Xcel Energy Details Environmental Compliance Projects in Texas, Minnesota, Wisconsin and Colorado

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)-- Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota) will invest about $1.8 billion by 2020 to install pollution-control equipment on power plants in Colorado, Minnesota, Wisconsin and Texas, according to Kent Larson, senior vice president for operations, speaking at an investor presentation in New York last week.

Roughly half of this amount--$862 million--will be invested in the company's Colorado generators between 2012 and 2016. Generators in Minnesota and Wisconsin are in line for about $457 million of environmental work by 2020, most of it in the 2017-20 period. And the utility's Texas unit, Southwestern Public Service Company (Amarillo, Texas), is scheduled to install about $470 million of environmental equipment between 2012 and 2016.

Of the states where Xcel operates, Larson said the company's Texas unit will be most significantly impacted by the Cross-State Air Pollution Rule (CSAPR), which was finalized earlier this year and then amended in October by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). For more on that regulation, see October 13, 2011, article - EPA Proposes Technical Changes to Finalized Cross-State Air Pollution Rule.

Larson said CSAPR would require Xcel's Texas unit, Southwestern Public Service (SPS), to lower emissions of sulfur dioxide (SO2) by 46% and oxides of nitrogen (NOx) by 33% starting in 2012. Because of a short compliance timeline, Xcel has joined with dozens of other parties in asking the EPA to reconsider the rule, while also filing suit in federal district court in Washington, D.C., to stay the rule.

In the near term, Larson said one part of SPS' compliance strategy will involve installing low-NOx burners at its Tolk Power Station, a two-unit, 1,100-megawatt (MW) coal-fired generator in Muleshoe, Texas, that began operating in 1982. Longer term, Larson said SPS will install dry-sorbent injection equipment at its Harrington Power Station, a 35-year-old coal-fired generator, as well as Polk, to lower SO2 emissions. To reduce NOx emissions, SPS plans to install selective catalytic reduction (SCR) equipment at Tolk and selective non-catalytic reduction (SNCR) equipment at Harrington.

The dollar value of the Texas emissions reduction equipment is about what the company plans to spend in Minnesota and Wisconsin, and far less than what it plans to spend in Colorado. But the Texas projects have a greater significance, because Texas was originally exempted from CSAPR, only to be included when the rule was finalized earlier this year. That last-minute inclusion creates significant operational challenges for the utility.

Over the next five years, Larson told investors and financial analysts in New York on December 1, Xcel Energy plans to make sizable capital investments in its Colorado coal-fired generators to comply with a state law enacted in 2010, the "Clean Air, Clean Jobs Act." Xcel's Colorado unit, Public Service Company of Colorado, plans to meet the emissions levels in the Colorado law by:

• installing scrubbers at its Pawnee and Hayden stations
• retiring about 900 MW of coal-fired generation
• fuel-switching to natural gas for 463 MW of generation
• building 569 MW of new gas-fired generation

For more on the utility's Colorado compliance-driven capital programs, see August 17, 2010, article - Xcel Energy's Colorado Coal Generators: Retire, Repower, and Retrofit.

Xcel Energy's Minnesota compliance projects are anchored by $344 million of pollution-control projects at its 2,400-MW Sherburne County Power Station, scheduled to take place in the 2017-20 timeframe. Less costly environmental retrofit projects are planned for the utility's Black Dog and Allen S. King plants in Minnesota and its Bay Front Power Station in Wisconsin.

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