Xcel Energy and El Paso Corp. plan to partner in the development of new natural-gas pipeline and storage facilities in Colorado.
The $290 million project, High Plains Pipeline, includes about 164 miles of natural-gas transmission lines and storage facilities with about 7 billion cubic feet of capacity, according to El Paso spokesman Richard Wheatley.
Minneapolis-based Xcel is Colorado’s largest gas and electric provider, serving 1.2 million gas and 1.3 million electric customers.
Xcel will pay $145 million toward the project between 2007 and 2009, a bill that will be picked up by the company’s shareholders. The project is expected to be operational by 2009.
“We’re going to use this to meet the growing needs of our Front Range customers and the growing requirements of electric generation,” Xcel spokeswoman Ethnie Groves said.
Much of the power Xcel provides in Colorado is generated from natural-gas-fired power plants, Groves said.
Last Feb. 18, rolling blackouts left 371,370 Colorado customers of Xcel without electricity and almost all of them without heat, after temperatures plunged to minus-13 degrees. One of the problems was an inability to get enough gas to run power plants.
Among other things, the Colorado Public Utilities Commission recommended after investigating the blackout that Xcel develop better mechanisms to purchase natural gas and power from outside providers when demand is expected to be high.
Xcel said it would study the feasibility and cost of adding more gas storage.
Groves said the new pipeline project had nothing to do with that recommendation.
“This project has been ongoing for some time,” she said.
Xcel has enough leased or owned storage in Colorado to supply about half of typical customer demand on the coldest day of the winter. The remainder is drawn from pipelines.
Colorado Interstate Gas, a subsidiary of El Paso, will lease and operate the gas pipeline and storage facilities. Xcel will bid for capacity on the system.
Houston-based El Paso has the largest U.S. network of natural-gas pipelines.
“This proposed project reinforces Colorado Interstate Gas’ commitment … to meet demand in the high-growth, Front Range region,” said El Paso’s Wheatley.
Xcel and El Paso are equal partners in the High Plains Pipeline venture, which requires Federal Energy Regulatory Commission approval.
The partners plan to file applications with the FERC this year.
In addition, Xcel said it may spend $210 million in 2009 to build a 100-megawatt wind-power facility in Minnesota. The company is the nation’s biggest distributor of wind power.
Also Wednesday, Xcel said fourth-quarter profit fell 13 percent after it earned less from energy trading amid milder weather. Net income fell to $97.7 million, 23 cents a share, after the payment of preferred dividends, from $112.1 million, 27 cents a share, in the fourth quarter of 2005. Sales fell to $2.47 billion from $2.88 billion.
For the year, the company earned $571.8 million, $1.36 a share, its highest annual profit since 2003.
Xcel shares closed at $23.33, up 2 cents.
Bloomberg News contributed to this report.
Staff writer Tom McGhee can be reached at 303-954-820-1671 or tmcghee@denverpost.com.
