Black Hills Energy: How the new clean energy plan helps utility customers, communities and the environment

Michael Alcala

June 7

By Campbell Hawkins,
Vice President of Colorado Utilities Black Hills Energy

At Black Hills Energy, our most important job is delivering safe, reliable electric service to our customers, while also meeting regulatory requirements like Colorado's greenhouse gas (GHG) emissions reduction goals.

We recently filed a report with the Colorado Public Utilities Commission (PUC) recommending a portfolio of additional renewable energy resources for our Southern Colorado electric grid. We call this our 2030 Ready Colorado Clean Energy Plan. We're excited about it because of the benefits it will deliver for customers, communities and the environment.

Colorado's GHG Emissions Reduction Roadmap requires investor-owned utilities like Black Hills Energy to reduce emissions from power generation by 80 percent by 2030, compared with 2005. We're on track to meet this goal. The addition of renewable resources to our generation portfolio over the past 12 years already has helped us reduce our GHG emissions by 61 percent as of 2022.

Thanks to our Clean Energy Plan, we will reduce emissions by 89 percent by 2030, while providing 75 percent of our electricity from renewable resources. Here's what's in the plan.

We will add a total of 400 megawatts (MW) of new renewable energy resources. Specifically, we're proposing a 200 MW utility-scale solar project to be built in Pueblo County; a 50 MW battery storage project to be located at our Pueblo Airport Generating Station (PAGS); and 150 MW of wind energy from a project to be built in Northeast Colorado, through a long-term power purchase agreement with a renewable energy developer. If approved by the PUC, these new renewable resources would be in service by the end of 2027.

We arrived at this recommended portfolio after reviewing more than 100 bids from renewable energy developers, with the oversight of an independent third-party evaluator. Cost to customers was the primary factor considered in evaluating the bids, along with transmission access, local community support, renewable energy developer experience, job creation and environmental impact.

If our preferred portfolio of resources is approved, our customers will benefit in several ways. Taking advantage of Colorado's abundant wind and sunshine is a common-sense way to improve air quality. As more renewable energy is added to our system, we'll generate less electricity from our natural gas-fired generating units at PAGS, allowing us to pass along fuel cost savings to customers. The cost of the project also will be reduced by $270 million over 10 years by leveraging tax benefits available through the federal Inflation Reduction Act.

The communities we serve benefit in several ways, too. The plan will deliver $53 million in local economic impact and $323 million in statewide economic impact and create hundreds of construction jobs. The City of Pueblo and Pueblo County both aim to reach 100 percent renewable energy by 2035, and our Clean Energy Plan is a giant step in that direction.

The environmental benefits are big: an 89% reduction in carbon emissions by 2030 compared to 2005. The plan continues and accelerates our track record of GHG emissions reduction, following years of phased in renewable energy generation. Black Hills Energy was the first electric utility in Colorado to have a coal-free generation fleet, and we're proud to continue our leadership.

Adding more renewable generation sources doesn't mean we're sacrificing reliability. Our state-of-the-art natural gas turbines at PAGS will continue as the foundation of our system, providing always-on electric power even when the wind isn't blowing and the sun isn't shining.

We're very aware of the impact of energy costs on our customers, so we're taking steps to minimize the customer bill impact of implementing the Clean Energy Plan. Starting on January 1, 2025, Black Hills Energy will add a Clean Energy Plan Rider to customer bills, to help pay for capital investments and related expenses as allowed by Colorado law. This surcharge will equate to 1.5% of the total annual bill or about $1.50 per month for the average residential customer.

We will offset the new monthly Clean Energy Plan Rider with a reduction in the existing monthly Renewable Energy Standard Adjustment rider, from 2% to 1.5%.

And as noted, we'll generate less electricity from our natural gas-fired generating units at PAGS as more renewable energy is added to our system, allowing us to pass along fuel cost savings to customers.

The PUC has 90 days to assess our report and evaluate our proposed new renewable generation portfolio. We expect a decision in July 2024. After that, we'll finalize contracts with the selected renewable energy developers and get construction underway, so that these assets can be in service by the end of 2027.

Everyone at Black Hills Energy looks forward to moving ahead on our 2030 Ready Clean Energy Plan, and delivering these new renewable energy resources and the benefits they will bring to our customers, communities and the environment.