Xcel Energy intends to spend $1.3bn to convert coal-fired power plants to natural gas and close a plant to comply with a new Colorado law aimed at cutting pollution from power plants.
The firm will also save $225m by avoiding installing pollution-control equipment with its new plan, according to the Associated Press.
According to the utility, switching to natural gas is expected to raise customers' bills on average by 1% annually and state regulators are currently considering the company's proposal.
Xcel Energy plans to reduce emissions by closing a 186MW coal-fired power plant in Boulder by the end of 2017 and switching all four units at its Cherokee plant in Denver to natural gas.
New pollution-control equipment will be installed in other coal plants.