denver, Colorado). Several cities and counties challenged the PUC's allocation of funds to affected communities when the plan was laid out last year, and some of those communities have met with success in their petitions, resulting in increased funding from the PUC's latest strategy for the plan, which it laid out last week.

Three of the four counties had their payment benefits extended from six to 10 years, resulting in millions of dollars in extra support for Routt, Moffat and Morgan counties. Pueblo County, home to the city of the same name as well as the state's largest operational coal-fired plant, had previously been allocated 10 years of funding but held out for something different in its request to PUC and Xcel, which it successfully obtained.

Plans for Pueblo

Pueblo is home to the Comanche coal-fired power station, the state's largest operating coal-fired plant. Equipped with three operating units at one point, Unit 1 was retired in 2022, leaving units 2 and 3 in action. The older Unit 2, which started operating in 1975, was slated to retire at the close of 2025, but this failed to happen as the remaining unit, Unit 3, in operation since 2010, has been plagued with problems since August, spending much of 2025 offline with repairs occurring through at least the first half of 2026. Unit 3's problems bought a one-year extension to Unit 2's operating life, which is now planned to end at the close of this year.

The slated closures alarmed community leaders as the power plant reportedly contributes about 12% to Pueblo County's tax base, a number that was even higher in other affected areas, but Pueblo leaders were vocal in their dissatisfaction with the scheme.

In a September 2024 report, the Colorado Fiscal Institute estimated that the closure of Comanche 3 alone would result in the loss of about $31 million annually to the community, along with more than 75 jobs. The same report also estimated that closing the unit would save Colorado between $52 million and $67 million in avoided health care costs, with Pueblo County benefiting by $4.6 million to $5.6 million. The PUC's plans to retire Unit 3 ten years earlier than planned dismayed county and city leaders.

After receiving 10 years of payments in the Just Transition plan, the county also held out for additional aid relating to the support of potential replacement projects. The result benefits all affected communities.

Pueblo's Successful Tax Credit Request

In the initial Just Transition plan, Xcel proposed providing developers a credit of $4 per megawatt (MW) of new generating capacity added to Pueblo County, with most potential projects envisioned as using solar energy or natural gas.

The PUC considered the credit too high, worrying that developers might "game" the system, taking advantage of loopholes and grey areas in order to obtain the lucrative credit. The PUC set the credit for $2, but Pueblo leaders were not happy, challenging the PUC to provide the full $4 credit in this month's rehearing with the agency. Pueblo argued the full credit is needed "to drive projects into coal communities, including Pueblo, and could result in replacing the number of jobs and the tens of millions of dollars in property taxes that will be lost when Comanche 3 closes."

The PUC agreed, raising the credit to $3 per megawatt for projects creating more than 20 jobs and by another dollar for projects that exceed a certain tax rate. The move affects all Just Transition communities.

In its rehearing, Pueblo also obtained another $16.7 million payment boost from Xcel for 10 years to make up the lost property taxes caused by Comanche 3's early closure.

Affected Communities & Their Plants

The Just Transition scheme affects four communities with coal-fired plants. These include:

• Pueblo city and county, home to the Comanche coal-fired plant, which generates more than 1,000 MW of power. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Plant Database can click here for the plant profile.
• Routt County, home to the 310-MW Hayden Generating Station. Click here to see the plant profile.
• Morgan County, home to the 505-MW Pawnee coal-fired plant. See plant profile.
• Moffatt County, home to the Craig Station, with about 1,400 MW generating capacity. Subscribers can learn more by viewing the plant profile. Many workers at the Hayden station live in Moffatt County.

There are two coal-fired plants outside of the PUC's purview that are not included in the Just Transition scheme. These are:

• The 280-MW Rawhide Generating Station in Larimer County, owned by Platte River Power Authority (Fort Collins, Colorado). (Click here to see plant profile.)
• The 260-MW Ray D. Nixon Power Plant, owned by Colorado Springs Utilities (Colorado Springs, Colorado). (See plant profile.)

Both of these plants are slated to close by 2030, although an extension of the Nixon's plant life is on the table.

Safety Valve

Colorado's PUC included language stating that, in order for communities to obtain the transition funds, their power plants actually had to close. Colorado was on the receiving end of the latest order from the U.S. Department of Energy to keep a coal unit operating. On December 31, a day before its planned retirement, the agency ordered Unit 1 at Moffat County's Craig station to continue operating. The 446-MW coal unit is now required to operate through March, with potential government-ordered extensions on the horizon. With some of the state's other coal-fired closures slated to occur under the second Trump administration, whether these plants will be allowed to close as planned remains a wildcard issue.

Key Takeaways

• The Colorado PUC has increased funds available in its "Just Transition" for communities losing coal-fired power plants.
• All of Colorado's coal-fired plants are slated to be closed by 2031.
• The Just Transition affects four communities that have power plants. Two other coal-fired plants are outside of the PUC's purview.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).