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Xcel Energy, PUC, and OCC are Irresponsible by Ratepayers

Xcel Energy, PUC, and OCC are Irresponsible by Ratepayers

By Amy Oliver Cooke and Michael Sandoval

Is it time to eliminate the Office of Consumer Counsel (OCC) and elect our Commissioners who serve on the Public Utilities Commission (PUC)? Maybe. Our recent insider perspective on the so-called approval process by supposedly neutral regulators leaves us pondering that very question.

The most recent Xcel Energy application for its massive $1.1. billion Rush Creek Wind Farm project indicates that the OCC has abandoned its role as a consumer watchdog and the PUC has been politicized and co-opted by Xcel, the state’s largest investor owned utility.

As we wrote in our recent paper about Xcel Rush Creek Wind Farm project:

•The state does not presently need more electricity; Xcel does not claim otherwise.

•Xcel claims it has already met the state’s renewable energy mandate.

•If the primary concern is emissions, the most efficient, least expensive way to reduce greenhouse gas emissions (GHGs) as well as EPA “criterion pollutants” is to generate electricity from Colorado natural gas.

•The project does not save Coloradans money as promised unless federal subsidies are passed along to ratepayers. Otherwise it will cost them. In any case, all American taxpayers will be paying for this project.

•Colorado’s electricity rates have skyrocketed over the last decade. This project will exacerbate that trend.

•The project requires an estimated 90 miles of transmission lines, reducing efficiency.

•Xcel’s requested compressed timeline prohibits appropriate and thorough vetting of the 95,000 acre, $1.1 billion, 90-mile transmission line with 150 feet of right-of-way, and 300 turbine wind project spanning five counties.

•Rushing the timeline and approval process along with PUC and OCC acquiescence disrespects all Coloradans and ratepayers who have the right to expect neutral regulators to take the time allowed under state law to consider all aspects and hear from all interested parties regarding projects that will have enormous financial and environmental impacts on the entire state, indeed the U.S.

•This project appears to have only one real purpose: to enrich Xcel’s coffers with the Production Tax Credit (PTC).

Despite these questions and testimony from our expert witnesses (testimony here, here, and here), this project is all but officially approved. While there is a process in place via the PUC and the OCC can intervene, both agencies have given up any pretense that they have a responsibility to electricity consumers. The PUC has granted Xcel’s request for a “drastically shortened timeline” and essentially abdicated its authority on the grounds of expedience.

Based on our first ever inside experience with the approval process, the PUC is little more than a bit player in Xcel’s Rush Creek Kabuki Theater. Xcel will get everything it wants with no consumer protections while the PUC pretends to host thoughtful, deliberative hearings where interveners can make their case and the OCC pretends to represent ratepayers.

The only group raising a red warning flag is our “Ratepayer Coalition” led by the Independence Institute and our attorney Shawn Mitchell, who also served as a Colorado State Senator from SD23 from 2005 to 2013.

The Ratepayers are comprised of individuals, businesses, and nonprofit associations, and include a diverse range of electricity usage including residential, agricultural and industrial consumers. According to the group’s motion to intervene:

 

The Ratepayers state that they have a legally protected interest in securing affordable, reliable, electricity produced by a fuel mix that is consistent with state and federal law. The Ratepayers further state that their interest is not adequately represented by any current party to this proceeding because the [PUC] and staff are statutorily charged with exploring and promoting alternative energy development, including renewable energy, and the [OCC] is charged by statute primarily with promoting an undefined “public interest” and only secondarily with promoting the security and economic interest of ratepayers…

 

That was one argument presented to the PUC for why the Ratepayers should be granted intervenor status in the Rush Creek approval process. The PUC agreed but with a warning from Xcel for Ratepayers and all intervenors as the Denver Post reported:

Xcel Energy, in a race to save $443 million on a proposed $1 billion wind farm, convinced the Colorado Public Utilities Commission to squeeze its hearing into three days in September, sparking a rush of more than 20 parties trying to intervene in the case.

 

The interveners, PUC chairman Joshua Epel said again and again, will need to be disciplined if there is any hope of fitting everything into the expedited hearing about the Rush Creek wind farm project set for Sept. 7-9.

 

“I’m leery that we can actually get this done in three days,” Epel said Wednesday during a meeting to approve the list of interveners and set procedures for the hearing.

 

Just recently we learned that the so-called approval process, which was scheduled to include three full days of hearings, was nothing more than a calendar entry.

Instead of three days of hearings for all parties to present their case as originally scheduled in Xcel and the PUC’s already expedited timeline, Xcel requested to “settle,” meaning there will be no public hearings, just our opposition statement because all the other intervenors – except the Ratepayers – agreed to the settlement. That way Xcel stays on schedule to ensure full taxpayer subsidies. Thorough analysis and thoughtful debate be damned right along with Ratepayers who have to foot the bill.

