In November of 2018, Xcel Energy announced its plan to purchase the Mankato Energy Center gas plant. This summer, the Minnesota Public Utilities Commission (PUC) will decide whether or not to approve the purchase – a decision which impacts every Xcel Energy customer.
Who is Affected?
- Xcel customers will pay for the plant and for the utility’s profit on the purchase. The power plant will cost $650 million to buy and is expected to run for another 30 to 40 years. If the plant runs until 2050, the utility says customers will see savings from the purchase. If the utility closes the plant earlier, it will be more expensive than not buying the plant, but shareholders expect to get paid anyway.
- Xcel customers will pay for the fuel to operate the plant. Xcel projected that the cost of gas to operate a similar plant at $5 billion over 20 years. No matter how high gas prices could rise, Xcel shareholders do not have to pay any fuel costs.
All Minnesota residents:
- Minnesota’s climate has already been warming due to greenhouse gas emissions. In addition to carbon dioxide released when burning fuel, methane leaked as it’s shipped to the plant warms the climate 80 times faster than carbon dioxide.
- Xcel’s shareholders will receive a 10% profit on the purchase, virtually guaranteed by their status as a regulated monopoly company with no competition.
Who Pays for Gas?
No matter the price, you will pay the fuel cost if Xcel owns this power plant. As you can see in this chart below, the predictions of the future price of gas (blue lines) rarely match up with the wild fluctuations in price (orange line). Source: Rocky Mountain Institute.
Can we do something else?
In several states, state regulators have banned utilities from building new gas plants, worried that they will cost more than alternatives. Wind and solar energy can be paired with energy storage to produce electricity more cheaply, and they don’t require customers to pay for fuel that can get much more expensive.
For a more detailed analysis of the costs of this acquisition, see Should Utilities Be Buying New Gas Plants?