Xcel Energy requests extra $100 million to meet Colorado's summer energy demands

After the hottest winter on record in Colorado, the National Weather Service is predicting above-average temperatures this coming summer. But Xcel Energy is already worried it doesn't have the supply to meet the energy demand.

Colorado's Public Utility Commission ordered Xcel to submit a plan for meeting the needs of customers this summer. Xcel submitted its "resource adequacy solutions" report last week.

The 33-page document details the supply challenges, including issues at numerous power plants. The state's largest coal plant, Comanche 3, has been offline since last summer and isn't expected to be repaired until mid-July. Xcel recently revealed its share of the cost to return the unit to service is $4.6 million. The aging Hayden 2 coal plant is working at only 75% of capacity and Xcel did not publicly release the estimated cost of repairs. Unit B of the Cabin Creek Hydroelectric Facility is out of service and water restrictions could limit duct firing at various operations.

Xcel proposed several ideas for incentivizing customers, both commercial and residential, to limit their energy usage. For commercial customers, that includes changes to the ISOC program. The Interruptible Service Option Credit allows businesses to earn bill credits by managing peak energy demand.

Customers agree to use less energy during peak use, like on hot summer days, and in turn, receive credits on their bills. Xcel is proposing to increase those bill credits by 54% for customers not already grandfathered in and to allow customers to enroll after June 1, the current cutoff date. Xcel estimates the changes to the ISOC program would cost $6-12 million to implement.

Xcel is also proposing better incentives for commercial customers participating in the Peak Partner Rewards and Peak Day Partners programs. Xcel did not have a cost estimate for those changes.

For residential customers, Xcel wants to better manage thermostats enrolled in the AC Rewards program. The program allows Xcel to adjust customers' smart thermostats during the hottest summer days. Customers enrolled in the program earn a $25 annual bill credit.

Xcel says it's also exploring buying small natural gas generators and/or battery energy storage resources, which could also be deployed during Public Safety Power Shutoffs, usually implemented during high fire danger days. Xcel estimates it would cost about $100 million to acquire 50 MW of capacity benefit.

At the end of the report, Xcel requested $100 million in incremental funding to cover the costs for managing energy supply for the summers of 2026 and 2027. Xcel wrote in the filing that it "recognizes that this request is both unorthodox and expedited," but it's necessary to fulfill the PUC's directive that Xcel is "obligat[ed] to maintain reliability and provide safe and adequate service."

Xcel has requested the PUC respond to its proposals by May 8.