State regulators would gain expanded power to order Xcel Energy to finance major costs for its chronically troubled Comanche 3 coal plant through bonds backed by a decades-long charge on every customer’s monthly electric bill.

House Bill 26-1326, the Colorado Public Utilities Commission sunset bill that cleared its first committee on April 23, would let the PUC direct investor-owned utilities to use securitization under 2019’s Colorado Energy Impact Bond Act. The measure continues the PUC through 2037 while expanding its authority beyond voluntary utility applications.

Securitization allows a utility to issue bonds backed by a decades-long charge on ratepayer bills. The charge stays on every bill, with periodic adjustments, only until the bonds are repaid — typically 20 to 30 years. Any securitization order would still require the PUC to find a net benefit to ratepayers, according to the bill.

Utilities in other states have used securitization to finance plant retirements at lower interest rates than traditional utility debt and equity financing, producing significant ratepayer savings in multiple cases.

Joseph S. Fichera, CEO of Saber Partners, an expert advisor to the Colorado Public Utilities Commission, said in a 2023 release announcing the firm’s selection by the PUC: “Utility securitization is a complex Wall Street financial tool that creates a unique and simple ratepayer-backed bond. Ratepayer-backed bonds can safeguard electricity consumers during this period of energy transition. When done correctly, they can generate significant savings for consumers.”

Xcel’s Comanche 3 Power Station near Pueblo is Colorado’s largest coal unit at 750 megawatts. It has long been a reliability headache, averaging roughly 91 days of outages per year in its first decade of operation. A catastrophic failure on August 12, 2025, knocked it offline.

Repairs are expected to cost $15 million to $26 million total, with Xcel’s share around $4.6 million after insurance. The unit is now projected to be back online by mid-July 2026. The prolonged outage has worsened summer 2026 energy capacity risks.

These concerns have resulted in stay-open or extension orders for both Comanche and Craig assets.

The PUC approved a one-year extension for Comanche Unit 2 through the end of 2026 to help cover the gap. Federally, the U.S. Department of Energy has issued emergency orders requiring Craig Unit 1 to remain available past its planned 2025 retirement. Similar retirement costs could arise at other coal assets.

U.S. Department of Energy reports highlight national strains on resource adequacy from rising demand and plant retirements, adding pressure for reliable dispatchable generation in Colorado.

Xcel maintains that repairing and running Comanche 3 through its planned retirement around 2030 remains the most cost-effective near-term option for reliability. Any early retirement or major cost recovery would still require PUC approval.

Clare Valentine, senior policy advisor with Western Resource Advocates, supports giving the PUC power to require securitization.

According to April 23 reporting on her testimony by Ed Sealover in The Sum & Substance, Valentine argued that investor-owned utilities like Xcel and Black Hills “have incentives to avoid securitization because it can decrease their profits.”

She stated that PUC members “should be able to step in and order it when they see it in the best interests of consumers.” Valentine added, “While securitization is not a magical tool, it can be useful in some cases.”

Critics worry the expanded authority shifts too much control and risk to ratepayers.

Sarah Montalbano, an energy policy analyst at the Independence Institute, a free market think tank based in Denver, said in written testimony submitted to the Colorado House Energy & Environment Committee, “Another concern is that HB26-1326 would authorize the PUC to order a utility to securitize assets rather than waiting for a voluntary application…Authorizing the PUC to compel utilities to write down those government-created losses converts securitization from a ratepayer protection tool into a financial mechanism for implementing legislative policy goals.”

The bill, sponsored by House Majority Leader Monica Duran, D-Wheat Ridge, and others, advanced on a 9-4 party-line vote in the House Energy and Environment Committee. It remains under consideration.