Amid a surge in utility shutoffs, and in the face of a groundbreaking study finding racial disparities in those outcomes, Minnesota’s largest utility is taking a closer look at the issue.

In a November agreement with consumer groups and the state’s Public Utilities Commission, Xcel Energy has outlined a series of steps to provide more information to customers and make it easier for them to restore service.

Xcel also agreed to hire an outside consultant to conduct a one-year study of disparity issues related to disconnections and outages and, separately, do its own analysis of outages. The move came in response to a University of Minnesota study released earlier this year that found that people of color were more likely than White households to have their service disconnected for falling behind on bills, even when controlling for income and home ownership status. 

The agreement falls short of a demand from the Minnesota Attorney General’s Office for Xcel to institute a temporary moratorium on shutoffs until racial disparities are addressed, based on a recommendation from Fresh Energy and a coalition formed by Cooperative Energy Futures, Environmental Law & Policy Center, Sierra Club, and Vote Solar. 

Erica McConnell, staff attorney for the Environmental Law & Policy Center, represented the clean energy organizations advocating for grid equity. She supported the agreement but believes it will do little to help reduce disparities in shutoffs. 

“These are very important improvements that don’t really address — and the commission didn’t discuss — the disparate impacts and the racial disparity (of disconnections) and how to address that specifically,” she said.

A temporary moratorium on disconnections would have allowed for time to study disparities and find ways to address them.  

“The commission didn’t talk about that,” McConnell said. “They didn’t address it at all, so that was disappointing. I understand it’s uncomfortable and it’s a tough issue, but it’s disappointing they shied away taking it head on.”

Shutoffs soaring

Beyond the challenge of disparities, Xcel’s number of service disconnections has skyrocketed. More than 45,000 Xcel customers saw their power shut off this year, a number that has grown significantly over the last two decades. 

Xcel agreed to many proposals from the Citizens Utility Board of Minnesota, the Energy CENTS Coalition, clean energy organizations and the Public Utilities Commission to create more consumer protection against shutoffs.

Xcel Energy’s involuntary disconnection notices began rising significantly in 2023 before skyrocketing in 2024, when shutoffs doubled the prior year’s total for May through July. Despite Minnesota’s cold weather protection rules that limit disconnections during the winter through April 30, shutoffs even grew during the winter months.

Clean energy and consumer organizations point to Xcel’s ability to remotely disconnect customers who have smart meters as a major reason for the shutoffs, along with inflation, escalating rate increases and challenging repayment requirements. Xcel had demanded customers pay 50% of what they owe to reconnect, which may have violated Minnesota law, according to the Citizens Utility Board. 

Xcel’s pact with the Citizens Utility Board and Energy CENTS “is going to make payment agreements more affordable and hopefully help households that are behind on their bills avoid getting shut off and get caught back up,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota.

The utility board and Energy CENTS Coalition forged the agreement with Xcel under the purview of the Public Utilities Commission, which will issue a final order later. The agreement requires the following:

• Customers will pay 10% of what they owe to have the power turned back on, instead of 50%.
• The amount due will have to be at least $180 before Xcel can send a disconnect notice.
• Xcel cannot shut off power until a customer reaches a $300 past due balance. Xcel’s data from this year showed disconnected customers were $441 in arrears on average in October and much higher in other months.
• The utility must wait at least 10 days after a shutoff notice has been sent to disconnect, up from five days.
• Xcel must post clear disconnection and payment policies on its website, along with information about customers’ right to develop an affordable repayment plan. Any changes Xcel makes to shutoff policies and repayments have to be reported to the commission, and it must collect data on repayments and customer agreements.
• A variance allowing remote disconnections without field visits from Xcel remains, but the utility must contact customers via voicemail and use at least one other form of electronic communication.

Xcel spokesperson Kevin Coss said the utility believes “this agreement is a great step toward reducing disconnections for some of our customers who continue to struggle economically.”

Options for customers

George Shardlow, Energy CENTS executive director, said he thought a clearer explanation of the disconnection process on Xcel’s website brings a transparency that had been lacking.

“I don’t think the average person even knows that they have a right to negotiate when they’re struggling to pay their bills,” he said. “It’s all sort of opaque. We’re excited to see better documentation of people’s rights on Xcel’s website.”

