Was the Colorado energy plan made in Minneapolis?

By |2018-11-20T21:38:58+00:00November 20th, 2018|Energy|0 Comments

The Colorado Energy Plan (CEP) proposed by Xcel Energy surprised people by its boldness, which some critics called reckless. It turns out that the CEP is just part of an Xcel-wide corporate strategy, which has little to do with Colorado. It may be that Colorado was just an easy target.

Prior to proposing the CEP, Xcel already had a massive corporate plan to dramatically expand its development of wind farms. At the time this meant building 12 new wind farms in the 7 states it sells electricity in. Colorado’s Rush Creek farm was included and at 600 MW it was among the largest.

Here is Xcel’s announcement of its bullish wind plan:

Xcel Energy Planned Wind Projects 2017-2021 (3,700 Megawatts)

We have announced plans to grow our wind portfolio 55 percent by the end of 2021. Our plans include 12 new wind farms in seven states that will add nearly 3,700 megawatts of new wind capacity to our system.

In addition, we have historically purchased most of our wind power from independent suppliers under long-term contracts. This is changing as we plan to own and operate more Xcel Energy wind farms. We currently own five wind farms totaling about 850 megawatts in the Upper Midwest: Border, Courtenay, Grand Meadow, Nobles and Pleasant Valley, with a sixth project now under construction in Colorado, Rush Creek.”

The Colorado Energy Plan’s 1,000+ MW of new wind farms was not included in Xcel’s grand corporate plan, so it greatly expanded it. It also added a major innovation, namely shutting down working coal-fired generators in order to make room for new wind farms.

Several Colorado groups fought this premature shutdown move on economic grounds. Some argued that Xcel was cooking the books in order to justify the addition of massive new assets to the rate base. They were ignored.

After all, Xcel is an investor owned utility and new assets create a significant new income stream. It may well be that this is Xcel’s real reason for pushing massive wind development across its seven states territory.

Xcel CEO Benjamin Fowke put it this way:

Because of the strong wind resources in our service territories, we have the unique opportunity to invest in renewable generation in which the capital cost could be more than offset by fuel savings.

“Could be” but maybe not, and not for a long time. In any case, while the savings may be fictional, the huge capital cost is real and the people of Colorado will pay for it, to the benefit of Xcel shareholders. This is about Xcel making quick bucks, billions of dollars in Colorado’s case.

The Colorado Energy Plan may not reflect what Colorado needs. It may just be what Xcel wants.

Xcel’s strategic wind plan even has a catchy name — “Steel-for-fuel.” That is, the steel used for wind machines is somehow supposed to be better than the fuel used in fossil fueled power generators.

Ironically, the name itself points to one of the two biggest problems with this grand scheme. The cost of the “steel” is now, while the savings on fuel, if any, come much later. Thus “steel-for-fuel” might as well be “pay now, maybe save later.” The cost is certain, the savings not so much. Perhaps it should be “pay-Xcel-now and hope for the best.”

This is why the focus of the debate before the Public Utilities Commission (PUC) was Xcel’s questionable economic analysis; which is based on complex computer models. Opponents made a strong case, which the PUC simply dismissed. “Pay now, save later” is a risky proposition at best.

As though substituting erratic wind for reliable coal were not enough, the Colorado Energy Plan also includes a huge and novel solar-plus-battery component. Pueblo County is going to be the new home of trainloads of utility scale batteries, something Colorado has never seen before.

No wonder the Colorado Energy Plan costs 2.5 billion dollars. Colorado is clearly Xcel’s new (and expensive) energy experiment center. How being lab rats benefits the people of Colorado is far from clear, but it clearly benefits Xcel. Their asset base is booming.