The Denver Post reported on the “settlement” where expediency takes precedence over analysis: “The settlement between Xcel Energy and multiple parties heads off three days of hearings before the Colorado Public Utilities Commission that were set to start Wednesday. Instead, the PUC may use the time slot to discuss the settlement, further speeding things along.”

Why are Ratepayers opposed? Because in the proposed settlement Xcel won’t even entertain any of the Ratepayer protections or requests.

What did Ratepayers seek?

•An independent audit. Nothing binding. Just an outside group or organization that would analyze Xcel’s actual cost and production numbers and make available a public report.

•Cost overruns would be born by shareholders, not ratepayers. As a state-sanctioned monopoly, Xcel has a guaranteed rate of return. Xcel has said that Rush Creek is an excellent economic investment so we assume it won’t mind putting shareholders instead of ratepayers on the hook. Apparently the Ratepayers assumed wrong.

•An independent study of the long term impact of wind farms on the eco-system.

It doesn’t matter what is best for Ratepayers or the environment. Because when it comes to Xcel’s wind projects, as PUC Commissioner Glenn Vaad stated referring to our Ratepayer Coalition, he won’t let us “throw sand in the gears.” Commissioner Vaad appears to be making good on his pledge, while appeasing Xcel.

The OCC

The State Legislature created Colorado’s Office of Consumer Council in 1984 to serve as a watchdog for ratepayers. From their web site:

“The OCC plays a significant role in advocating for these constituent consumers’ interests in multimillion-dollar rate proceedings involving energy.  Utility regulatory proceedings are very technical, complex, and complicated, requiring specialized analyses and modeling tools, resources not readily available to the average citizen or small business owner.”

Apparently “The OCC employs financial, economic, engineering, and policy analysts and other professionals to analyze utility rate and service information and intervene in proceedings that involve rate changes, rulemaking, service modifications, and certificates of public convenience and necessity. Three attorneys in the Department of Law are assigned to the OCC for legal representation in the various utility regulatory proceedings. The OCC also contracts with recognized and technically qualified experts to perform research and appear as expert witnesses in proceedings.”

Where is that army of analysts and attorneys when consumers need them to intervene in the $1.1 billion Rush Creek Wind Farm project? Nowhere to be found. Not even a question to Xcel about the need for the project or who will pay if there are cost overruns.

The PUC

Colorado’s electricity industry has been socialized since the early 20th century. At the time, politicians determined that the electricity business is a “natural monopoly,” despite the existence of robust competition among electricity distributors. The ironic solution was a government-certified monopoly.

From 1907-1930, state legislatures across the country created commissions with the regulatory power to outlaw competition among utilities and set electricity rates for consumers. In exchange for a monopoly within a given service area and a “reasonable” profit, electricity companies allowed the state to dictate business decisions.

For politically-connected electricity barons, a government-granted monopoly was a great deal, because it eliminated competition. For politicians, it was an even better deal, because they gained the power to control energy and manipulate behavior.

Currently the PUC’s stated mission is to serve “the public interest by effectively regulating utilities and facilities so that the people of Colorado receive safe, reliable, and reasonably-priced services consistent with the economic, environmental and social values of our state.”

In reality, Xcel and other state-sanctioned monopolies do whatever they want and pass costs along to consumers, regardless of whether those costs are from poor decisions, lack of thorough analysis, or cost overruns.

Our Conclusion

Our experience underscores the pernicious effect that taxpayer-funded PTC has had on Colorado. It has effectively rendered the PUC a rubber stamp and caused the OCC to abdicate its consumer protection reason for existing. Federal tax policy has corrupted and destroyed the system because Xcel can’t halt its lust for the PTC.

And this isn’t the first time that Xcel has colluded with the PUC commissioners to ram through a project. We wrote a paper on how they did it with HB 1365, the fuel switching bill that also cost ratepayers roughly $1 billion.

To be clear, we’ve always complimented the work of the PUC staff, which, based on their testimony, seems to take ratepayer impact into consideration. However, the Governor-appointed commissioners have completely politicized what should be neutral regulatory positions.

To add insult to injury, Ratepayers pay to fund both the PUC and the OCC. For our money, we get lap dogs instead of watch dogs. If OCC can’t do its job, then the State Legislature should admit the OCC experiment failed, close the doors, and save consumers some money. Since the PUC is a political entity, then Colorado voters should have the opportunity to weigh in as voters in so many other states do.

Something else to ponder: Since Ratepayers don’t have any champions, is it time to break up the state-sanctioned, investor-owned utility monopoly on electricity generation and distribution?

Amy Cooke
ADMINISTRATOR
PROFILE