This story by Allen Best appeared on BigPivots.com on April 1,2025. We are sharing it in two parts.
The letter dispatched to Colorado’s legislative leaders on Friday, with 64 signatories, raises questions about a bill that would have Colorado’s electrical utilities hitting 90% decarbonization goals by 2035 as compared to 2005 levels and 100% by 2040.
The bill, if it became law, risked “driving energy costs higher at a time when our state is already nearing an affordability crisis,” said the letter.
You can download the letter here.
In October 2023, Will Toor, the chief executive of the Colorado Energy Office, said in a Boulder County presentation that Colorado’s utilities were on pace to be at 85% to 87% emission reductions by 2030. And then in 2031, after retirement of Comanche 3, the state’s last coal plant, the emission reductions will be “north of 90%.” He pointed to the plummeting of wind and solar prices.
That was definitely true then. But the story has veered in the last 18 months. We have had utilities – most prominently Colorado Springs and Xcel – reporting supply chain kinks and other problems that have made it more difficult to get new renewable resources on-line.
Consider transformers. Costs had gone up 50% or more compared to pre-pandemic levels – and this was before President Donald Trump imposed a 25% tariff on goods from Mexico, a major source of transformers used in transmission in the United States.
We have entered a more fraught period. Six years ago, when he was still relatively new at Holy Cross, Bryan Hannegan said that getting to 85% to 90% would be relatively easy. The remaining 10% to 15% would be more difficult and likely more costly.
This week, he told me that Holy Cross was “fortunate to have procured clean energy resources through a request for proposal issued prior to the Covid-19 pandemic and resultant supply chain constraints, general inflationary increases and other cost drives that have significantly increased the costs of all forms of new power supply.”
This early start, he said, has now allowed Holy Cross to “invest in modernizing its distribution grid, protecting against cyber and physical threats, and reducing the risk of wildfire associated with our electric system, all while maintaining some of the lowest electric rates in Colorado.”
The periodic surveys done by the Colorado Association of Municipal Utilities back him up. Holy Cross, which serves some of the most affluent neighborhoods in Colorado, has some of the cheaper electricity.
Higher prices for new generation will be a “consideration,” he said, as Holy Cross continues on its journey to 100% clean energy by 2030.
Also an issue – as Gabriel pointed out – is the projected growth in demand for electricity. Looking back, there were hints of that two years ago. But then came Xcel’s filing with the PUC last October about the explosive growth, more than 60% of it caused by data centers, that it projects in years ahead. How real are those projections? That’s a multi-billion-dollar question.
Xcel Energy has closed one of its three coal-burning units at Comanche Generating Station, plans to close another this year, and is scheduled to close the third unit before the end of 2030. Photo/Allen Best
On February 11, Xcel Energy sent a letter to the PUC commissioners that had an edge to it.
“We write to express our concerns about the continued skepticism around the level of resources we have identified as necessary to maintain the reliability of the current system and address the growing demand in Colorado,” said Alice Jackson, then the senior vice president for system strategy, and two others.
The letter cited concerns about “resource adequacy,” the question of whether enough electrical generation is available to meeting demands.
“The electric system is bringing on ever-increasing amounts of weather-dependent energy generation in efforts to meet energy policy goals,” the letter said. “The electric system is also losing firm generation that is available 24 hours per day, 7 days per week, and we must take sufficient actions to secure replacement for the retiring generation over the medium- and long-term. Short-term actions and patches are not solutions for the long run.”
Also at issue is which, if any, of the so-called emerging technologies will be cost effective by 2035 and 2040. Some hope for nuclear, others — including Polis‚ — see great promise in geothermal. But nobody really knows.
The Colorado Energy Office insists that the 2035 and 2040 goals identified in the legislation are not a stretch. “Colorado is on track to reach more than 85% emission reductions in the power sector by 2030 and on a path to nearly decarbonize the power sector by 2040,” said CEO in a statement.
“There is no formal draft legislation along the lines of what the letter refers to yet, but we share many of the same concerns expressed, which is why a close read of the policy framework shows strong protections for consumers and assurances for reliable electricity, which the governor hopes can be made even stronger. This is just the beginning of the conversation, and we look forward to conversations around how Colorado can continue leading the nation on reliability, cost savings on electricity, and climate action.”
Some word-parsing may be useful here. In saying there is no “formal draft legislation,” the energy office is saying that no bill is ready to be dropped into the hopper.
Whether it’s informal legislation or something else, the signatories to the letter say it “reflects little to no input” from them. This goes against the common precept of legislative sausage-making that the real work on the big bills occurs in September or at least by December before the Legislature convenes in January and involves meeting with the affected parties.
On background, I spoke or corresponded with several people quoted in this story and some who were not. I am very uncomfortable using material on background in a story in a substantial way. I will just say that there is a gulf, a substantial one, about whether efforts to solicit input have occurred and for how long.
What also must be noted is that the draft bill — or whatever we call it — that I saw explicitly contained language that gave utilities and regulators flexibility. If utilities can’t achieve the marks without endangering affordability and reliability, they’re off the hook. That, at least, is for those utilities regulated by the PUC, the arbiter of affordability and reliability.
What remains, however, is that this is just five weeks before the end of the session.
So why must this bill get passed this year? Why not wait while some things settle out?
One perspective is that the utilities are now creating plans for the 2030s, the time in question. Xcel Energy’s current electric resource plan has a timeline out to 2031. Next year it is due to submit another one, going deeper into the 2030s. The energy office and allied environmental groups want the utilities to be thinking hard about what they can do to get to these targets in 2035 and 2040.
And yes, it should be noted, that since 2016, Polis has put the 100% renewables by 2040 at the top of his banner.
That 100% was never written into law, however.
I see two big and overlapping stories here that will play out in various ways. One is the increasing worries about resource adequacy.
The other has to do with the inevitable tensions as we head into the last 10% to 15% that Bryan Hanegan was talking five, six and probably seven years ago.
In high school, I was a miler and two-miler. In both, we always picked up the pace in the final lap. There might be even be a little jostling, some elbows clashing as we summed the strength to get across the finish line. That’s kind of where we are right now.
Allen Best publishes the e-journal Big Pivots, which chronicles the energy transition in Colorado and beyond.