Minnesota law says utility customers are “entitled” to a payment plan they can afford, Shardlow said. Customers who cannot afford the 10% down payment can still negotiate for a settlement that fits their budget, he added.

Shutoffs have been growing. This year Xcel sent disconnection notices to 51,000 customers in January and 71,000 in July. But not all notices result in shutoffs. The highest month for disconnections, May, saw more than 10,000 shutoffs. By August, slightly more than 8,400 customers had been disconnected.

Coss said Xcel works with customers to avoid disconnection by starting a nine-week process of contacting them through multiple channels to “point them to available options for energy assistance — both through the federal Low Income Home Energy Assistance Program and our own affordability programs — and offer flexible payment plans tailored to their circumstances.”

Minnesota also has cold weather protections that greatly reduce utilities’ ability to disconnect customers in winter months. But people who fail to pay their bills in winter see their balances grow, leading to higher disconnections in summer when they fail to catch up.

Xcel agreed to monitor progress and collect more data on racial disparities involving customers involuntarily shut off. The utility has already hired a third party evaluator, as the agreement requires, to study its shutoff policies and hold stakeholder engagement meetings during the year-long process.

Coss said disparities result in inequities throughout society and Xcel has been doing its part to address them. The utility has worked with the study’s authors and advocacy groups to identify actions to reduce disparities, he said.   

Earlier this year, the commission also approved a proposal by Xcel for a pilot program that will provide bill credits to select census tracts with high levels of disconnections. Coss said Xcel will provide $500 bill credits to customers in low-income census areas who have a greater than $2,000 past-due balance, using money available from a quality of service program.

Minnesota Public Utilities Commissioner Joe Sullivan said he believed the agreement negotiated among the nonprofits and utility would reduce the financial strain on households facing disconnections and assist Xcel in recovering debt.

“I thought that in that docket people came together and were constructive,” he said. “I feel like I’m hopeful that the order will make some progress.”

PUC Chair Katie Sieben said the commission is “always looking at affordability, and especially as it pertains to low-income customers, I think we have a great track record on working with stakeholders and with utilities to provide robust low-income assistance to customers.”

She mentioned the commission’s role in approving an Xcel pilot to decrease payments for low-income, low-usage customers and a September decision that used a penalty for the utility’s service quality underperformance to provide bill credits to around 1,000 customers with the oldest outstanding balances in low-income census tracts.

‘Still more work to do’

The agreement does not solve the problem of low-income customers struggling to pay utility bills. Shardlow said Energy CENTS and the Citizens Utility Board lobbied the state legislature to allow households to apply for energy assistance funding the entire year instead of the current policy of having a deadline of May 31. Only 20% of eligible Minnesota households participate in the program, he said.

Levenson-Falk wants Xcel to consider eliminating the 1.5% late fee it charges customers on their balance, or consider donating the money to affordability programs.

The Citizens Utility Board also wants Xcel to develop a plan to reconnect customers quickly on days of high heat or poor air quality. Coss said Xcel will evaluate reconnecting customers disconnected during days of air quality alerts.

Levenson-Falk said the agreement at least makes progress. “I think we resolved everything that we had discussed with Xcel but that’s not to say that we think this is going to solve the problem, because, of course, there are still going to be continuing shutoffs, and those are still very concerning,” she said. “There’s still more work to do.”

This story was updated to include a statement from Minnesota Public Utilities Commission Chair Katie Sieben.

Fresh Energy staff, board members and funders do not have access to or oversight of the Energy News Network’s editorial process. More about our relationship with Fresh Energy can be found in our code of ethics.

As utility shutoffs soar in Minnesota, Xcel Energy agrees to consumer protections and racial disparities study is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

A top executive with Minnesota’s largest utility says data center growth will not prevent it from meeting the state’s 100% clean electricity law, but it may extend the life of natural gas power plants into the next decade.

“As we take all of that coal off the system — even if you didn’t add data centers into the mix — I think we may have been looking to extend some gas (contracts) on our system to get us through a portion of the 2030s,” said Ryan Long, president of Xcel Energy’s division serving Minnesota and the Dakotas. “Adding data centers could increase the likelihood of that, to be perfectly honest.”

Long made the comments at a Minnesota Public Utilities Commission conference this fall exploring the potential impact of data centers on the state’s 2040 clean electricity mandate.

The expansion of power-hungry data centers, driven by artificial intelligence, has caused anxiety across the country among utility planners and regulators. The trend is moving the goalposts for states’ clean electricity targets and raising questions about whether clean energy capacity can keep up with demand as society also tries to electrify transportation and building heat.

Minnesota PUC commissioner Joe Sullivan organized last month’s conference in response to multiple new data centers projects, including a $700 million facility by Facebook’s parent company Meta that’s under construction in suburban Rosemount. Microsoft and Amazon have each acquired property near a retiring Xcel coal plant in central Minnesota. 

“We need to ensure that our system is able to serve these companies if they come,” Sullivan said, “and that it can serve them with clean resources consistent with state law.” 

Alongside concerns about whether clean energy can keep up with new electricity demand, there’s also an emerging view that data centers — if properly regulated — could become grid assets that help accelerate the transition to carbon-free power. Several stakeholders at the Oct. 31 event shared that view, including Xcel’s regional president.

A 100-megawatt data center could generate as much as $64 million in annual revenue for Xcel, enough to help temper rate increases or cover the cost of other projects on the system, Long said. He said the company wants to attract 1.3 gigawatts worth of data centers to its territory by 2032, and it thinks it can absorb all of that demand without harming progress toward its 2040 clean energy requirement.

Long said data center expansion will not change the company’s plans to close all of its remaining coal-fired power plants by 2040, but it may cause them to try to keep gas plans operating longer. Ultimately, meeting the needs of data centers will require more renewable generation, battery storage, and grid-enhancing technology, but rising costs and supply chain issues have slowed deployment of those solutions.

Other utilities echoed that optimism. Julie Pierce, Minnesota Power’s vice president for strategy and planning said the company has experience serving large customers such as mines in northeastern Minnesota and would be ready to serve data centers. Great River Energy’s resource planning director Zachary Ruzycki said the generation and transmission cooperative “has a lot of arrows in its quiver” to accommodate data centers.

Ruzycki noted, too, that much of the interest it has received from data center developers is because of the state’s commitment to clean energy. Many large data center operators have made corporate commitments to power them on 100% carbon-free electricity, whether from renewables or nuclear power.

Pete Wyckoff, deputy commissioner for energy at the Minnesota Department of Commerce, expressed doubts about the ability to meet unchecked demand from data centers. Even with the state’s recent permitting reforms, utilities are unlikely to be able to deliver “power of any sort — much less clean power — in the size and timeframes that data centers are likely to request.”

He sees hydrogen, long-duration batteries, carbon capture, and advanced nuclear among the solutions that will eventually be needed, but in the short-term the grid could serve more data centers with investments in transmission upgrades, virtual power plants, and other demand response programs.

“These solutions can be deployed faster and cheaper than building all new transmission and large clean energy facilities, though we’ll need those, too,” Wyckoff said.

Aaron Tinjum, director of energy policy and regulatory affairs for the Data Center Coalition, said data centers provide the computing power for things like smart meters, demand response, and other grid technologies. The national trade group represents the country’s largest technology and data center companies.

“We can’t simply view data centers as a significant consumer of energy if they’re all helping us become more efficient, and helping us save on our utility bills,” Tinjum said. 

He also pointed to data centers’ role in driving clean energy development. A recent report from S&P Global Commodity Insights found that data centers account for half of all U.S. corporate clean energy procurement. 

The true impact of data centers on emissions and the grid is complicated, though. Meta, which participated in the recent Minnesota conference, says it matches all of its annual electricity use with renewable energy, but environmental groups say there is evidence that its data centers are increasing fossil fuel use and emissions in the local markets where they are built.

Amelia Vohs, climate program director with the Minnesota Center for Environmental Advocacy, raised concerns at the conference about whether data center growth will make it harder to electrify transportation and heating. She pointed to neighboring Wisconsin, where utilities are proposing to build new gas plants to power data centers.

“This commission and the stakeholders here today have all done a ton of work and made great progress in decarbonizing the electric sector in our state,” Vohs said. “I worry about possibly rolling that back if we all of a sudden have a large load that needs to be served with fossil fuels, or [require] a fossil fuel backup.” 

The Minnesota Attorney General’s Office argued that state regulators need to scrutinize data center deals to make sure developers are paying the total cost of their impact on the system, including additional regulatory, operational and maintenance work that might be required on the grid.

