By Cortney Crouch
On April 12, 2016, the Denver Business Journal published an article, “Xcel, Vestas to build Colorado’s biggest wind farm,” in which David Eves, the President and CEO of Public Service Company of Colorado, stated that the newly announced 600-MW wind farm that PSCo would be building in partnership with Vestas would mean “hundreds of millions of dollars in savings for Colorado energy customers.” The article did not elaborate on how those hundreds of millions of dollars in savings had been calculated in order for Mr. Eves to make such a sensational claim, so I did a little digging.
The author of the article did not have further information but speculated that Mr. Eves was referring to the savings associated with avoided fuel costs. In other words, he was speaking of money that energy customers would no longer pay for natural gas and coal since wind has no associated fuel costs. However, since this was speculation, the author was kind enough to put me in touch with a media relations representative at Xcel. I sent an email asking the question, “Does Xcel have economic analysis that can provide support for the comment that those savings will be worth hundreds of millions of dollars, particularly when customers will ultimately bear the burden of the associated capital costs of this 300 turbine wind farm project?”
The answer: “…the news stories on the proposed wind farm may or may not have pointed out that we have not yet filed with the Colorado Public Utilities Commission for the project, so many of the typical questions that would be addressed in a formal news release—cost, location, how we pay for it, expected savings, etc.—are forthcoming.”
So, how can the President and CEO publicly claim that the savings associated with the wind farm will be worth hundreds of millions of dollars when, even by their own admission, it is a “bit early in the process” to have conducted the analysis to support that claim?
Furthermore, isn’t anyone in the media curious enough to ask these types of relevant follow-up questions? For example, what happens to the “hundreds of millions of dollars” in savings to customers when the Production Tax Credit for wind goes away? Do the future savings truly offset the capital cost incurred today of building a 600-MW wind farm? Does the per-MW cost of $1.5 million to $2 million include the cost of a non-Distributed Generation energy source and the transmission lines necessary to transport the stored energy to consumers?
Only time will tell if Xcel is forthcoming with any supporting information.
Cortney Crouch is an economic consultant for the Independence Institute and a former Captain in the US Marine Corps.