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Xcel admits what "clean energy" advocates won't

Normally reading an energy compliance plan is about as exciting as watching low VOC paint dry.  But Xcel Energy‘s 2012 Renewable Energy Standard Compliance Plan, filed with the Public Utilities Commission in May 2011, has some pretty powerful stuff in it including admissions about Colorado’s “phantom carbon tax” and the cost effectiveness of renewable energy.

In Section 7 — Retail Rate Impact and Budget, Xcel acknowledges that my testimony in front of the Agriculture Committee on HB 1240 (the bill explained here and here) in February 2011 was correct. No national carbon tax in the near future.

The carbon assumptions approved by the Commission in Docket No. 07A-447E assumed carbon regulation would be enacted in 2010; such regulation was not enacted and the prospects for near term carbon regulation appear to be slim.

Passage of a national carbon tax under Cap and Trade was the underlying assumption when HB 1164 passed the state legislature in 2008. With no carbon tax at the national level and virtually no chance of one passing any time soon, why does Colorado still have one? Good question. Lawmakers on both sides of the aisle capitulated to special interests, including Xcel, and voted to kill HB 1240, which would have repealed the controversial “phantom” tax.

Because Xcel assumes there will be no carbon tax in the near future, it presents a cost model that excludes the carbon tax and another model that does include the tax but not until 2014.

Due to the uncertainties related to the timing associated with possible carbon emission regulation, the Company did not include any carbon cost imputations in the model runs and other calculations set forth on Table 7-3. However, as discussed later, Public Service also presents with this Compliance Plan, as Table 7-4, a sensitivity case that assumes the same carbon imputation costs ($20 per ton, escalating at 7% annually) as approved in the 2007 Colorado Resource Plan but on a delayed implementation schedule of 2014.

One wonders if the the carbon tax supporters feel a bit betrayed by Xcel’s admission.

For those of you searching for the “carbon tax” on your Xcel bill, stop looking. It does not show up as a line item, but as my colleague William Yeatman and I have written before, “the tax is used in the models, and the models dictate spending. It leaps from the computers to your wallet, like the worst sort of virtual reality.”

The carbon tax is just one way that the PUC allows Xcel to greenwash the real cost of Colorado’s renewable energy, which must be 30 percent of Xcel’s electricity portfolio by 2020.  In spite of a legislatively-mandated two percent rate cap, Yeatman documented how Colorado’s New Energy Economy will cost Xcel ratepayers an additional 8 percent this year alone.

Which leads to this gem about the economic viability of renewable energy. Xcel says it just isn’t cost effective unless it is taxpayer subsidized.

Going forward, it is very questionable if new renewable resources can be cost effective if they do not get the benefit of the Federal Production Tax Credit. Currently the production tax credit for wind is set to expire at the end of 2012 and at the end of 2016 for solar resources.

This is interesting because former Governor Bill Ritter said recently in a debate titled “Clean energy can drive America’s economic recovery” that both he and “the utility” can increase renewable energy for the same price. (Read the entire debate transcript here)

In fact, last year, the utility and I, after talking with each other said, you know what? We can get to 30 percent [renewable] with the same rate cap in place. So, as a state, we’ve got a 30 percent renewable energy standard.

This is where the financial shell game tricks ratepayers. The rate cap is a sham. The real cost of renewable energy is recovered elsewhere on ratepayers’ bills, as we have explained in the past. The American Enterprise Institute’s Steven Hayword, one of Bill Ritter’s opponents in that debate, stated what should be clear economically unless one’s judgment is clouded by green energy infatuation.

the basic problem with so-called clean energy is that nearly every form of it is more expensive than the fossil fuel energy it seeks to displace. Now, I know of no economic theory that says the economy benefits by reducing the purchasing power of consumers.

Representative Max Tyler also claimed an economic fantasy in a Denver Post opinion editorial, “Raising the RES [Renewable Energy Standard] will not raise utility rates.” Writing that rates won’t go up, does not make it true. Rates will go up as we have demonstrated, and now Xcel says that unless taxpayers subsidize renewable energy sources, they just aren’t cost effective — certainly not for ratepayers or taxpayers.

The PUC will decide on Xcel’s Compliance Plan in October 2012. While Xcel seems to accept the reality of no national carbon tax and that renewable energy is an economic fairy tale, it remains to be seen if the PUC, lawmakers and special interest groups will have the same eco-epiphany.