In an interview, Sullivan said he was impressed by tech companies’ interest in having data centers in Minnesota because of the 2040 net zero goal, not despite it. They want to buy electricity from Minnesota utilities rather than build their own power systems or locate in neighboring states, he added, and the October meeting left him confident that “we can deal with this.”

Xcel Energy says data center growth won’t get in the way of 2040 clean energy target in Minnesota is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Correction: An earlier version of this story did not include that the advocacy groups’ modeling included one new natural gas plant. The story has been updated.

Xcel Energy’s latest long-range plan for meeting electricity demand in Minnesota includes six new natural gas peaker plants that critics warn could be obsolete before customers are done paying for them.

Comments filed last month by clean energy advocates and the state attorney general’s office push back on the utility’s plan to build a fleet of small fossil fuel plants as it otherwise ramps up clean energy investments. The facilities would operate sparingly, just a few hours at a time on days when the grid is strained and wind, solar and other clean power can’t keep up with demand.

More economical options exist, though, according to a coalition of clean energy groups that hired experts to model alternatives. The study commissioned by the groups concluded Xcel could save ratepayers as much as $3.5 billion by opting for a single new gas plant, and relying more on existing plants, energy storage, efficiency and demand response, and buying surplus power on the regional power grid.

The clean energy groups include Fresh Energy, which publishes the Energy News Network (Fresh Energy’s leadership and policy staff do not have access to ENN’s editorial process.)

The debate is over the utility’s latest integrated resource plan — the first submitted to state regulators since Minnesota Gov. Tim Walz signed legislation last year requiring electric utilities to use 100% clean energy by 2040. Xcel Energy supported the legislation and has proposed various scenarios for achieving the target, but disagreements remain among stakeholders about how to get there, particularly when it comes to cost and equity issues.

Different approaches to modeling

Allen Gleckner, executive lead for policy and programs at Fresh Energy, said Xcel’s gas plant proposal is similar to one in its last integrated resource plan that asked regulators to approve two new peaker plants that would provide as much as 800 megawatts of electricity. Xcel eventually agreed to an open, fuel-neutral bidding process allowing clean energy companies to propose alternatives. That process is still underway, with an administrative law judge expected to make recommendations.

The clean energy groups’ consultants used the same software program as Xcel to arrive at a plan to add a new 374 megawatt gas plant, 3,800-4,800 megawatts of wind, 400 megawatts of solar, and 800 to 1,200 megawatts of energy storage resources by 2030. Extending contracts at existing peaker plants could add 970 megawatts, and energy conservation initiatives could reduce use during high demand times. 

Gleckner said Xcel has taken an exceptionally conservative approach by mostly creating scenarios that did not consider electricity being available from neighboring systems or the MISO regional transmission grid. Gleckner said Xcel does not and has never operated as an island, with MISO delivering power to its customers through a shared resource pool.

“Xcel is using a sort of fiction of modeling because the reality is we’re part of a regional grid,” he said. 

The result is a plan to “build a bunch of new resources that we know are either not compatible with our state laws or are going to be costly and likely to retire early,” he said.

Amelia Vohs, climate program director for the Minnesota Center for Environmental Advocacy, praised Xcel for not asking regulators to extend the life of existing fossil plants, unlike its counterparts in other states. Unlike previous long-range plans, Xcel’s latest imagines a future in which large gas and coal power plants are not the backbone of the system. 

What that grid will look like remains challenging, Vohs said. Adding to the challenge is rising power demand from data centers, manufacturing, and the electrification of buildings and transportation. Even so, Vohs believes clean energy is ready for a leading role.

“It’s a much better solution that’s flexible in this time of uncertainty without making this big commitment to gas resources for the next 40 years,” Vohs said.

Patty O’Keefe, senior field strategist for the Minnesota Sierra Club, said proposed combustion turbine peaker plants pose “significant environmental and public health risks” because they potentially emit more carbon and nitrous oxide than larger, more common combined cycle gas plants. They also tend to be built in communities already suffering higher pollution levels.

The Sierra Club would like Xcel to focus more on energy efficiency than electricity generation in its planning. Efficiency reduces demand and makes “the transition to clean energy smoother and more cost-effective,” O’Keefe said.

Managing risk

Meanwhile, the office of Minnesota Attorney General Keith Ellison has also weighed in, warning that investments made now may become obsolete “stranded assets,” meaning the plants may become uneconomical or forced to retire before they have delivered projected benefits to customers. 

