Xcel invests in clean energy

announced today that it is committing $3.5m through 2007 to develop an Integrated Gasification Combined Cycle (IGCC) generating project in

. The company plans to file an application with the Colorado Public Utilities Commission (CPUC) for approval of the project late next year.

According to Xcel, IGCC is a clean-coal technology that uses a chemical process to turn coal into a gas, which is then burned in a modified combustion turbine to generate electricity. The potential benefits of this technology include increased energy-efficiency and reduced emissions. IGCC is also said to facilitate the capture of carbon dioxide (CO2) before it is emitted into the atmosphere. The CO2 can then be sequestered, for example, underground in depleted oil wells. This IGCC project would be the first coal-fueled IGCC plant in the USA to capture a portion of its CO2 emissions.

'We believe the development and commercial operation of clean-coal technology is needed in Colorado and throughout our nation,' said Richard C. Kelly, president, chairman and chief executive officer of Xcel Energy. 'We want to lead the effort to demonstrate that this technology works using western coal at high altitude.'

The Colorado General Assembly passed and, in June, Colorado Govenor Bill Owens signed legislation that facilitates IGCC development in the state. By the end of 2007, Xcel Energy plans to file an application with the CPUC that includes an IGCC project as part of the company’s resource plan.

The company anticipates construction of a 300-350 megawatt IGCC facility, which would serve the electricity needs of up to 350,000 homes in Colorado. The plant is expected to cost $500m or more. Construction would begin after 2009. Xcel Energy has committed up to $3.5m to conduct engineering studies and project development activities and the company may seek partners for the project.

Xcel Energy has named Mary Fisher, vice president for Colorado resource development, as project leader for the proposed next-generation clean-coal power plant. Fisher was named vice president in May 2004, and most recently worked on securing the permitting, water rights and other necessary approvals for a third unit at the Comanche Generating Station in Pueblo, Colorado.

The

federal Energy Policy Act of 2005 contains several provisions that support IGCC development, including a provision for an IGCC facility built at an elevation of 4,000 feet or higher using western coal. The company anticipates working with the Department of Energy and Congress to leverage federal funding opportunities. The Energy Policy Act has authorized up to $200m a year for funding of clean-coal technologies.