Xcel Energy insists its plan to retire two Minnesota coal plants won’t mar reliability even though the South Dakota Public Utilities Commission sent a letter urging the utility to hold off on shutting down the units.  

The South Dakota PUC asked Xcel in a letter this month to reconsider its planned closures of the Sherburne County Generating Station (Sherco) and Allen S. King coal plants in Minnesota.  

“Closing these plants will take nearly 3 GW of reliable dispatchable electricity generation off the [MISO] grid precisely at a time when those resources will be needed the most to keep electricity flowing 24/7/365 throughout Xcel and MISO’s footprint,” South Dakota commissioners wrote to Xcel. “Premature closure of these plants adds to the uncertainty of electric generation resource adequacy in the upper Midwest including Xcel’s customers in South Dakota.” 

South Dakota commissioners cited NERC’s finding in its Long-Term Reliability Assessment that the MISO footprint could face a 4.7-GW shortfall through 2028. 

“Evidence is mounting that the premature closure of dispatchable generation will elevate the risk of electricity outages, particularly in tight load hours including hours of extreme cold and extreme heat, as well as those hours when wind generation is low,” the commissioners wrote.  

Commissioners also expressed concern South Dakota ratepayers may bear the costs of closing the plants early. They said Xcel said in a docket that choosing not to operate the two coal plants for the duration of their useful lives paired with a decision against extending the Prairie Island nuclear plant could cost customers $453 million more than keeping the plants open.  

“We do not want Xcel to be part of the impending problem of [a] generation shortage in the MISO footprint. Reliability should be your number one commitment!” commissioners told Xcel leadership.  

Xcel, however, said both the PUC and it are taking threats to reliability seriously and that it appreciates the feedback on plans to decommission its coal plants by 2030.  

“We are in alignment with the commission’s priority to ensure reliability throughout the clean energy transition and ensure South Dakotans have a dependable supply of electricity at all times, including periods of extreme weather and high demand,” Xcel said in an emailed statement to RTO Insider.  

Xcel pointed out that it plans to infuse 2.1 GW of wind and 2.5 GW of solar onto its Upper Midwest grid by 2032 and said it has another 1.1 GW of wind and solar waiting in the wings beyond 2032. It added that its two nuclear plants will be able to complement the variable supply with dispatchable, carbon-free electricity.  

Xcel also said it has plans to include 800 MW of “hydrogen-ready” combustion turbines in its generation portfolio and soon will build 500-700 miles of new transmission lines to further bolster reliability. It said it looks forward to “continuing to meet with the commission” for insight on the “complex task” of ensuring a reliable and affordable clean energy future.  

Xcel remains on track to exit coal generation by the end of the decade. It officially retired the first of its coal units at Sherco on the last day of 2023, with plans to retire the other two in 2026 and 2030.  

Ryan Long, president of Xcel Energy Minnesota, South Dakota and North Dakota, said there’s “tremendous potential for the plant site in the Upper Midwest’s energy future.”  

“Just as we’re taking a phased approach to decommissioning the coal units, we’re building replacement generation in phases to support clean, reliable and affordable energy for our customers,” Long said in a press release at the time.  

Xcel is building the first two phases of the total 710-MW Sherco Solar project adjacent to the Sherco site. It also plans to construct a 10-MW, 100-hour battery storage facility onsite as a pilot project from Massachusetts-based Form Energy. Xcel received a grant of up to $35 million from the U.S. Department of Energy for the battery project. 

Xcel said Sherco Unit 2 is slated to become a synchronous condenser to manage system stability after retirement.  

Finally, Xcel said it’s proposing to build the Minnesota Energy Connection, a 175-mile, 345-kV transmission line in southwest Minnesota that will use existing interconnection at Sherco to connect a minimum 2 GW of wind and solar.  

“There’s a lot of life left at the Sherco site, and our dedicated coworkers will manage the transition over the next decade,” plant director Michelle Neal said in the release.