Xcel has acknowledged the risk of stranded assets generally in Securities and Exchange Commission filings, though not specifically in relation to its proposed gas peaker plants.

Utilities are incentivized to build power generation because investors earn a return on capital investment. The attorney general argues that if plants become obsolete or transition to other forms of energy, such as hydrogen, Xcel ratepayers should not have to pay for retrofits and other investments it might have to make to reduce emissions.

In its filings to state regulators, Xcel said it is concerned about having enough firm dispatchable power to meet rising demand quickly during certain times of the day. By 2030, the company will have ended its use of coal for energy generation after closing four coal-burning facilities this decade. The proposal suggests Xcel may need to add even more peaker plants between 2030 and 2040.

Xcel spokesperson Kevin Coss said the company will be “adding a significant amount of wind and solar power to our energy mix” and complementing that generation “with always-available generation — power we can supply any time it’s needed — to reinforce the reliability of the grid.”

Coss said Xcel identifies generation sources in a technology-neutral way so it can decide not to use natural gas combustion plants in the future. The current integrated resource plan calls for fewer firm dispatchable resources than the 2019 version, he said.

The conservative modeling “avoids overreliance on the energy market, which could expose our customers to excessive risk,” Coss said.

Residents, businesses and organizations have until Oct. 4 to send comments on the integrated resource plan to the Public Utilities Commission. The commission is expected to make a decision on the plan in February 2025. 

Minnesota advocates say their alternative to Xcel’s plan for new gas plants could save customers up to $3.5 billion is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Xcel Energy is proposing a new approach to powering the grid in Minnesota.

The utility recently told state regulators it wants to build a network of solar-powered energy storage hubs, located strategically on its grid and linked with technology so they can be operated in concert with each other.

The result would be what’s known as a “virtual power plant.” By simultaneously discharging the batteries, for example, the collection of distributed resources can function similar to a conventional power plant.

It’s a solution some clean energy advocates have long pushed for as an alternative to larger, centrally located projects that are more reliant on long-distance transmission and create fewer local economic benefits. Xcel’s new embrace of the concept likely reflects the evolving economics of clean energy and the urgency to replace generation from retiring coal-fired power plants.

“I welcome our now-agreement about the importance of distributed energy resources in their future procurement plans,” said John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance.

Virtual power plants 101

Virtual power plants use sophisticated software and technology to aggregate energy from batteries, smart thermostats, electric vehicles, storage and other connected devices. The clean energy nonprofit RMI predicts virtual power plants nationally could reduce peak loads by 60 gigawatts and cut annual energy expenditures by $17 billion by 2030.   

Several utilities, as well as solar and storage companies, have developed virtual power plant programs around the country. Perhaps the best-known is National Grid’s ConnectedSolutions program in New England, which includes residential batteries, electric vehicle batteries, and thermostats.  

In May, Colorado Gov. Jared Polis signed legislation requiring Xcel Energy to create a virtual power plant plan in that state by next February. 

Xcel is pitching the Minnesota project on its own as part of its latest long-range resource plan. In a recent Public Utilities Commission filing, Xcel proposes combining 440 megawatts of solar power with 400 megawatts of battery storage at dispersed locations. Designed to be flexible, the program might add backup generation and energy efficiency measures in the future. 

A virtual power plant, Xcel said, would save ratepayers money, improve reliability, accelerate clean energy development, and reduce energy disparities by playing assets in underserved communities. The “new approach equips us to confidently meet incoming load growth, deliver unique customer and community value, and support economic development,” the company said in its filing.

Kevin Coss, a spokesperson for the company, said the proposal “is part of a larger plan to better serve the grid and our customers while meeting anticipated growth in energy demand. The program would grow our distributed energy resources as a complement to our existing plans for additional utility-scale renewable and firm dispatchable generation to advance the clean energy transition.”

Advocates reaction

Clean energy advocates say the approach could reduce Xcel’s need to build more infrastructure at a time when electricity demand continues to grow and its fleet of aging fossil fuel plants reach closure dates.

A recent study in Illinois suggested that pairing solar with storage could be the most economical and environmentally beneficial way to maintain grid reliability as the state transitions to 100% clean energy.

“Utilities always treated distributed energy resources as something that happened to them and that they had to figure out how to accommodate because they were being told to,” said Will Kenworthy, Vote Solar’s Midwest regulatory director. 

