Gov. John Hickenlooper praised Xcel Energy’s plan to shut down two coal plants in Pueblo during his annual address to lawmakers in January.
“What is it the critics don’t like?” Hickenlooper quipped. “Is it the cleaner air or the lower utility bills?”
Oh, if only it were that simple.
The Public Utility Commission heard complex testimony last week detailing the proposal from Xcel to close the power plants and replace them with another 1,100 megawatt hours of wind and solar power. Critics say they’ve uncovered evidence that the plan will likely mean increased utility bills.
After investigating the issue, we still think it’s a worth-while endeavor even if promises of a cost-free switch to renewables is overstated by proponents.
Xcel estimates the plan will prevent power plants from spewing 3.8 million tons of carbon dioxide into the atmosphere every year beginning in 2026. That’s roughly the equivalent of taking 760,000 cars off Colorado roads.
We hope the three appointed commissioners on the Public Utilities Commission will decide next month to approve Xcel’s proposal.
However, we remain healthily skeptical that shuttering two coal powered plants more than a decade early will save rate payers $215 million.
And we’re not alone.
The PUC’s unbiased staff took a spoonful of disbelief too as they analyzed Xcel’s extremely complicated modeling.
“Staff believes this amount is likely overstated and Staff is unable to conclude that the (plan to decommission Comanche 1 and Comanche 2 early) Preferred CEPP is more likely than not to produce savings,” PUC employees wrote in their comments on Xcel’s most recent analysis.
Notably staff didn’t discredit all of the savings Xcel thought they were likely to gain with their plan, only about $71 million worth, which would still leave a healthy margin of savings for ratepayers.
However, there’s another flaw in the logic of a cost-free switch to renewables.
Energy users will pay more for the early depreciation of the Comanche plants, but Xcel proposes offsetting the necessary increase to bills by cutting in half a separate 2 percent fee charged to every customer.
That fee is known as the Renewable Energy Standard Adjustment and it was created by Colorado lawmakers to provide investor-owned utilities with a way to pay for the mandate that a greater portion of their energy — now at least 30 percent — come from renewable sources.
But it’s a bit of an accounting trick to say that it’s a one-for-one swap for customers, similar to claims by politicians that renewing expiring bond issues isn’t a tax increase.
Xcel hasn’t been using all of the RESA it collects every year, because it was able to comply with the 30 percent renewable energy standard without using all of the RESA fee. It’s feasible that the state would one day reduce the 2 percent fee based on the fact that it is over-collecting a fee. That would mean utility bills would go down, but under the Xcel plan instead of rates going down when the fee is cut, they would stay the same and fund the early closure of the Comanche plants.
Officials with Xcel say that even taking all of that into account, their plan is a better deal than the alternative. A perfect convergence of extremely low-cost wind energy and battery storage, federal tax credits for wind energy production and the ability to close two aging facilities, has put Xcel in the unique position of being able to move away from coal without hurting its customers.
And that should be the threshold that the PUC commissioners consider — will it hurt?
This plan doesn’t have to save money to still be worthwhile.
We supported Hickenlooper’s executive order a year ago, setting the voluntary goal for our utilities to cut power plant carbon emissions by 35 percent by 2030, compared to emissions levels in 2012. Shuttering these two power plants gets Xcel closer to complying with that admirably high hurdle.
There might be no such thing as free renewables, but Xcel is getting close enough.
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