Xcel Energy has reached a significant settlement agreement with Denver, Boulder, and various community groups regarding its 2025-2027 Wildfire Mitigation Plan, which includes an estimated $1.9 billion investment aimed at enhancing safety and infrastructure maintenance.
The terms of this settlement, filed on April 18, will require approval from the Colorado Public Utilities Commission, following a series of hearings set for May. This agreement represents a pivotal moment for Xcel Energy, its customers, and the communities affected by wildfire risks, which have been a contentious point since the plan was initially proposed in June 2024.
Joseph Pereira, Deputy Director of Colorado’s Office of the Utility Consumer Advocate, highlighted that this settlement emphasizes community safety over profits. He stated, “What is unique about this settlement and about the outcome here is that the adopted approach reduces risk for our communities and for the company, but also ensures that profits are secondary to safety.”
The Wildfire Mitigation Plan, designed to address rising wildfire risks across Xcel Energy’s extensive service area, departs significantly from traditional methods that have primarily focused on vegetation management around electrical equipment. Instead, the new strategy entails substantial investments in advanced technologies and infrastructure improvements.
Among the plan’s key measures, Xcel Energy has committed to burying approximately 50 miles of power lines, replacing outdated utility poles, and acquiring cutting-edge wildfire detection equipment, including AI-enabled cameras. Furthermore, the company plans to establish a centralized database to monitor the age and status of all transmission equipment.
Robert Kenney, president of Xcel’s Colorado operations, expressed optimism about the plan, stating, “This agreement, if approved by the Commission, will allow us to move forward more quickly to implement important projects to protect our customers and communities.”
A significant aspect of the settlement addresses the controversial practice of preemptively shutting off power during high-wind conditions to prevent fires ignited by downed lines. While such shut-offs can help mitigate risks, regulators previously criticized Xcel for inadequate communication during its first shut-off event last year.
If the settlement is validated, future public safety power shutoffs will come with mandatory advance notifications, ensuring that power restoration is prioritized for “critical customers.” Additionally, Xcel plans to offer rebates to customers with medical needs for the purchase of backup batteries in high-risk zones.
The agreement also promises crucial upgrades in Boulder County, which includes undergrounding certain power lines and modernizing aged utility infrastructure. This is particularly relevant given Xcel Energy’s ongoing legal challenges following its alleged involvement in the Marshall Fire—Colorado’s most devastating fire to date, which impacted Boulder County severely.
Nuria Rivera-Vandermyde, Boulder’s city manager, emphasized the importance of this agreement: “This is a significant step toward making our community safer and more resilient in the face of growing wildfire threats.”
The 2025-2027 mitigation plan reflects the evolving fire risk landscape in Colorado, with investment costs that are four times higher than Xcel Energy’s initial mitigation efforts in 2020 and covering twice the geographic area. The financial implications of wildfire risk are now more pronounced, as seen in October 2024, when insurers imposed a staggering nearly 300% increase in the company’s annual premium for excess liability insurance, used to cover claims related to fire incidents caused by the company.
In response to regulatory decisions, the company has been allowed to set aside approximately $50 million in insurance costs off its accounting books for the time being. The approved settlement permits Xcel Energy to maintain this practice while also seeking to pass on these expenses to Colorado customers in the future.
Traditionally, Xcel Energy has recouped infrastructure upgrade costs directly from customers while generating returns on those investments. However, this settlement introduces a novel approach called “securitization,” akin to municipal bonds. In this method, the company plans to compile a series of bonds based on its infrastructure upgrades and subsequently sell them to investors.
This proactive strategy is generally applicable after catastrophic events like hurricanes but is now being utilized by Xcel Energy to preemptively manage wildfire risks and control costs. Pereira noted, “It’s the first of its kind that we can tell in which this mechanism has been used to proactively address wildfire risk. It’s forward-looking instead of reactionary.”
While the company initially estimated an average monthly increase of about $9 in residential bills by 2027 under the plan, it remains uncertain how the bond structure will ultimately affect consumer costs.
image source from：https://www.cpr.org/2025/04/25/xcel-energy-wildfire-mitigation-plan-denver-boulder/