The company’s interest in more distributed resources could lead to a more flexible grid, one that helps mitigate substations congestion and allows it to store energy from wind farms for use during high-demand periods, Kenworthy said.

One area of disagreement between the utility and some clean energy advocates is who should own the facilities. Unlike in Colorado, Xcel is proposing to own the Minnesota solar and storage hubs itself, collecting money to build them — plus a rate of return — from ratepayers. 

That’s not the best deal for customers, and it prevents local communities and developers from being able to share the financial benefits of distributed energy, said Farrell, of the Energy Democracy Initiative. If Xcel owns the virtual power plant, the cost could be higher than they would be with an open, competitive process.

Farrell pointed to the recent opposition to an Xcel electric vehicle charging plan in which it sought to own all of the chargers. Convenience stores and gas stations argued Xcel had an unfair market advantage as the incumbent utility and would own too much of the state’s charging network. Xcel withdrew the proposal in 2023 after regulators reduced the charging network’s size.

As Xcel’s plan evolves, Farrell wants Xcel to allow businesses, homeowners, and aggregators to also participate by selling their battery capacity or demand response into the program.

The Minnesota Solar Energy Industries Association, which promotes battery storage, also takes a dim view of Xcel owning a virtual power plant.

“This is an area where competition would likely provide better service, lower cost and more choice to ratepayers,” said regulatory and policy affairs director Curtis Zaun. “Monopolies are not particularly good at providing the best service at a reasonable rate because that is inconsistent with their investors’ interests.”

Getting the details right

Virtual power plants are different than demand response, such as thermostat savings programs, in that they add value to the grid “without any change needed to the homeowner’s behavior,” said Amy Heart, senior vice president for policy at Sunrun, a home solar and storage company that participates in virtual power plants in the Northeast and in Texas, California, and Puerto Rico. 

Heart said the “devil is in the details” when creating a robust demand response program. A program in Arizona failed, she said, because of the underperformance of the single company it selected to aggregate resources.

Sunrun developed a virtual power plant in four New England states, enrolling more than 5,000 solar and storage customers to share their capacity on the grid. In the summer of 2022, Sunrun’s virtual power plant shared more than 1.8 gigawatt hours of electricity.

Typically, Sunrun customers agree under contract to share a portion of their battery backup 30 to 60 times annually for three hours or less for each event. The process is automated, with Sunrun’s software connecting to customer batteries and sending utilities power during high-demand times or predictable peak loads. Customers receive payment for the electricity provided.  

Heart said the best systems are open to individual customers and aggregators using different battery storage brands. Giving a virtual power plant “room to grow, breathe, and adapt will be important,” she added.

The Xcel virtual power plant proposal is part of the multi-year Upper Midwest Integrated Resource Plan, which regulators have been reviewing and will likely approve, with many changes, later this year.

In Minnesota, Xcel Energy looks to mimic power plant with solar and storage networks is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

This article was originally published by Canary Media.

A hefty chunk of U.S. emissions comes from the energy used to heat buildings. That means millions of homes must be converted to electric heating in order to meet climate targets. 

In Colorado, a 2021 law spurred the state’s largest investor-owned utility to produce a plan that could transition a lot of homes to clean heating — and fast.

Xcel Energy’s Clean Heat Plan was approved this May. It directs more than $440 million over the next three years mainly to electrification and energy-efficiency measures that are meant to reduce reliance on the gas system and cut annual emissions by 725,000 tons.

The utility, which provides both gas and electricity to its customers, filed an initial plan that included proposals to spend heavily on hydrogen blending, biomethane, and certified natural gas. But after strong opposition from clean energy advocates who say these routes do not represent viable pathways to decarbonization, those proposals were reevaluated. Following a motion filed by the Sierra Club, Natural Resources Defense Council, and others last November, Xcel amended its original plan filed with the Colorado Public Utilities Commission.

Now the majority of funds will go toward building electrification and energy efficiency, which the commission found to be the ​“most cost effective and scalable ways to reduce emissions from burning gas and buildings, both in the short run as well as in the long term,” said Meera Fickling, building decarbonization manager at Western Resource Advocates.

Electrification efforts will primarily take the form of incentives that make it cheaper for customers to switch gas heating appliances to electric heat pumps. The incentives can be combined with federal electrification tax credits and extend to all-electric new construction as well. One-fifth of the program’s funding is earmarked for low-income customers. The plan’s funding is roughly three times the $140 million that the Inflation Reduction Act allocated to Colorado for similar measures.

