Recently, the three commissioners on the South Dakota Public Utilities Commission (PUC) signed a prudent and commonsense two-page letter to Xcel Energy, a large utility that provides electricity and natural gas to customers in eight states, including South Dakota. As part of Xcel’s strategy to reduce its carbon emissions 80% by 2030, the utility has indicated its intention to retire all of its coal-fired power plants in the Upper Midwest. To achieve this objective, the company has proposed to prematurely retire three coal units in Minnesota: one unit at the Allen S. King coal plant is to be retired in 2028 and the two remaining units at the Sherco coal plant are to be retired in 2026 and 2030, respectively. These three coal units total more than 2,000 megawatts (MW) of electric generating capacity. Xcel already retired the third Sherco unit (680 MW) at the end of last year.
Minnesota is part of the 15-state MISO region, which means that a decision made by an electricity provider and utility commission in one of these states has the potential to affect the electricity supply in the other states. In other words, actions in one state can impact, for better or worse, the entire MISO region.
By now, anyone who follows developments in the electric power sector is aware of the North American Electric Reliability Corporation’s (NERC) Long-Term Reliability Assessment which designates the MISO region as being at “high risk” of not having enough electric generating capacity over the next ten years. The primary reason for NERC’s warning is the premature retirement of dispatchable power sources like the King and Sherco power plants. Utilities have already announced plans to retire half the coal plants (totaling 23,800 MW) in the MISO region by 2030, which is likely to exacerbate the risk of rolling blackouts. Even more concerning is that 20,900 MW of MISO coal capacity are expected to retire by 2028, unless utilities change their minds.
The PUC letter asks Xcel to “reconsider your unfortunate decision to close King and Sherco prematurely” because of the commission’s concern about the reliability of the electricity supply for Xcel’s South Dakota customers. If Xcel reverses its decision, it would join utilities in 13 states that have reversed decisions to retire almost 14,000 MW of coal-fired generation. Most of the reversals were the result of concerns about reliability and load growth.
For the sake of maintaining a reliable electricity supply, we urge other utilities and utility commissions to delay coal retirements at least until replacement capacity has been placed in operation that has the same reliability attributes, dependability, and accredited capacity as coal-fired power plants.