UTILITY FINANCIAL TRANSITION IMPACTS: FROM FOSSIL TO CLEAN

The briefing examines the financial challenges and opportunities associated with the early retirement of coal-fired power plants in the United States, using Colorado as a case study. It highlights that the marginal cost of energy (MCOE) for many coal plants now exceeds the cost of new wind and solar resources. To manage the resulting 'stranded assets' and undepreciated plant balances, the author proposes a transition strategy involving financial analysis of public data, the use of regulatory assets, and refinancing mechanisms such as debt-for-equity swaps and securitization. These tools are intended to reduce consumer costs, maintain utility investor returns, and fund just transition initiatives for affected workers and communities.

• In many parts of the United States, the cost of operating existing coal generation is now higher than the all-in cost of replacing it with wind and solar power.
• Financial analysis using publicly available data from the SEC, DOE, and FERC can be a more reliable method for determining plant-level marginal cost of energy (MCOE) than utility-led production cost modeling, which is often proprietary and subject to information asymmetry.
• In Colorado, analysis of public financial data for Public Service Company of Colorado (PSCo) indicated that most of its coal fleet was more expensive to own and operate than new wind power, which was estimated at $25 per megawatt-hour including federal production tax credits.
• Early retirement of coal plants creates 'regulatory assets'—undepreciated plant balances that utilities seek to recover through consumer rates to protect equity earnings.
• Securitization through ratepayer-backed bonds can provide the lowest cost of capital and the most substantial consumer savings compared to corporate debt or equity by leveraging state legislation and commission financing orders to achieve high credit ratings.
• Debt-for-equity swaps can reduce consumer costs by replacing high-cost shareholder equity in a regulatory asset with lower-cost corporate debt.
• Financial savings from the transition can be used to support a just transition; for example, proposed Colorado legislation directed 15 percent of securitized bond totals toward mitigating risks for impacted communities and workers.

APA

LEHR, R. (2018). UTILITY FINANCIAL TRANSITION IMPACTS: FROM FOSSIL TO CLEAN. Energy Innovation. https://energyinnovation.org/wp-content/uploads/From-Fossil-to-Clean-Brief_12.3.18-2.pdf

Chicago

LEHR, RON. UTILITY FINANCIAL TRANSITION IMPACTS: FROM FOSSIL TO CLEAN. Energy Innovation, 2018. https://energyinnovation.org/wp-content/uploads/From-Fossil-to-Clean-Brief_12.3.18-2.pdf.

Wikipedia

{{cite report |last1=LEHR |first1=RON |title=UTILITY FINANCIAL TRANSITION IMPACTS: FROM FOSSIL TO CLEAN |publisher=Energy Innovation |date=December 2018 |url=https://energyinnovation.org/wp-content/uploads/From-Fossil-to-Clean-Brief_12.3.18-2.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lehr2018utility, author = {LEHR, RON}, title = {{UTILITY FINANCIAL TRANSITION IMPACTS: FROM FOSSIL TO CLEAN}}, institution = {Energy Innovation}, year = {2018}, month = dec, url = {https://energyinnovation.org/wp-content/uploads/From-Fossil-to-Clean-Brief_12.3.18-2.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }