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Xcel Energy pitches new clean energy plan for Colorado that is nearly twice as costly as one it offered in 2021
Colorado Sun ^ | Dec 6, 2023 | Mark Jaffe

Posted on 12/06/2023 6:36:51 AM PST by george76

Colorado utilities regulators will consider the new plan, which was revised in hopes of capturing lucrative renewable energy credits while slashing greenhouse gas emissions...

Xcel Energy has a vision for Colorado’s clean energy future — one independent power producers, consumer advocates and regulators didn’t see coming — a vision that is both expensive, with a $15 billion price tag, and unparalleled in its sweep.

Xcel Energy’s preferred electric resource plan submitted to the Colorado Public Utilities Commission in September includes 7,100 megawatts of new generation and storage, mainly wind and solar and nearly $3 billion in new transmission lines.

“We believe the preferred plan is transformational: achieving increasingly clean energy service with high reliability and affordable cost,” Xcel Energy said in its filing to the commission.

This proposal, however, has 26% more generation and is almost twice as expensive as an earlier plan approved by the PUC and endorsed by consumer, environmental, labor and business groups.

“There was no contemplation of going this big or this expensive,” said Joseph Pereira, deputy director of the Colorado Office of the Utility Consumer Advocate, or UCA, which represents residential and small commercial customers.

“We’ve never seen anything of that size or scale,” Pereira said. The UCA had backed the earlier plan. “The company finds every opportunity to maximize its profits as it relates to decarbonization.”

The PUC begins deliberations on the plan Wednesday and is slated to make a decision before the end of the year.

Colorado utilities that are regulated by the PUC must submit a resource plan every four years showing how they will meet their customers’ electricity demand. This time Xcel Energy must also offer a clean energy plan to cut greenhouse gas emissions.

Under state law Xcel Energy must cut its greenhouse gas emissions 80% from 2005 levels by 2030. The proposed plan would cut them by 87%.

The proposal, the PUC staff said, “represents an inflection point — the point in time when the company moves from steady incremental progress towards decarbonization to an acceleration in fossil resource retirements (and) renewable acquisition.”

Still, the staff in its evaluation deemed the plan “too costly and not well supported,” adding that it includes “a surprise $2 billion in transmission upgrades not anticipated a year ago.”

Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary, said the plan was revised so the company could capture $10 billion in tax credits under the federal Inflation Reduction Act, allowing the utility to add more renewables at a reduced cost.

“I think we’ve put together a good package and I hope the PUC will approve it,” Kenney said.

Xcel wants to own more generating capacity than allowed by law Under the proposed plan Xcel Energy would own two-thirds of the new capacity, exceeding the 50% target for utility ownership set in the same law, Senate Bill 236, requiring the 80% reduction.

“To be clear,” Xcel Energy said in response to a Sun query, “SB-236 did not set any ceiling or floor on ownership.”

The cost of those projects would go into customer bills. Xcel Energy estimates that the plan would raise bills 2.25% a year “in line with the rate of inflation.” But the PUC staff and the UCA said the company is low-balling the impact.

“The company’s statement was carefully worded to include only the incremental rate impact of the (clean energy plan), not the rate impact of the entirety of the company’s planned investments,” the PUC staff said.

The UCA estimates adding in all the planned investments could raise customer bills by more than 6% a year between 2023 and 2030.

These concerns are compounded by the fact this plan will not receive the same scrutiny as the earlier and less expensive clean energy plan. An independent evaluator also concluded that there had been inadequate time to evaluate bids and analyze transmission needs.

“In the absence of discovery, a record of tested evidence, and additional time to investigate the ballooning costs … there are too many red flags and unknowns,” Colorado Energy Consumers, or CEC, which represents Xcel Energy’s large industrial and commercial customers, said in a filing.

How the first plan was pitched In February 2021, Xcel Energy unveiled an $8 billion clean energy plan that would have doubled the renewable generation on its grid and cut greenhouse gas emissions by 80%.

The plan proposed adding 5,600 megawatts of new wind, solar and storage. The company estimated it would need $500 million in new transmission lines.


Fifteen parties, including state energy officials, consumer advocates, local governments, labor unions, environment groups and renewable energy industry representatives, supported the proposal.

This came after the parties had the ability to request documents from Xcel Energy and cross-examine company witnesses.

After the approval, known as phase one, the utility issued a call for bids to fulfill the plan in phase two. However, to “maximize the opportunities” for federal tax credits, Xcel Energy overhauled the agreed upon plan.

And this is where things got complicated. Independent power producers and contractors submitted more than 1,000 bids for projects. That was far more than the computer model Xcel Energy was using to assess and rank proposals could handle.

Xcel Energy used a “economic and due diligence” screen to cut the number to 382, but that was still too many so a second “best-in-class” screen was used and eventually the company did a full assessment on 137 bids — about 12% of the total.

“The company often provided vague explanations as to why bids were eliminated,” the Colorado Solar and Storage Association, a trade group also known as COSSA, said in a PUC filing.

Accion Group, a utility industry consultant, was chosen by the commission to act as an independent evaluator of the bids and bidding process. Accion said the portfolio offered the “best options provided by the marketplace and the self-build options,” but added that the process had been flawed.

“Immediately after bids were received it was apparent that completing all evaluations within 120 days was an unrealistic goal,” the Accion report said. There was also inadequate time allotted for the transmission analysis.

“The rules for competitive solicitations were established some 20 years ago when the electric utility industry was far different than what is demanded of the industry today,” the evaluator’s report said. “The migration from coal-fired base load units and gas turbines to cleaner, renewable resources significantly changed the complexity of designing portfolios.”

Xcel Energy said, in a statement to the Sun, that it agreed with the evaluator that the “resource planning process needs to evolve to meet the current needs of the market.”

When the model was run to optimize the portfolio for projects it selected:

3,400 MW of wind generation 1,100 MW of solar 1,100 MW of solar 1,400 MW of solar with storage 600 MW of standalone storage 600 MW of gas-fired generation All that was going to require more transmission capacity than was originally anticipated by the utility.

“Field of Dreams” forecasting In 2022, the PUC approved Xcel Energy’s $1.7 billion Power Pathway project, which will create a 560-mile high-voltage transmission belt to link wind and solar from the Eastern Plains to Front Range cities and suburbs.

Xcel Energy is building the line in the hopes that it will spur independent development of new projects on the plains. The company has called it a “Field of Dreams” strategy.

Many of the new projects in the portfolio, however, are to be located closer to the Denver metro area and as a result need additional transmission — nearly $3 billion in new lines or six times more than the original phase one plan’s estimate.

“The company has this circular, self-justifying approach,” UCA’s Pereira said. “They seek approval for projects that need transmission and once you have transmission that’s where you can put projects.”

A prime example, Pereira said, is the $250 million May Valley-Longhorn extension, a 90-mile transmission line into Baca County. Xcel Energy proposed the extension as part of Power Pathway, but the PUC, uncertain whether there was any interest among developers in that area, set it aside.

The company is now seeking to build the line to serve two company-proposed wind farms in the county.

“These projects are the sole justification for construction of this line,” the UCA said in a filing, noting that when the cost of the line is added to the overall cost of the wind farms, they are no longer price competitive.


While two company-owned projects were selected, Xcel Energy said there were 27 bids from seven developers along the extension.

The model evaluation also gave 66% of the capacity and 72% of the investment to company-proposed projects leaving independent power producers and contractors frustrated.

The Colorado Independent Energy Association, a trade group for merchant power producers who build their own plants and sell electricity to utilities, told the PUC that Xcel Energy’s “feet must be held to the fire given its unprecedented utility-owned generation.”

The plan, CIEA said, would turn Xcel Energy into a commercial generation and transmission development company to construct 13 generation facilities and as many as 28 transmission projects, within four years.

“The ownership percentage is purely a reflection of the competitiveness of the company’s bids relative to Independent Power Producer (IPP) projects,” Xcel Energy said, adding that the federal tax credits had made company projects more competitive.

Xcel Energy makes most of its money by building new infrastructure and recovering the money spent, plus a return on the investment, which is set by the PUC.

That collection of investments — the rate base — is used to calculate customer charges. The plan proposed by Xcel Energy would add $10 billion to the rate base, essentially doubling it, according to the PUC staff.

The plan serves Xcel Energy’s “financial interest of expanding its rate base to the detriment of customers,” CEC, the group of large customers, said.

“Used and useful” can be a temporary state Once the projects are built and in service — the PUC phrase is “used and useful” — a utility can start collecting customer dollars on it, but once it is rate base it doesn’t matter whether it stays used and useful.

The $1 billion Comanche 3 coal-fired power plant, in Pueblo, has been shut down for the equivalent of almost two years during its 13-year life, but remained in rate base during that time.

The Cabin Creek hydro-storage facility, near Georgetown was out of service for years but customers still paid for it and the company-owned Rush Creek and Cheyenne Ridge wind farms have also been underperforming, according to the PUC staff.

“Xcel makes money when it builds stuff whether it works or not,” said Mike Kruger, the solar and storage association’s president and CEO. “It doesn’t matter, they get paid. For an independent power producer, if it doesn’t work if they don’t get paid.”

The independent power producers sell Xcel Energy electricity at a fixed price in long-term contracts and assume the costs and risks of building and operating a generating facility.

The risks of heavy company ownership include cost overruns, poor performance, unexpected capital costs and delays in getting online, COSSA and the Solar Energy Industries Association said in a PUC filing.

“We recognize the significance of our ask and have proposed two performance incentive mechanisms designed to hold the company accountable for the construction and ongoing operations of its projects,” Xcel Energy said. “These mechanisms impose penalties on the company for underperformance.”

The proposed PIMs, however, also provide bonuses for meeting goals and UCA’s Pereira said PIMs are a new and largely untested cost-control mechanism.

The PUC staff, with the support of UCA and CEC, proposed an alternative which was to treat Xcel Energy like an independent power producer, holding the company to its initial bid project costs and keeping the projects out of rate base.

The proposal, the staff said, is focused “on shifting the current risk structure from being 100% on ratepayers, to a structure where the utility shares in the risk.”

As expensive as the Xcel Energy plan is, it is likely to end up even more costly, according to Accion, UCA, CEC and staff.

“The company has been notoriously bad on its estimates and consistently overruns project costs by 30%, 50%, 100%,” UCA’s Pereira said. “It will never be as low as they project.”

In Xcel Energy’s last electricity rate case, the advocate’s office documented eight projects — including substations, transmission lines and converting a coal-fired plant to natural gas — that were projected to cost $265 million but ended up costing $544 million and going into rate base.

Xcel Energy also required all developers to use the company’s standard contract for the purposes of comparing projects, but Accion warned that those contract prices may not hold.

“Accion believes there is a strong likelihood that the developers of selected projects will seek contract changes and price adjustments before the development process is completed,” the consultant said. “The Commission should anticipate some bidders will be unable to meet commitments unless their bid prices are increased.”

In 2022, Xcel Energy had to scramble to fill a gap in energy generation when some solar developers scrapped or delayed projects.

To safeguard against a similar problem, Xcel Energy has included a “backup bid portfolio,” but Accion said “the backup bids come with higher costs than the preferred portfolio.”

Accion urged the PUC and staff to monitor the final contracts to “be aware of any changes that would impact cost to ratepayers.”

Xcel Energy calls its combination of proactive company investments and laissez-faire “Field of Dreams” development “an approach that can be an example for the West and the country. To which the PUC staff responded, “Cost estimates that are off by almost an order of magnitude seem more like a nightmare than a dream.”

TOPICS: Business/Economy; News/Current Events; Politics/Elections; US: Colorado; US: Minnesota
KEYWORDS: agw; boondoggle; climatechange; climateinsanity; clownworld; coal; coloradical; colorado; energy; energybills; environmentalwackos; globalwarming; governmentabuse; govtabuse; greenagenda; greenenergy; powerplants; waroncoal; waronenergy; xcel; xcelenergy
Deep State’s war on the middle class continues.. not just higher food prices.

While Coloradans see energy bills rise, Xcel Energy top executives take home millions in bonuses each year..

1 posted on 12/06/2023 6:36:51 AM PST by george76
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To: george76

If your clean crap is not cheaper then you can STICK IT

2 posted on 12/06/2023 6:39:05 AM PST by butlerweave
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To: george76

Only in Dim logic does it help customers to charge higher prices for less dependable service.

3 posted on 12/06/2023 6:40:02 AM PST by Tell It Right (1st Thessalonians 5:21 -- Put everything to the test, hold fast to that which is true.)
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To: MileHi; dynachrome; backspace; Balata; bboop; Ben Dover; Benito Cereno; BigEdLB; bluejean; ...

Colorado Ping ( Let me know if you wish to be added or removed from the list.)

4 posted on 12/06/2023 6:41:54 AM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: Tell It Right

Colorado’s high energy costs are part of a regulatory ‘game’. ( Xcel energy ).. For example, the recent approval Xcel Energy received to build 650 miles of high-tension power lines in eastern and southeastern Colorado to serve distributed renewable energy sources means the Minneapolis-based monopoly utility will earn a guaranteed profit on its $1.7 billion in capital investment, which will be collected from ratepayers..

