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Irresponsible by ratepayers: Is Xcel floating legislation for mandated CO version of CPP?

Irresponsible by ratepayers: Is Xcel floating legislation for mandated CO version of CPP?

If it’s devious and being done behind closed doors, it must be Xcel Energy.

Late Friday, two reliable sources independently sent me a copy of what appears to be draft legislation that the monopoly investor-owned utility is quietly shopping around the Gold Dome, in search of a sponsor. Xcel’s name isn’t anywhere on the draft, but the text states, “rate-regulated utilities that provide electric service to more than five hundred thousand meters in Colorado…” That’s only Xcel.

Reading the language, it appears Xcel wants the legislature to rubber stamp the monopoly’s plan to exploit federal taxpayers and force ratepayers, who have no choice, to foot the bill for expensive fuel switching (think controversial Clean Air, Clean Jobs Act), and entrench Xcel as the number one Big Grid, Big Wind monopoly.

Key passages from the first two pages include:

Section 1: This section leverages time-sensitive opportunities, including federal tax incentives, to advance Colorado’s clean energy leadership at a low cost. The legislation will enable the continuance of the cost-effective and orderly deployment of cleaner, reliable, and efficient advanced energy resources.


On or before July 31, 2017, rate regulated utilities that provide electric service to more than five hundred thousand meters in Colorado shall submit to the commission [PUC] a proposed advanced energy plan to obtain the benefits of federal tax incentives approved by the United States Congress…


The advanced energy plan may include proposals to replace existing electric generating resources owned by the utility, with advanced energy sources. The advanced energy plan may also include investments in infrastructure necessary to support implementation of the plan…. The commission shall enable the fullest utilization of the tax credits and if necessary shall allow the advanced energy resources to be utilized as an energy resource prior to full transmission infrastructure availability. The utility may elect to own any or all of the advanced energy resources and the supporting infrastructure used in the plan to replace any electric generating resources.


A utility is entitled to fully recover the costs that it prudently incurs in executing any approved advanced energy plan.

“Advanced energy” isn’t defined in the current draft, but it’s a good guess that it means industrial wind because of the reference to the “federal tax incentives.” This is the obscene 40 percent production tax credits that currently are on a stepdown plan and explains why the company wants to move quickly:

  • For wind facilities commencing construction in 2017, the PTC amount is reduced by 20%
  • For wind facilities commencing construction in 2018, the PTC amount is reduced by 40%
  • For wind facilities commencing construction in 2019, the PTC amount is reduced by 60%

Also not mentioned by name, this is designed to get legislative approval for Xcel’s May 2016 Electric Resource Plan (ERP) also called “Our Energy Future,” which includes an additional 600 megawatts of electricity most likely from industrial wind and is loaded with references about compliance with the unpopular, costly, and likely illegal Clean Power Plan (CPP). Xcel must think its ERP is in jeopardy following the unexpected election of President Trump, who promised to kill the CPP.

Shortly after President Trump’s election,  I suggested that Xcel needs a new ERP (ERPs are filed every four years) because in the May plan, the company assumes some type of federal carbon regulation even if the United States Supreme Court stayed CPP isn’t reinstated, as it said in testimony:

While there is some expectation that this environmental regulation will be reinstated with changes, even if it does not, we anticipate continued change and drive toward lower emitting generation resources. Accordingly, we will be looking for projects to fill our resource need – like the Rush Creek Wind Project discussed below – that move the Company and the State of Colorado toward compliance with the stayed Clean Power Plan.

Like everyone else, Xcel probably assumed a Hillary Clinton presidential victory that would maintain the Obama-era EPA regime as back up for Governor John Hickenlooper, his Public Utilities Commission (PUC), and the Colorado Department of Public Health and Environment (CDPHE), all of which supported the CPP. Also, the monopoly likely assumed it would be business as usual complying with the establishment environmental left agenda of killing fossil fuels, building behemoth industrial wind farms, making ratepayers pay, and making Xcel top executives and shareholders wealthy.

But Xcel faced headwinds even before the SCOTUS stay of the CPP and the election. From the start, the new Republican-controlled State Senate opposed the CPP and certainly doesn’t think the state could comply absent legislative authority; and they weren’t about to give it. They’ve spent the last two legislative sessions making sure the state doesn’t force ratepayers into an expensive carbon scheme, even defunding CDPHE’s compliance plans.

CDPHE chief Larry Wolk is on the other side. Early in 2015, he told the Denver Post’s Vincent Carroll that he “believes his agency enjoys such sweeping power already as ‘the conduit for the EPA.’” [emphasis added] 

When Carroll pressed Wolk further, he confirmed that he believed he and CDPHE could give “marching orders to all of the utilities in the state,” Wolk answered “yes”…“in consultation with the EPA, the PUC, and others.” That would be new law.

Other problems for Xcel include Attorney General Cynthia Coffman joining 26 other state attorneys general who filed a lawsuit against the CPP, and Governor John Hickenlooper withdrawing his plan for an executive order to force compliance, citing Republican opposition.

This week, President Trump is expected to sign an executive order instructing the EPA to rescind the CPP completely. If Wolk is consistent as a “conduit for the EPA,” then CDPHE should be telling utilities not to comply. Don’t hold your breath.

Xcel has two serious issues. First, it spent considerable resources developing an ERP predicated on expensive carbon regulations that are publicly unpopular and politically out-of-favor. Second, it must build additional capacity, even if its unneeded, in order to continue redistributing wealth from ratepayers to shareholders because retail electric sales are anemic.

To build more and exploit federal taxpayers, Xcel needs the legislature to increase Colorado’s current 30 percent renewable mandate, which the monopoly isn’t likely to get; or, the other option is forced fuel switching and premature closure of existing electric power plants, most likely coal.

How important is it?

Xcel Energy CEO Ben Fowke isn’t compensated for low rates and satisfied ratepayers. Instead, top executives are rewarded for increased earnings per share, employee safety, and being the biggest wind profiteer. With the exception of improved restoration time due to weather, there is nothing about ratepayers, consumers, or customers, according to Xcel’s 2016 Proxy Statement.

This draft is trying to pull a fast one on the state legislature, hoping lawmakers don’t catch on to the fact that it’s Xcel’s vision of the CPP for Colorado.

Should the bill see the light of day and get a committee hearing, Lawmakers should ask Xcel the following simple yes or no questions:

Absent your guaranteed rate of return on capital construction, would Xcel consider additional capacity a wise investment?

Absent a 40 percent federal production tax credit (PTC), would Xcel build more wind?

If the answers are no, then ask why ratepayers should pay for construction and taxpayers pay for production?

If the answers are yes, then ask if it will accept a 0 percent rate of return, no cost on carbon, a least cost principle, and waiting until the PTC expires?

Exploiting taxpayers and ratepayers, who have no options, to enrich Xcel executives and shareholders needs to stop. If the Colorado legislature wants to lead on electricity policy, it can by clearly saying “NO” to Xcel. The future is not in Big Grid monopoly utilities like Xcel.