The utility forecasts gas sales to decline by 14 percent between this year and 2028, The Colorado Sun reports.

While many states have incentives and rebates available for upgrading to energy-efficient appliances and heating solutions, Colorado specifically directs its gas utilities to lead those programs — and holds them accountable for contributing to the state’s climate goals.

That’s why Xcel’s new clean heat program will be ​“a test case of a utility-led model towards decarbonizing the gas distribution system,” Fickling said. ​“It really serves as a model — a nationwide model — for how gas utilities can allocate resources to decarbonize their system in the long term.”

From state laws to utility plans 

Colorado’s push to clean up home heating started three years ago with the Clean Heat Law, which requires gas distribution utilities to create concrete plans to reduce their greenhouse gas emissions 4 percent below 2015 levels by 2025 and 22 percent by 2030. Xcel’s recently approved Clean Heat Plan will carry the utility through 2027, and the utility must propose a new plan in the coming years to meet the next target.

“I expect the next plan to really take a close look at the 2030 target and the trajectory to achieve it,” said Jack Ihle, regional vice president of regulatory policy at Xcel.

The Clean Heat Law was the first of its kind in any state, Fickling said, though others have since taken steps to curtail the climate impact of heating.

Following Colorado’s 2021 law, in 2023 Vermont passed the Affordable Heat Act to reduce emissions from home heating, and Massachusetts drafted similar legislation. This year, Illinois and New Jersey have both introduced bills with clean heating and decarbonization standards.

In Minnesota, the state’s largest gas utility just received approval for a five-year, $106 million plan to reduce its emissions following the state’s 2021 Natural Gas Innovation Act. The utility, CenterPoint Energy, says the plan would ​“reduce or avoid an estimated 1.2 million tons of carbon emissions over the lifetime of the projects,” though advocates have criticized the approach.

But utilities in Colorado ​“have a lot more flexibility in terms of the portfolio that they propose,” said Joe Dammel, manager of carbon-free buildings at RMI. While Xcel can prioritize energy efficiency and electrification in Colorado, Minnesota’s Natural Gas Innovation Act requires gas utilities to produce emissions-reduction plans that spend at least half of their budgets on alternative fuels like renewable natural gas, which can still heavily pollute. In Colorado, a much smaller amount is dedicated to alternative fuels; only around $10 million out of the $440 million can be spent on renewable natural gas and recovered methane, and all projects must specifically be approved by the commission.

Another difference between the two recently approved plans is that Xcel delivers gas and electricity to about 1.5 million customers in Colorado, which gives it an opportunity to counterbalance lost gas revenue with increased sales from its electricity business. 

Meanwhile, CenterPoint serves gas to about 910,000 customers but has no electricity customers. That gives it fewer opportunities to make up for losses from its gas business driven by electrification mandates, and more incentive to prioritize the use of alternative fuels delivered through the pipelines it owns — and not electrification.

Investing in 100,000 heat pumps 

Now that the funds have been approved, Xcel is waiting on a final written order from regulators, which should arrive later this month. From there, it will start implementing the plan and work on defining rebate levels and informing customers on how to access incentives.

The details are still being decided, but customers will likely need to pay first and then get reimbursed later, as is the case for many current rebate programs, said Emmett Romine, vice president of energy and transportation solutions at Xcel. Customers would also get higher rebates if they choose more advanced technologies, like high-efficiency cold-climate heat pumps.

Beyond educating customers, the company is putting workforce-training plans together to ensure there are enough heat-pump installers ready to help customers convert. Xcel is also working with distributors and manufacturers ​“to make sure that there’s a supply chain that will come to Colorado when we stimulate demand,” Romine said.

The plan represents a significant step up from Xcel’s current pace of upgrades. ​“The goals are really aggressive,” Romine said. ​“When you look at the number of heat pumps and the number of water heaters we’ve got to contemplate getting into homes, it’s an enormous amount of work.” Currently, Xcel does around 10,000 rebates a year for traditional gas furnaces. Now, it’s aiming to do 20,000 heat-pump conversions this year and just under 100,000 total by the end of 2026, Romine said.

