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Fuzzy Math behind Xcel's New 'Colorado Energy Plan'

Xcel Energy last week announced that it would seek regulatory approval of a “Colorado Energy Plan,” which would retire early almost 700 megawatts of coal-fired generating units to be replaced with a new natural gas plant and also renewable energy. Although Xcel has yet to provide details, the company has suggested that the plan would save $200 million.

I don’t understand how this could be true.

In essence, the company is claiming that unnecessarily retiring cheap power and then replacing it with new expensive power would somehow save ratepayers money. My guess is that the company will game its economic models by, among other things, assuming implausible future regulatory costs and also a carbon tax. As a result, the Colorado Energy Plan would appear to be a good deal on paper, even though it’s a terrible deal in real life.