Long-fought federal regulations to curb smokestack emissions that cross state lines may not be as costly as once asserted by Xcel Energy Inc.
The Minneapolis-based power company, one of many utilities that challenged the "good neighbor" pollution rule, has in the past said the rule might mean $700 million in fuel-shifting costs and pollution control investment for its Texas coal power plants.
The U.S. Supreme Court this week upheld the cross-state rule affecting 27 Midwestern and Appalachian states, including Minnesota and Texas. But Minnesota's largest power company no longer is seeing dire consequences from the rule.
"Bottom line, we don't see it as very significant to our capital plans," Xcel CEO Ben Fowke said Thursday during a quarterly earnings call with analysts. "We think any gaps we may have in compliance we probably can meet with the purchase of allowances."
Allowances are tradable credits that are part of the U.S. Environmental Protection Agency's complex strategy to control pollutants wafting across the eastern United States, contributing to smog and fine soot in some downwind urban areas.
Now, with the rule reinstated, utilities and regulators are only beginning to look at how it will be applied. Some parts, including one relating to Minnesota, await further appellate court review. Industry groups and the EPA have offered few details on what happens next, although some utilities have warned that coal power plants may need to be shut down.
Fowke said Xcel, which operates in eight states, is in a better position than in the past to comply in Texas, where it once worried that customers could end up paying $8 more per month because of compliance costs.
He said that Xcel's recently added Texas wind power, which displaces fossil-fuel generation; a new natural gas generating unit in that state, and coal-plant upgrades there have reduced the potential costs of compliance. He said the retirement of coal power plants by some utilities should help, in part by making available allowances that utilities like Xcel could purchase to meet their emission targets.