Xcel Energy will pay $640M to settle claims from Denver-area wildfire that burned 1,000 structures

Key Points

• Xcel Energy is expected to pay $640 million to settle lawsuits related to Colorado's most destructive wildfire, which occurred in 2021 and resulted in two deaths and the destruction of nearly 1,000 homes.
• The settlement was announced just before jury selection for a trial that would have addressed claims from homeowners and insurers, although Xcel maintains its equipment did not cause the fire and does not admit fault.
• The fire's origins included a sparking power line from Xcel and a smoldering scrap wood fire from a nearby property, which, when combined, resulted in significant damage estimated at $2 billion.

DENVER (AP) — Xcel Energy expects to pay about $640 million to settle lawsuits alleging it was responsible for starting Colorado’s most destructive wildfire that killed two people and destroyed nearly 1,000 homes in 2021, the company said Wednesday.

The announcement came as jury selection was set to begin Thursday in a two-month trial combining lawsuits brought by hundreds of homeowners, insurers and others over the fire in the heavily populated suburbs between Denver and Boulder. Court documents confirmed a settlement has been reached and the trial canceled.

Minneapolis-based Xcel has maintained that its equipment did not cause or contribute to the fire. It said it does not admit any fault under the settlement.

Lawyer James Avery said the settlement provides hope to the hundreds of fire victims he represents. Most of them plan to accept confidential payouts already determined by mediators based on their circumstances.

“There is a sense of relief and hope for an ending to this tragic disaster that they continue to struggle with as they rebuild their homes and lives,” he said.

As global warming makes wildfires worse in the western U.S., utilities in the region have spent billions of dollars in recent years on insurance costs and trying to upgrade old equipment to reduce the chances of accidentally igniting a blaze. They have also faced lawsuits after major fires from people who contended they did not do enough.

In Colorado, investigators found that a sparking power line owned by Xcel was one of the causes of the fire that was fanned by high winds. Embers from a smoldering scrap-wood fire set days before on a nearby property used by a Christian religious communal group were also found to have been another cause.

The smoldering fire at the Twelve Tribes property had been buried by residents a few days before in a way that was approved by firefighters who stopped by to investigate, authorities said.

The two fires combined into an inferno following months of drought amid a winter nearly devoid of snow. It spread rapidly in winds that gusted up to 100 mph (160 kph) in places, causing $2 billion in damage.

Killed in the fire were a 69-year-old man who lived near where the fire started and a 91-year-old woman last seen trying to rescue her dogs from her home in Superior.

Authorities spent 18 months investigating the cause of the Marshall Fire and determined criminal charges were not warranted for either Xcel or the Christian group.

Xcel said in a statement Wednesday that it, Qwest Corp., which leased space on Xcel’s power poles for fiber optic cable, and Teleport Communications America LLC reached agreements in principle to settle all claims involved. But the company said homeowners and others who filed lawsuits against it still had to decide whether to opt into the agreement.

“We recognize that the fire and its aftermath have been difficult and painful for many, and we hope that our and the telecom defendants’ contributions in today’s settlement can bring some closure for the community,” Xcel CEO Bob Frenzel said.

A transcript of a hearing held Wednesday to discuss the deal has been sealed until the end of the day. Lawyers must update the court on the status of the settlement within the next month, Judge Christopher Zenisek said in an order.

Xcel said about $350 million of its settlement payment would be funded by its insurance coverage and that its customers would not pay any of it.

The lawsuits brought by about 4,000 homeowners, insurance companies and local governments like fire districts were set to be tried together. They suffered a variety of losses, from smoke damage to losing their homes and income.

A construction company Avery represents estimates it lost millions of dollars in business and equipment and likely won't participate in the settlement, opting to pursue its own lawsuit instead, he said.

"The intention is to resolve the case with just a couple of exceptions,” he said.

Utilities in California and Oregon have also faced lawsuits alleging their equipment sparked destructive wildfires.

Oregon’s PacifiCorp has faced a series of lawsuits over wildfires that broke out in 2020, which were among the worst natural disasters in state history. The company reached settlement agreements over the Archie Creek Fire, including one for $299 million with 463 plaintiffs impacted by the blaze, while juries have ordered it to pay tens of millions to other wildfire victims.

Earlier this month, the federal government filed two lawsuits against Southern California Edison, alleging the utility’s equipment started fires including January’s Eaton Fire in the Los Angeles area, which destroyed more than 9,400 structures and killed 17 people.