5 posted on 12/06/2023 6:47:01 AM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: george76
Solar and wind powered electricity are irregular, unreliable, and there is no capability to store the energy.

Fossil fuel, coal, or hydropower are required to provide backup.

Therefore, it is not possible to "lower carbon emissions", by providing additional solar and wind power, WHICH ARE NOT ENVIRONMENTALLY FRIENDLY!!

6 posted on 12/06/2023 7:05:01 AM PST by G Larry (It is RACIST to impose SLAVE WAGES on LEGAL Immigrants by importing Cheap ILLEGAL Labor!)
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To: george76

The anti-freedom movement continues.

7 posted on 12/06/2023 7:08:54 AM PST by SaxxonWoods (Successful People Have a Sense of Gratitude. Unsuccessful People Have a Sense of Entitlement)
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To: george76



8 posted on 12/06/2023 7:41:01 AM PST by ridesthemiles
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To: george76
We had a similar problem recently in Alabama, only it was being forced onto Alabama Power (Southern Company) by Obama's EPA. They forced AP to spend over a beeelllyuuun dollars closing down a coal plant and redirecting the power lines to bring in power from "clean burning natural gas" fueled plants. This process took a few years and was completed in the early Trump era. The cost was born by us power customers and spread out across IIRC 5 years in a standard rate per kWh (never showing up in the bill, by they way, just imputed in the standard rate).

As a power customer I was still paying that when Biden issued multiple EO's in his first week in office to make it harder to drill natural gas -- making NG prices skyrocket to force us to wean off of the very "clean burning" natural gas that the Dims forced us to use more of. I saw both my natural gas bill spike and my power bill spike. (The per kWh rate has an extra rider per kWh for the fuel costs Alabama Power pays to fuel their plants. In my recent bills it's now 4 cents per kWh on top of the standard 12 cents per kWh rate.)

Bull crap like that is why I went solar and now produce 80% of all the power we consume. It doesn't save the world or any of that mess. But it does save our retirement financial planning from most of the costs the Dims put on us from their warmageddon cult. In the past 12 months my power bill has averaged $73, I have no natural gas bill (I converted my two NG appliances to electric), and have almost no gasoline costs because we do most of our driving in an EV car (in the past 12 months we averaged 1,300 miles per month charged at home, not counting miles from charging away from home).

I hated having to do all of that. It required a lot project engineering (don't think calculus, think lots of attention to details that relate to each other) and some up front costs that I monthly pay loan payments for. But the loan payments + tiny power bill is a hair less than what my larger power bill + natural gas bill + gas at the pump would have been. And as the loan balance is paid down the minimum payment goes down with it. So next year it'll cost me less money (lower payment) to save more money (the energy costs I'm mostly avoiding will go up). And the year after that it'll cost even less to save even more, etc.

Again, it burns my butt that we should even have to think like that. But it is what it is, so I bring it up every now and then at places like FR to encourage the idea of each one of us looking for ways to be more self-reliant so that the government has less ways to control each of us. It's one thing for us all to fuss for less government intrusion in our lives. It's another thing to actually make ourselves self-reliant so that we're less inclined to be manipulated if we're unable to change the government's ways.

9 posted on 12/06/2023 7:50:56 AM PST by Tell It Right (1st Thessalonians 5:21 -- Put everything to the test, hold fast to that which is true.)
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To: george76

Thinning the herd to save mommy earf./s

10 posted on 12/06/2023 7:57:12 AM PST by dynachrome (War does not determine who is right, but who is left.)
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To: george76

ALL state public utility authorities should have one mission - seeing that the electric utilities provide the most reliable electricity that is the most cost effective possible, and with no “climate” mandates as to the source - simply what is most reliable and cost effective, period.

11 posted on 12/06/2023 11:00:07 AM PST by Wuli ( ,)
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To: george76

12 posted on 12/06/2023 11:13:01 AM PST by Chode (there is no fall back position, there's no rally point, there is no LZ... we're on our own. #FJB)
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To: george76

Decarbonization is expensive. Fork it over.

13 posted on 12/06/2023 2:46:42 PM PST by Libloather (Why do climate change hoax deniers live in mansions on the beach?)
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To: george76

I swear, I’m going to convert completely to wood-fired heating and cooking.

14 posted on 12/06/2023 7:12:04 PM PST by TigersEye (Our Republic is under seige by globalist Marxists. Hold fast!)
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