Xcel Energy announced Monday it plans to close its two remaining coal power plants in the Upper Midwest a decade earlier than scheduled, putting the utility on pace to be coal-free in the region by 2030.

The company also announced that it intends to keep its nuclear power plant in Monticello, Minn., running until at least 2040 — 10 years beyond the expiration of its current license — while it expands wind and solar energy generation.

Under Xcel's proposal, the Allen S. King coal-fired power plant in Oak Park Heights, Minn., will close in 2028. Sherco 3, the company's remaining Upper Midwest coal-fired generator, located in Becker, Minn., will close in 2030, a decade ahead of schedule. Xcel had already planned to retire Sherco's other two coal units in 2023 and 2026 and build a natural gas plant on the Sherco site.

Xcel, Minnesota's largest utility company, said it will submit its plan to the Minnesota Public Utilities Commission in July. In Minnesota, utilities are required to file a resource plan every few years, outlining the different sources of energy they need to serve their customers for the next 15 years.

Xcel Energy will retire their last two coal-fired power generating stations. The Allen S. King station will retire in 2028 and the Sherco 3 station will be retired in 2030. William Lager | MPR News

"We're showing how we can execute on our plans to achieve an 80 percent carbon reduction by 2030, which is an important milestone to our ultimate goal of 100 percent carbon-free electricity by 2050," said Ben Fowke, Xcel's CEO.

The accelerated timeline for retiring Xcel's two coal-powered plants comes after the company reached an agreement with environmental and labor groups on its planned purchase of the Southern Power energy company's Mankato Energy Center natural gas plant.

In comments to the Minnesota Public Utilities Commission, which regulates the state's utility companies, the Sierra Club objected to Xcel's purchase of the plant, saying it would cement the company's reliance on burning fossil fuels well into the future. Now that Xcel has committed to retiring its coal-fired plants earlier than expected, the Sierra Club says it will withdraw comments, so the sale can move forward.

The complicated move toward a carbon-free future

Xcel's decision to retire its coal-powered plants early is "a really big deal," said Allen Gleckner, senior director of regulatory affairs and energy markets at the nonprofit clean energy group Fresh Energy. "These are the largest greenhouse gas, carbon-emitting sources on Xcel's system."

But environmental groups stopped short of endorsing Xcel's broader energy plan, which includes extending the life of the Monticello nuclear plant and continuing to rely on natural gas power plants.

"We should instead be investing in clean, renewable energy," said Jessica Tritsch, senior campaign representative with the Sierra Club's Beyond Coal campaign.

Tritsch said dealing with nuclear waste is expensive and puts Minnesotans at risk. And while burning natural gas emits less carbon dioxide than coal, the process of extracting gas results in significant emissions of methane, another greenhouse gas, she said.

Xcel's latest plans fit with the utility's announcement late last year to eliminate carbon emissions by 2050. Some Minnesota policy makers want to require all utilities to produce electricity from carbon-free sources by 2050, but it's looking unlikely that will happen at the Legislature this year.

Federal and state regulators would need to approve Xcel's proposal to extend the Monticello nuclear plant's operating license. Xcel operates one other nuclear plant in Minnesota — the two-unit Prairie Island plant near Red Wing — whose licenses are set to expire in 2033 and 2034.

Meanwhile, Xcel also committed in the agreement with environmental groups to add at least 3,000 megawatts of solar by 2030 and boost energy efficiency. The plan also calls for adding 1,850 megawatts of wind — the company's largest-ever wind expansion — by 2022.

Sherco in Becker, Minn., in October 2012. Jeffrey Thompson | MPR News 2012

Xcel CEO Fowke said the changes would not lead to significantly higher customer utility bills.

"We think we can do this at or below the cost of inflation," Fowke told reporters in a Monday morning phone call. "It's not going to be free, but it's going to be inexpensive and importantly, it compares very well to other alternative plans."

Becker and Oak Park Heights: bracing for change

Leaders in Becker and Oak Park Heights on Monday called on the Legislature to support their communities as Xcel phases out its coal-fired plants.

"Our cities want to be partners in the clean energy transition, but we cannot go it alone," Becker city administrator Greg Pruszinske said in a statement. Sherco contributes 75 percent of the city's local tax base and about 300 jobs.

"We absolutely need the partnership of the state, Xcel and other stakeholders to support us through the transition," he said.

The city is requesting help in building infrastructure and other resources to help it attract and sustain new businesses as it transitions away from dependence on the Sherco plant.

Xcel owns thousands of acres of land around the Sherco site in Sherburne County. For years, the company has been working with the city of Becker to bring in new companies to fill that space and replace some of the jobs that will be lost when the coal generators are retired.

They're now working to land a Google data center, which the Minnesota Department of Employment and Economic Development estimates could create 2,000 construction jobs for 18 to 24 months, plus 50 permanent jobs. The data center would be powered by two dedicated Xcel wind projects..

The city of Oak Park Heights, Minn., along the St. Croix River, has long expected Xcel's King power plant would close; it was just a matter of when. The plant was already slated to close in 2037.

Two of three generator units are operational at the Sherco plant in Becker, Minn., in October 2012. Jeffrey Thompson | MPR News 2012

"We'll do fine," Oak Park Heights Mayor Mary McComber said. "We just have to get a plan in place. And that will take time, as well."

McComber said it's too early to speculate about the future of the roughly 150-acre site. Xcel said it has no plans for the site yet, because the planned closing is still years away. If the property were put to other uses, McComber said, there are many issues to consider first, from an environmental cleanup to building restrictions associated with the site's location along the St. Croix National Scenic Riverway.

Oak Park Heights, with a population of 4,800, has relied on the plant for about a third of its property tax revenue, which amounts to about $1.7 million a year. If tax revenue from the Xcel plant property drops significantly, the city could have a large gap in its budget.

It has already created a task force to study the economic and other impacts of the plant closing.

"We're putting together a comprehensive economic study, looking at how it's going to impact some of our businesses, how much employment will be lost from the plant," McComber said. "[We're looking at] the economic impact not just for our city but all the cities that are going to be affected by this."

Xcel said it expects no jobs cuts among the 90 or so workers at the Oak Park Heights plant, thanks to to attrition and transfer opportunities.