Xcel’s Coal Pricing Projections Off By a Quarter Century
Coal costs at Xcel’s newest and largest Colorado coal plant, Comanche 3, are currently increasing by more than 10%/year; however, Xcel Energy is modeling their coal costs as going up by less than 2% per year when making their consumer rate projections.
2011 coal costs for Comanche 3 were in the neighborhood of $1.50/MMBTU, but Xcel predicted they would not be paying this price ($1.50/MMBTU) for coal until the 2030’s (see the LWG 1-4 attachment below). Xcel’s price modeling was off by a quarter century.
Coal prices for the Comanche 3 plant have been rising steadily: Comanche coal was approximately $1.05/MMBTU in 2007 and only $0.70 in 2004 when the coal plant was being planned. (See LWG 3-7 attachment below)
The Comanche 3 plant is scheduled to operate until 2069. Comanche 1 and 2 are scheduled to operate until 2033 and 2035, respectively. The scenario begs the question: How high will coal prices get by 2020; let alone 2o69 ?
As the prices for fossil fuels continue to rise, the economic case for renewable energy and efficiency alternatives is becoming increasingly clear.