Xcel's plan deserves some extra scrutiny

THE DAILY SENTINEL

After Gov. John Hickenlooper signed an executive order last summer committing the state to climate action, Xcel Energy responded with a "Colorado Energy Plan" that promised hefty environmental benefits without raising customers' bills.

The benefits are legit — the plan could remove 4.5 million tons of carbon dioxide a year. But consumer advocacy groups aren't sure those benefits don't come with huge hidden costs to ratepayers at a time when Colorado is already on track to meet its 2030 goals under the state's renewable energy mandate.

Xcel Energy has proposed a plan to decommission two of its highest-performing coal-fired plants (upgraded to be more enviornmentally friendly) and replace them with more expensive — and mostly intermittent — sources of energy. If it could that and actually save ratepayers money, there probably wouldn't be objections outside of the coal lobby. That there's so much pushback, including from the Intermountain Rural Electric Association, makes us leery.

The byzantine process of determining whether Xcel's calculations are trustworthy — and in the public interest — plays out today in a Public Utilities Commission hearing regarding the plan to shutter Xcel's Comanche I and II power plants a decade of ahead of schedule.

Critics of the plan, including the Coalition of Ratepayers and the Heartland Institute — representatives of which addressed the Sentinel's editorial board Tuesday — say it's corporate self-interest by a regulated monopoly cloaked in economic development and environmental advocacy.

"It's all about Xcel having the opportunity to build out $2.5 billion in new facilities for which they get 10-percent guaranteed profit," said James Taylor, an attorney and senior fellow for environment and energy policy at the Heartland Institute.

Shuttering the plants and 700 megawatts of generating capacity "that have already been purchased and paid for and upgraded with advanced environmental technologies and utilize inexpensive coal" gives Xcel the opportunity to build out expensive replacement power facilities, Taylor said. But because they're using variable power, like wind and solar, they need to build 2,400 megawatts of
generating capacity to account for when the wind doesn't blow or the sun doesn't shine.

"They put into their proposal that they get to bid on their own projects, anywhere from 50-75 percent of their new facilities and they're guaranteed a 10-percent rate of return on investment for anything that they build," Taylor said.

Fifty percent of a 10-percent return on a $2.5 billion investment is $125 million in guaranteed profits. The Coalition of Ratepayers, led by the Independence Institute, says this is a drawback of monopoly utilities. Their profits stem from increasing their asset base, not growing their customer base.

Xcel packaged the plan to the Colorado PUC in a "stipulation" that was initially supported by 14 other parties. The PUC staff also signed on.

Since then, however, the coalition has successfully challenged the plan with expert witness testimony that pointed out modeling errors, challenged accounting practices and questioned recovery costs of accelerated depreciation of the plants.

As a result of the scrutiny, the state Office of Consumer Counsel, the state's official watchdog that advocates on behalf of ratepayers, has said it doesn't endorse the plan, according to Amy Oliver Cooke, director of the Coaltion of Ratepayers.

The coalition raised three points that PUC staff said warranted further review, setting the stage for today's hearing — a quasi -judicial process that will involve more expert testimony.

Xcel's own data shows the cost-savings do not even materialize until 2046, Cooke said. By then, the utility may be on to another phase of asset-building which would mean the savings never actually reach consumers' pocketbooks.

There are obviously plenty of questions about the validity of Xcel's cost-savings claims, which will be thoroughly vetted by the PUC staff and commissioners. If the cost savings don't pencil out, we see no reason to decommission coal-fired power plants that Xcel customers have already paid $190 million to make the cleanest in the nation.