Texas Coal Plant Speeds Up Retirement, Saving Ogallala Water Resources

Xcel Energy To Close Tolk Station in 2028, Four Years Early

Lindsay Stafford Mader, lindsay.mader@sierraclub.org 

Sudan, Texas — After last week’s vote by the New Mexico Public Regulation Commission, the Tolk coal plant in the Texas Panhandle will close down four years earlier than its previous retirement date. Tolk Station, which is not part of the ERCOT grid and supplies power to customers in Texas and New Mexico, will stop burning coal by 2028 under the agreement – a move that will likely save millions of gallons of groundwater from the Ogallala Aquifer every day. The plant’s owner, Xcel Energy, plans to build a portfolio of replacement resources, which should include low-cost renewable energy to provide affordable, clean power and safe jobs. More and more utilities are moving away from expensive and polluting coal, and Sierra Club’s Environmental Law Program worked for years to help ensure this latest Tolk victory.

“An earlier Tolk retirement will save customers more than $100 million over the next 10 years, clean the air for rural neighbors, reduce climate-warming emissions, and keep precious water in the ground,” said Josh Smith, an attorney with the Sierra Club’s Environmental Law Program. “More than half of Xcel’s power comes from carbon-free sources, and we give it credit for recognizing that Tolk’s path forward was unsustainable. But we’ll also keep pushing the company to build renewable, transmission, and battery resources in the Panhandle and comply with New Mexico’s mandate to become carbon-free by 2045.”

“This agreement is welcome news for the countless lives that will be improved, the communities that will now be safeguarded, and our collective future,” said Sierra Club Executive Director Ben Jealous. “The only way to ensure a livable future is by rapidly moving off of coal and investing in cheap and readily available clean energy. Xcel cannot and should not waste this opportunity to grow its clean energy portfolio and the good jobs that come with it.”

The Tolk coal plant is in Sudan, about one hour northwest of Lubbock. It is regulated by both Texas and New Mexico's utility oversight agencies because it provides power to both states. The New Mexico Public Regulation Commission voted Oct. 19 to approve a rate case settlement agreement that, among other things, requires Xcel (called Southwestern Public Service Company or SPS in New Mexico and Texas) to retire Tolk by the end of 2028 and limits the plant to operate in its remaining years only when it is economically beneficial for customers. The early retirement marks the 373rd coal plant retired since the start of the Sierra Club's Beyond Coal campaign.

Because Tolk withdraws so much water from the rapidly depleting Ogallala Aquifer to cool its coal-burning boilers, a speedier retirement, limits on the plant’s operations, and recent energy market trends should result in that water being saved for drinking, raising livestock, and growing food. The importance of this for Texans in the Panhandle cannot be overstated. A recent Moody’s Investors Service report pointed out that thermal electric power generation “is the largest U.S. consumer of freshwater,” and ranked Xcel as the No. 2 utility in the West and Southwest “most exposed to an increased risk” due to its stressed water resources. The report cited Tolk as a major contributor to this risk.

“In a state where heat waves, drought, and high electricity bills are changing daily life as we know it, the transition away from coal just makes sense,” said Nova Jones, field organizer for the Sierra Club. “An earlier retirement and decreased operations of the Tolk coal units are vital for energy economics – coal has long been the most expensive way to produce energy. But even more so, this settlement reflects a step toward greater environmental justice in the entire region, an effort that touches on air pollution and also the sustainability of the water resources people depend on to live.”

Additional benefits of closing Tolk earlier include fewer trips by open-air railcars hauling coal from Wyoming to the plant in Texas, a harmful part of the mine-to-plant life cycle where coal dust and particles fall into rivers, streams, and lakes and dust pollutes the air for people living near the tracks. And it will irrefutably clean the air: In 2022, Tolk released 2.9 million tons of climate-warming carbon dioxide emissions, 5 million pounds of toxic nitrogen oxide pollution, and 17.3 million pounds of sickening sulfur dioxide emissions. A 2023 Sierra Club report found that the plant is associated with 17 premature deaths every year, most of which are in the surrounding rural counties. Many of coal’s negative health impacts can be reversed immediately after a plant’s closure, according to a New York University study.

Back in 2020, an agreement between Xcel and the Sierra Club secured an initial retirement for Tolk no later than 2032. Part of that settlement required the company to do a thorough study into retiring Tolk even earlier, based on the plant’s costliness and the aquifer’s depletion. After conducting the analysis, the company proposed retiring the plant in 2028, and the recent order from the New Mexico commission requires Xcel to now follow through on that earlier retirement. Xcel is currently going through settlement negotiations with parties in a separate Texas proceeding on how to recapture its investment, which will be decided, likely this fall, by the Texas Public Utility Commission. 

About the Sierra Club

The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.