Denver, Boulder, and other groups have agreed to Xcel Energy’s 2025-2027 Wildfire Mitigation Plan, which lays out around $1.9 billion in investments and maintenance costs, a series of protocols to shut off power during times of high fire risk, and improved strategies to alert customers.
The sprawling “settlement agreement” – first filed April 18 – must still be approved by the Colorado Public Utilities Commission after a series of hearings in May.
But the framework is a major agreement for the company, energy consumers and Colorado communities, who’ve grappled over the plan since it was first filed in June 2024.
“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,” said Joseph Pereira, Deputy Director of Colorado’s Office of the Utility Consumer Advocate, a state agency that advocates on behalf of utility customers.
The plan takes a forward-looking approach to wildfire risk in Xcel’s sprawling service area. Typically, utilities have relied on clearing vegetation around equipment as the main way to lower the odds that their equipment sparks a fire.
Instead, this plan invests in newer, more expensive techniques to reduce wildfire risk. Xcel said it will place around 50 miles of power lines underground, replace aging utility poles and invest in wildfire detection equipment, which includes AI-backed cameras. The company also agreed to compile a centralized database of all of its transmission equipment to track its age and status.
“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,” said Robert Kenney, president of Xcel’s Colorado operations.
The settlement also tackles one of the company’s most controversial tools: preemptively shutting off power during high-wind events. That can prevent ignitions from downed lines, but regulators faulted the company for poorly communicating during its first shut-off last year.
If the agreement is approved, future “public safety power shutoffs” would come with advance notification requirements and prioritize bringing back power to “critical customers.” Xcel will also offer rebates to purchase backup batteries, available to select customers with medical needs in high-risk areas.
The framework features major upgrades within Boulder County, including undergrounding some lines and replacing aging utility infrastructure. The company is fending off hundreds of lawsuits for its alleged role in sparking the Marshall Fire, the most destructive fire in Colorado history, which ripped through the county.
“This is a significant step toward making our community safer and more resilient in the face of growing wildfire threats,” said Nuria Rivera-Vandermyde, Boulder’s city manager.
The mitigation plan recognizes evolving fire risk in the state – it costs four times more than Xcel Energy’s first mitigation plan in 2020, and covers twice the geographic area. Fire risk is increasingly creeping into the company’s bottom line – in October 2024, insurers hit the company with a nearly 300% annual premium increase for its “excess liability insurance,” which it uses to pay out claims when its equipment or employees spark blazes.
In January, state regulators let the company keep that nearly $50 million insurance payment off its accounting books in the short term. This settlement lets Xcel Energy continue doing that, and the company can petition regulators to let it bill those costs back to Coloradans in the future.
Normally, Xcel Energy charges infrastructure upgrades back to Colorado customers, while it enjoys a return on its investments. In the settlement, however, the company agreed to a new payment structure, called “securitization,” similar to how municipal bonds work.
In a few years, the company will put together a set of bonds based on its upgrades and sell that to investors. Utilities typically issue bonds like these after large, destructive catastrophes like hurricanes, when they need to rebuild costly infrastructure.
But in this case, it’s being used as a proactive tool to keep costs down. The result, according to Pereira, is that Coloradans will save money, and Xcel Energy will earn back a smaller return on its investments over decades.
“It’s the first of its kind that we can tell in which this mechanism has been used to proactively address wildfire risk,” Pereira said. “It’s forward-looking instead of reactionary.”
The company initially estimated that by 2027, the plan would increase average residential bills by roughly $9 a month. It’s unclear how much bills will increase under the bond structure.
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