Xcel Energy could be a beneficiary of a provision dealing with coal gasification power plants inserted into legislation by Colorado Sen. Ken Salazar.
The provision in the Senate energy bill would provide federal loan guarantees to energy companies that build clean-burning coal gasification plants in at least 16 high-elevation Western states.
Coal gasification plants use a technology that combines coal and oxygen to create a source of energy that approaches the cleanliness of natural gas.
John O’Donnell, Xcel’s managing director of government affairs, said the utility is considering building a coal gasification plant but that any project is at least several years away.
“It depends on how this technology matures,” O’Donnell said. It would become more attractive “if someone proves it is cost effective and reliable.”
Xcel, which is based in Minneapolis, delivers electricity and natural gas in Colorado and nine other Western and Midwestern states.
On June 6, the consumer group Public Citizen blasted the provision in the Senate’s energy bill, saying it could leave taxpayers ultimately responsible for hundreds of millions of dollars in loans should a company default.
Public Citizen, founded by consumer activist Ralph Nader, initially said the provision inserted into the energy bill by Salazar was intended to benefit a single company, Houston-based DKRW.
The group said DKRW, which is run by four former Enron executives, would be the only energy company to qualify for the federal assistance outlined in the provision.
But Public Citizen backed off that claim, saying DKRW’s planned $2.8 billion coal gasification plant near Medicine Bow, Wyo., is the only “publicly announced plant” that would satisfy the requirements, according to the group’s website.
Salazar spokesman Cody Wertz said Public Citizen “failed to do its homework” and the provision “was not meant for a specific company or project.”
He also said chances are slim that a company would default on a loan. If it did, the U.S. government would take possession of the power plant.
Public Citizen also said on June 8 that the bill is aimed at a joint coal gasification project involving Xcel, PacifiCorp and Tri-State Generation and Transmission that has not yet been publicly announced.
Xcel on Thursday denied it is involved in such a project. No one at PacifiCorp or Tri-State could be reached for comment.
O’Donnell said several companies are going forward with coal gasification plants in eastern states, but companies are hesitant to do the same in the West for three reasons: Compared with coal mined in the East, Western coal has a lower energy content and contains more moisture. The Rocky Mountain region’s high altitude also complicates the process.
“All three factors are potentially very significant and would force alterations on current designs,” O’Donnell said. But “it could be a useful technology.”
Wertz said the provision offered by Salazar is aimed at overcoming some of the challenges.
“We want to create incentives for companies to take this up and prove it works (in the West),” Wertz said. Compared with a traditional coal plant, “it is a cleaner technology that reduces pollutants by a significant amount.”
The provision is expected to be addressed by the full Senate next week. It’s not in the House energy bill.
Staff writer Will Shanley can be reached at 303-820-1473 or wshanley@denverpost.com.
