How Xcel is playing loose with numbers and gaming the system in its favor.
Xcel Energy is a monopoly with no competition. Still it spends millions of ratepayer dollars on PR campaigns and lobbyists to convince the media, lawmakers and its hostages customers – the entire state – that it is “responsible by nature.”
The company’s most recent propaganda campaign is for its so-called Colorado Energy Plan (CEP), which the state legislature rejected in 2017. President Pro-Tempore Jerry Sonnenberg (R-Sterling) expressed his displeasure to the Denver Business Journal:
Sonnenberg said Xcel was ‘pulling a bit of a fast one by going to the PUC for something it couldn’t get passed through the Legislature last session.’
‘This proposal didn’t fly at the statehouse because Republicans don’t believe it’s in the interest of Colorado energy consumers to shut down our most affordable and dependable power plants, while subsidizing expansion of unreliable, not-ready-for-primetime alternatives,’ he said.
Xcel makes the astoundingly unrealistic claim that its plan to prematurely shut down 660 megawatts of affordable coal generation will save ratepayers money: “We believe that we can achieve this clean energy transition without increasing costs to Colorado customers, and even saving them money.”
Xcel may “believe” it, and the monopoly certainly wants everyone else including the Colorado Public Utilities Commission to believe it. But it’s absolutely not true. In fact, I think Xcel knows it is not telling the truth.
Do the math. William Yeatman and I did it here originally. Now expert testimony filed on behalf of the Coalition of Ratepayers* has documented in detail how Xcel has its thumb on the scale tipping the financials in the monopoly’s favor.
Some of the specific highlights (or lowlights depending upon your perspective) include:
- The CEP is likely to cost ratepayers at least somewhere between $250 and $390 million.
- Xcel failed to account for $173 million in sunk costs for Comanche Units 1 and 2 in its calculation of the CEP.
- Ignoring generally accepted accounting practices, Xcel also “falsely inflates the Baseline Portfolio costs by including a $40 million annual book value amount for Comanche 1 and 2 while excluding these book value costs from the wind/solar/gas case. This is improper because PSCO intends to recover its sunk capital investments in the plants in either portfolio case.”
- To make the CEP appear to be cost effective, Xcel didn’t include the cost of transmission in the CEP Portfolio but did include transmission costs in units that would replace Comanche 1 and 2 after their planned retirement dates. In other words, according to Xcel, it’s cheaper to close Comanche 1 and 2 ahead of schedule because the company doesn’t include transmission costs.
Xcel ‘burdened the Baseline Portfolio with $82 million in net present value in transmission interconnection costs for a combined-cycle gas turbine (“CCGT”) plant that would replace Comanche Units 1 and 2 after their planned retirement dates — an amount that is extraordinarily high for interconnecting a CCGT because these units can be sited close to existing transmission infrastructure and in brownfield locations. Curiously, PSCO assumed no transmission interconnection cost on any units replacing Comanche Units 1 and 2 in the CEP Portfolio. These inconsistent assumptions are not reasonable and, not surprisingly, have the effect of tipping the scale in favor of the CEP Portfolio.’
Xcel’s been doing this kind of thing for years with aid and comfort from the state legislature and an accommodating PUC Commission. Think Clean Air, Clean Jobs Act, the scam two percent rate cap on renewable power, and demand side management – just to name a few.
It’s unconscionable to me that Xcel Energy would make the claim that it will save ratepayers money by retiring two very highly reliable and expensively retrofitted coal-fired power plants at Comanche 1 and Comanche 2 (660 MW generating capacity) and replace them with 49 MW of wind capacity and 400 MW of natural gas combined cycle power, at a staggering cost of $1.4 billion, not to mention the stranded costs of $297 million still owed on the Comanche installations.
Over the last week, predictable fawning media parroted each other as they reported on an 11-page Xcel “Solicitation Report” with fantastic headlines such as this from the Denver Post:“Xcel Energy receives shockingly low bids for Colorado electricity from renewable sources. Solar and wind generation with storage now competitive with coal power”
And this headline from Vox: “In Colorado, a glimpse of renewable energy’s insanely cheap future. Even with storage, new renewables beat existing coal.”
And this misleading headline from GreenTech Media: “Xcel Attracts ‘Unprecedented’ Low Prices for Solar and Wind Paired With Storage”
The report doesn’t say the prices are “unprecedented,” but rather the number of bids is unprecedented.
What the media didn’t cover is “the Company has not yet sufficiently evaluated all of the proposals…to determine if any contain ‘fatal flaws’…”
Further, reporters failed to ask a basic question. Do these bids consider ALL costs associated with the premature retirement of and replacement for two perfectly good coal-fired assets Comanche 1 and 2. Because if they had, they would find out the answer is NO as mentioned above.
If the PUC foolishly approves Xcel’s scheme, the cost of electricity for Xcel’s 1.4 million hostages ratepayers will go up.
*Editor’s Note: The Independence Institute is a member of the Ratepayer Coalition opposing Xcel Energy’s Colorado Energy Plan.