The Colorado News Agency reported a gem of a quote from State Representative Randy Fischer (D-Fort Collins). While providing arguments against Representative Kathleen Conti’s (R-Littleton) bill to bring more accountability to the Public Utilities Commission, especially in the area of utility rate increases, Fischer:
The incremental costs are listed on consumers’ bills as the Renewable Energy Standard Adjustment (RESA). Since January 2009, the RESA charge has been set at 2 percent, the rate impact limit. For a consumer with a $150 Xcel bill, a 2% RESA charge would be $3 monthly, $36 annually.
Xcel defines the RESA on the monthly statements as representing “2% of an electric bill and funds the renewable energy program as required by Colorado law that asks utilities to generate increasing portions of their electricity from sun, wind and biomass.” Note with care that the Xcel statement does not say that the RESA covers the cost of renewable energy.
Incremental costs are only a small portion of the total costs of renewable energy that count towards RES compliance. The “non-incremental costs,” which are the total renewable energy costs minus the incremental costs, are recovered through a different monthly fee, the Electric Commodity Adjustment (ECA).
The Public Utility Commission staff’s William Dalton acknowledged confusion over the two fees as he explained the cost-shifting technique in testimony given to the Commission regarding the Public Service Company’s RES compliance plan in September 2009:
This could be a point of confusion to ratepayers and other interested parties: The [Public Service] Company is not exceeding the Renewable Energy Standard at the 2 percent retail rate impact that is borne by ratepayers. The costs above the retail rate impact limit are recovered through other Commission approved cost recovery mechanisms, primarily the ECA. Once the renewable energy resource cost recovery is allocated to the ECA, cost recovery of these resources is no longer subject to retail rate impact criteria or cost cap.
According to the Public Service Company’s 2010 RES Compliance Plan, the ECA is projected to be $6.3 million this year, before it balloons to $141 million in 2012. It then increases exponentially to $738 million in 2020, or almost 23 percent of total retail electricity sales—none of which would count against the 2 percent retail rate impact.
Assuming 1.5 million ratepayers in Colorado (current figure is 1.3 million) in 2020, and the mandated 20 percent renewable standard, the ECA cost alone will average nearly $500 per year per ratepayer.
The 2 percent rate cap does not apply to the preponderance of RES costs. And even where it does apply—to incremental costs—the price ceiling is evaded and exceeded.