Xcel Energy files plan to meet Southwest power needs

Xcel Energy will invest approximately $770 million in existing Texas-New Mexico power generating facilities by extending the life of two older natural gas-fueled units, constructing solar generating systems and adding battery storage as it seeks to meet growing electricity needs and retire power plant generators that have served customers for close to seven decades.

These upgrades and additions to the generating fleet will return $116 million in added tax revenue to their host communities and save customers $900 million to $2 billion in fuel costs over 35 years. Additionally, Xcel Energy will pass through the anticipated $500 million in federal solar tax credits as savings to customers over 10 years.

“Our power plants are operated and maintained by highly trained and dedicated employees and hosted by supportive communities that have come to depend on the economic activity these power plants generate,” said Adrian J. Rodriguez, president, Xcel Energy – New Mexico, Texas. “By reinvesting in these power plants, we are providing new opportunities for our valued workers who have served this region with reliable power for decades while realizing significant savings for our customers by repurposing existing grid connections and generating electricity from free and abundant sunshine.”

In proposals filed today with the New Mexico Public Regulation Commission and the Public Utility Commission of Texas, Xcel Energy presented its plan to extend the life of two natural gas units at its Cunningham-Maddox Generating Complex near Hobbs, New Mexico. Additionally, the plan calls for the construction of three solar generating facilities – two at Cunningham Station and one at Plant X Generating Station near Earth, Texas. A battery system is also planned at Cunningham Station to store surplus power for grid reliability.

The two solar plants near Hobbs will have a combined peak capacity of 268 megawatts. The solar facility at Plant X will produce 150 megawatts under optimal conditions. Combined, the facilities would power about 140,000 typical Xcel Energy customer homes on average. Given the intermittent nature of solar generation, total capacity from these facilities would total approximately 280 megawatts. If regulators approve the plan as filed, Xcel Energy expects to have the new and updated generating resources online by 2026 and 2027.

The Hobbs-area power plants, Cunningham and Maddox, are located west of Hobbs and have provided an economic stimulus to Hobbs and Lea County since the 1950s and 1960s when the two plants were developed. Xcel Energy will invest in upgrades to Cunningham Unit 2, constructed in 1965, to extend operations until 2027. Further upgrades will extend operations at Maddox Unit 2, which was placed in service in 1975 by the New Mexico Electric Service Co., a predecessor company, to 2028.

“Having abundant, reliable and affordable power is critical to the long-term economic success of Lea County, a county which contributes significantly to the state’s overall economy,” said Jennifer Grassham, president and CEO of the Economic Development Corporation of Lea County in Hobbs. “We are fortunate to have existing Xcel Energy employees, infrastructure and grid interconnections in our backyard, making Lea County an attractive location for additional power generation today and in the future.

“Xcel Energy’s proposal to extend the life of existing gas generation as well as own and operate new solar power and battery energy storage technology in Lea County will bring needed additional generation capacity to our region along with new multi-year, federal tax incentive benefits to New Mexicans, locally-sourced construction jobs, increased economic activity and more than $75 million in reinvested property tax payment to the County and local school districts,” Grassham added.

Plant X, located in Lamb County south of Earth, Texas, has been serving regional customers since 1952. At its peak, Plant X was made up of four natural gas-fueled steam generating units. The oldest of these units is being retired this year. Like Cunningham, Plant X has a skilled workforce made up of local residents and is the site of valuable substation and transmission infrastructure that moves electricity to the wider grid. Xcel Energy is saving as much as $440 million by integrating solar generating capabilities into the grid infrastructure at Plant X and Cunningham while maintaining its economic commitments in the facilities’ host communities.

“Solar will play an increasingly important role in sustaining growth and supporting rural Texas economies with added land value, an expanding tax base and new potential revenue streams for farmers and ranchers,” said Kasey Coker, executive director of the High Ground of Texas, an economic development coalition serving 67 West Texas counties. “Xcel Energy’s vision for the future of Texas matches our own, and we anticipate the decision to locate in Lamb County will open the door for even more development.”

Robert Melton, business manager for the International Brotherhood of Electrical Workers Local 602, pointed out that IBEW members are also customers, and applauded Xcel Energy for choosing a path that saves customers money and gives IBEW members more opportunities.

“This plan solves for both by extending the operational lives of existing generation and reinvesting locally to integrate new technologies,” Melton said. “We are in full support of Xcel Energy’s vision as this plan promotes reliability and funnels millions in federal tax incentives directly to Texas and New Mexico customers, while avoiding emissions and benefiting the environment.”