A pair of mutually exclusive legislative mandates ordering utilities to cut greenhouse gas emissions by 2030 leaves Xcel Energy with a choice, either miss climate deadlines while keeping customer costs below a statutory cap or exceed that limit — by a lot — to meet climate goals.

Xcel filed its 2024–2028 Clean Heat Plan with the Colorado Public Utilities Commission for its consideration Wednesday outlining four options for meeting emissions limits in Gov. Jared Polis’ Greenhouse Gas Reduction Roadmap and laws passed by the state General Assembly.

Senate Bill 21-264 mandated greenhouse gas reductions for gas distribution utilities like Xcel of 4% by 2025 and 22% by 2030. The statute also directed the PUC to set a cost cap of 2.5% of annual gas bills for gas and electric customers.

In Xcel’s plan the company makes it clear that keeping consumer costs below 2.5% is “extremely unlikely” if the emissions targets are to be reached by 2025 or 2030.

“Our modeling shows that meeting both the statutory emissions target and the statutory cost target is likely not possible in the same scenario, creating a challenge for the Commission, the Company, and stakeholders in deciding how to proceed,” according to the plan.

To meet the “ambitious 2030 emission reduction target,” annual program costs are expected to exceed the 2.5% retail cost cap “by approximately 6 to 17 times,” depending on which option the PUC chooses.

Xcel worked with Energy and Environmental Economics, Inc. (E3), a leading modeler of cleaner gas system options, to produce the four options it’s suggesting.

“Through that work, we found the costs of portfolios creating a pathway to the 2030 emissions target could be over $1 billion over the course of the five-year plan, significantly higher than the cost target that Senate Bill 21-264 puts into place of approximately $34 million annually or a total of $170 million over the five-year plan.”

As its preferred plan, Xcel rejected staying within the 2.5% cost cap and selected one of the three “electrification only” approaches that meets the climate goals but could cost customers huge amounts.

“Under all electrification-focused strategies, customers would incur personal costs to electrify their gas appliances and homes. These costs can be in excess of $20,000 per home before incentives for a residential customer retrofitting an existing home to all-electric heating.

“Depending on the scale of the electrification initiatives, total customer personal costs could be additional billions of dollars, even after rebates,” said the plan.

The budget for the Clean Heat Plus 5-year plan is $816 million just for Xcel. Even under that scenario, E3’s analysis indicates that achieving the 2025 goal is extremely unlikely.

Xcel also pointed out that in real terms, because of customer growth since 2015 and weather, the emissions targets have actually shifted significantly to approximately 14% and 28%.

Xcel said 2015 was an unusually warm year, which skews the baseline emissions downwards, resulting in a wider gap between the baseline and today’s emissions that increases the required emissions reductions.

Xcel’s Clean Heat Plus plan “is projected to achieve the 2030 Clean Heat Target, while at the same time saving our customers $100 million per year through 2030 when compared to a portfolio that omits CNG (certified natural gas) and (carbon) offsets.”

“While we strongly believe in the potential of the Clean Heat Plus plan, there are very real questions about the pace, scale, feasibility, and costs of the planned initiatives,” according to the plan. “Simply put, we cannot guarantee the pace, scale, and costs of the implementation of these initiatives will occur as we have modeled.”