Colorado’s on the frontlines of a fuel turf war

At a presentation before independent natural gas producers in Denver earlier this month, Susan Arigoni, Executive VP Fuels at Xcel Energy, suggested Colorado is on the front lines in a growing turf war over which fuel – coal or natural gas – will become the preferred base-load source for utilities and power providers in the West.

“Colorado’s a battleground state, no doubt,” Arigoni said.

Arigoni was invited to speak before members of the Western Energy Alliance, formerly IPAMs, an advocacy organization that promotes the beneficial use and development of natural gas and oil in the West. She outlined Xcel’s response to the passage of Colorado House bill 1365, known as the Clear Air-Clean Jobs act, which requires Xcel to shutter or retrofit three coal-burning power plants in favor of cleaner-burning gas-powered facilities.

Xcel is a leading provider of electricity and natural gas, serving 3.4 million electricity customers and 1.9 million natural gas customers in eight western and Midwestern states. The company has moved aggressively to diversify its portfolio of fuel used to produce electricity, in part due to renewal energy standards that force providers to incorporate more renewable sources.

Xcel’s relies on coal as its primary fuel source for generating electricity, accounting for 71 percent of electricity sales in 2010 according to Arigoni, with natural gas comprising 15 percent, and renewables including solar, wind, biomass, and geo-thermal , and others around 14 percent. The changes announced by Arigoni will altere Xcel’s fuel mix considerably by 2020, with coal accounting for 50 percent, gas 30 percent, and renewables and others 20 percent.

While new renewable energy standards including tougher environmental benchmarks have been a catalyst for Xcel’s initiatives, Arigoni alluded to how more abundant and sustainable supplies of gas are providing the price stability crucial to Xcel’s capital investment plans. Utilities and power suppliers have been slow to fully commit to gas-fired facilities in the past given the extreme fluctuations in gas prices.

It adds up to a heated battle just beginning to play out in Colorado and across the West for fuel supremacy between coal and natural gas.
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