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Colorado PUC Approves Expensive Green Energy Replacement for Coal Power Plants

September 21, 2018

Colorado's Public Utilities Commission approved Xcel Energy's plan to prematurely close two coal power units at its Comanche Generating Station and replace them largely with renewable power sources at an estimated cost of $2.5 billion.

The Colorado Public Utilities Commission (PUC) approved a controversial plan by Xcel Energy to prematurely close two of the three coal power units at its Comanche Generating Station and replace them largely with renewable power sources at an estimated cost of $2.5 billion.

Xcel decided to shut the coal-powered units despite recent upgrades to reduce emissions, because profits from the units were low. Xcel’s plan to replace the coal units with renewable generating units allows the company to claim federal tax credits for the construction of wind and solar plants before the government phases them out in 2019 and 2021, respectively; tax credits for the power generated by such units; and business tax deductions for materials and labor expenses, plus a guaranteed rate of return of approximately 10 percent passed onto ratepayers for new power plant construction.

Disagreement Over Solar

All three PUC commissioners—Jeff Ackerman, Frances Koncilja, and Wendy Moser—approved Xcel’s request to close two coal-fired units. Moser rejected Xcel’s replacement plan, saying it relied too much on solar power and battery storage. Ignoring Moser’s objections, the other commissioners approved Xcel’s plan to replace the two coal-powered electric generating units by building 1,100 megawatts of wind power, 700 megawatts of solar power, 380 megawatts of natural gas power, and 275 megawatts of battery storage.

Xcel’s plan calls for closing one of the coal power units in 2022, 11 years before its scheduled retirement date, and a second in 2025, 10 years ahead of schedule. Xcel says prematurely closing the power plants will result in about 80 lost jobs. To replace them, Xcel would purchase two existing gas-fired generating plants in Colorado and add three wind farms and five solar farms, three with battery storage.

PUC approved Xcel’s plan even though its own staff expressed doubts about the utility’s claim the plan would save ratepayers $213 million over time. Bob Bergman, a member of the Public Utilities Commission staff, told commissioners the savings may never materialize, as they aren’t scheduled to occur until after 2034.

Predicts Higher Prices

PUC’s approval of Xcel’s plan virtually guarantees Coloradans will pay more for electricity, says James Taylor, a senior fellow with The Heartland Institute, which publishes Environment & Climate News.

“Colorado electricity consumers now face the certainty of $2.5 billion of unnecessary spending on replacement power facilities, with no guarantee consumers will ever recoup the costs,” said Taylor. “Xcel’s massive lobbying efforts and cozy relationship with the PUC have paid off big-time.

“Logically and factually, Xcel’s claim consumers will save money lacks credibility,” Taylor said. “States that have abandoned conventional power for wind and solar power have, on the whole, seen a substantial spike in electricity prices. In neighboring Kansas, for example, electricity prices have risen 54 percent during the past decade as wind power rose from just a couple percent to 38 percent of the state’s electricity mix. The left-of-center Brookings Institution reports replacing conventional power with wind power raises electricity costs at least 50 percent and replacing conventional power with solar power causes electricity prices to triple.”

‘Misleading the Public’

Taylor says Coloradans already have experience with higher energy prices from the state government’s prior decision to force utilities to add renewable energy sources to their electricity generating mix.

“Politicians are misleading the public about the enormous costs of imposing expensive renewable power on Colorado households,” Taylor said. “When Colorado lawmakers hiked renewable power mandates in 2010 and 2013, politicians claimed the mandates would lower electricity bills.

“Not surprisingly, given the high costs of generating wind and solar power, Colorado’s electricity prices have risen by 20 percent since 2010,” said Taylor. “This Xcel plan, and any additional renewable power schemes imposed by politicians or the PUC, will only further impoverish Colorado taxpayers.”

End Run Around Legislature

Xcel turned to the commission to thwart the Colorado legislature, which had rejected Xcel’s proposal to replace coal-powered electricity with more-expensive renewables, says Colorado state Sen. John Cooke (R–Greeley).

“Xcel Energy tried to get this plan passed at the state legislature, and we rejected it for good reason, knowing it was never going to save money for Colorado’s ratepayers,” Cooke said. “So Xcel bypassed the legislature and sought approval via regulatory fiat, which it got because the PUC commissioners do a better job of being Xcel lapdogs than being ratepayer watchdogs.

“PUC’s own staff knew Xcel’s numbers didn’t work and the cost savings will never happen, yet the commissioners approved the plan,” said Cooke. “Everyone knows this plan is meant to pad Xcel’s profits, not save money for hard-working Coloradans. Ask yourself, if wind and solar are ‘free’ and the price of natural gas is so low, why do rates keeps going up?”

Says Trust Is Gone

Amy Oliver Cooke, executive vice president of the Independence Institute, says Xcel’s PUC win cost it the public’s trust.

“Despite knowing Xcel Energy can’t keep its promise to save ratepayers money with the Colorado Energy Plan, Colorado PUC allowed the utility’s giant corporate welfare plan to proceed,” Cooke said. “Captive Colorado electricity customers will pay more for electricity while Xcel’s corporate leadership celebrates million-dollar bonuses and rising stock prices.

“While Xcel prevailed in the regulatory space, it lost the public narrative and the public’s trust.” said Cooke. “Many groups, including PUC staff, electric co-ops, editorial boards, labor groups, and others know Xcel’s cost savings and economic development claims are false or, at the very least, greatly overstated. No one should trust the company—ever.”

H. Sterling Burnett, Ph.D. (hsburnett@heartland.org) is a senior fellow at The Heartland Institute.

Internet Info

Tim Benson, “Research & Commentary: Higher State Support  for Green Energy Increases Energy Costs for Consumers,” The Heartland Institute, May 12, 2016: https://www.heartland.org/publications-resources/publications/research--commentary-higher-state-support-for-green-energy-increases-energy-costs-for-consumers

Author
H. Sterling Burnett, Ph.D. is a Heartland senior fellow on environmental policy and the managing editor of Environment & Climate News.
hsburnett@heartland.org