Under the agreement approved by New Mexico regulators, Xcel will only run Tolk “when it is economically beneficial for customers,” the Sierra Club said.
Xcel Energy’s 1,067-MW coal-fired Tolk Generating Station will shut down by 2028 — and until then will limit its operations — under an agreement approved Thursday by the New Mexico Public Regulation Commission, or PRC.
Xcel had previously planned to shutter the plant in 2032 but last year announced it would speed the plant’s retirement as part of rate cases filed in New Mexico and Texas. The Tolk plant is located about 70 miles northwest of Lubbock, Texas, though it is not a part of the Electric Reliability Council of Texas.
The plant is regulated by commissions in both New Mexico and Texas. According to the Sierra Club, which was a party to the New Mexico agreement, Xcel is in negotiations in a separate Texas proceeding on how to recapture its investment in Tolk and a decision by the Public Utility Commission of Texas is anticipated in the fall.
As part of the New Mexico agreement, Xcel can recover operating and maintenance costs associated with running Tolk to generate up to 4,000 GWh annually. Regulators noted there are customer savings considered in the agreement.
“Tolk may be offered into the market and will be dispatched when it is economical to so, as determined by the Southwest Power Pool,” the PRC said.
The earlier retirement of Tolk will save customers more than $100 million over the next 10 years, while providing environmental and climate benefits, Josh Smith, an attorney with the Sierra Club’s Environmental Law Program, said in a statement.
“More than half of Xcel’s power comes from carbon-free sources, and we give it credit for recognizing that Tolk’s path forward was unsustainable,” Smith said. “But we’ll also keep pushing the company to build renewable, transmission, and battery resources in the Panhandle and comply with New Mexico’s mandate to become carbon-free by 2045.”
Xcel subsidiary Southwestern Public Service, or SPS, which operates the Tolk plant, submitted an integrated resource plan with the PRC on Oct. 13 that discusses replacement power for Tolk. “As part of that plan, we intend to issue a request for proposals for Tolk replacement power and other power needs in mid-2024,” a utility spokesperson said in an email.
The IRP notes that the utility faces a capacity shortfall in 2025 and “it is extremely challenging to acquire new generating resources” that quickly.
“Therefore, SPS is currently evaluating alternative means to meet any shortfall,” the utility said. “For example, SPS has proposed new demand response programs in both Texas and New Mexico that could alleviate this need and … will also be advancing its efforts to build its renewable energy customer programs.”
The IRP also concludes the most cost-effective portfolio of resources selected under a multi-jurisdictional baseline scenario “includes 4,899 MW of new gas-fired [combustion turbine generators] and 10,329 MW of new variable energy resources.”