That supercharged effort won’t come without costs. Ratepayers will see electricity rates go up by 1.1 percent and gas rates rise by 7 percent over the next four years due to the plan. But advocates say it’s worth it to avoid pouring money into a gas system that must be phased out — and that the climate benefits outweigh the upfront costs. Even without the Clean Heat Plan, Xcel projected it would need to increase base rate revenue by 32 percent between 2023 and 2030, The Colorado Sun reported.

Colorado’s plan ​“is a very good example of needing to pursue both sides of the equation at the same time — decarbonization, electrification — but at the same time ensuring that we’re starting to shrink and eliminate unnecessary investments in the gas system,” said Alejandra Mejia Cunningham, senior manager of state buildings policy at the Natural Resources Defense Council.

The Public Utilities Commission has encouraged Xcel to report its progress by 2026, ahead of the legally mandated schedule, Ihle said. Advocates will be watching closely to see how it all plays out.

“We’re gonna have to make sure that we’re seeing the results of that in terms of participation, customer satisfaction, and ultimately emissions and cost reductions,” Dammel said. ​“There’s going to be a lot of utilities across the country following this.” 

Xcel Colorado’s new clean heat plan is a big deal. Here’s why. is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Minnesota solar developers frustrated with the process of connecting projects to the electric grid will soon have a new place to turn to answer questions and resolve disputes.

State lawmakers recently passed legislation calling on the state Public Utilities Commission to hire an interconnection ombudsperson to provide clean energy companies with information, guidance, and mediation on connecting projects of 10 megawatts and less to the grid.

The legislation follows years of complaints by solar companies about disputes with utilities, Xcel Energy in particular, that have contributed to years-long delays for some projects to connect.

“We hope that we can create a role dedicated to understanding the entire interconnection process and help manage those disagreements when they arise,” said Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association.

The legislation says the ombudsperson will track disputes and serve as a mediator between customers and investor-owned utilities. They will be expected to review policies, convene stakeholder groups, and assess ways to reduce conflicts.

O’Grady said customers, installers, and developers could contact the ombudsperson for assistance on issues involving rooftop, commercial, or community solar projects. 

The ombudsperson would not eliminate the state’s existing dispute process for interconnection issues, which can take over a month and require mediation if unresolved issues remain.

O’Grady said he hopes having an interconnection ombudsperson will more efficiently resolve some disputes and provide a new option for developers that haven’t wanted to deal with the time and attention required to file a formal complaint.  

Solar developers’ complaints have varied, but some involve inaccurate information leading to “weeks of back and forth to get clarity on a simple misunderstanding,” O’Grady said. The hope is that an ombudsperson with experience in the industry could more efficiently answer those questions or know who to contact in utilities to provide guidance. 

State Rep. Patty Acomb, a suburban Democrat and chair of Climate and Energy Finance and Policy committee, said the ombudsperson’s work is less likely to draw skepticism because it comes from an independent source.

Solar company leaders support the new position. Bobby King, Minnesota program director for Solar United Neighbors, said the ombudsperson could “centralize” information, advocate for interconnection, create solutions to improve the process and avoid litigation. “I think it’s a positive step in the right direction,” King said.

Michael Allen, CEO of All Energy Solar, said the ombudsperson would provide “unbiased information” to the Commerce Department, the Public Utilities Commission, installers, and utilities. He also believes an ombudsperson could reduce the number of disputes that reach the Public Utilities Commission.

Marty Morud, CEO and owner of TruNorth Solar, said he’d had few issues with Xcel but sees an ombudsperson as a source for helping move utilities to respond if installer emails and phone calls go unanswered.

More than a dozen states already have positions similar to interconnection ombudspersons, including California, Massachusetts and New York. Sky Stanfield, a lawyer who works with the Interstate Renewable Energy Council, said states approach the ombudsperson differently, not all requiring them to have the technical skills Minnesota seeks.

She said that having someone see all the disputes and detect patterns could also help the Public Utilities Commission target rulemaking in problem areas. 

“I do think having a person whose job is to stay up to date on what is happening seems to me like a positive step,” Stanfield said.

To be effective, the ombudsperson must be “empowered” by the Public Utilities Commission and accepted as an objective mediator by utilities and clean energy developers, she said.    

The Legislature created an initial $150,000 budget. The ombudsperson position, which has not been posted, is expected to be filled later this year.

Minnesota lawmakers hope ombudsperson can help defuse solar interconnection disputes is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.