Sign Here To Tell Colorado Decision Makers That Investing In Coal Now Is a NO-GO!
Xcel Energy plans to spend $400 million in upgrading two coal plants. As the US coal industry has taken an ominous nosedive, Colorado will face financial risk if these plants cannot be run. Renewables are cost-competitive with coal and natural gas and we know coal plants don’t balance well with renewables on the grid. In addition, coal plants need millions of gallons of water for cooling and climate change will not wait. It’s unconscionable.
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For more background, see this searing review in the Denver Post by Leslie Glustrom, CEA’s co-founder:
Will coal investments become stranded assets?
A machine that no rational person wants to build is one that generates stranded assets — assets that become non-functional long before they have been paid for.
Unfortunately, customers of Colorado’s largest utility, Xcel, are bound to just such a “stranded asset machine,” given the poor decisions that the Public Utilities Commission is allowing Xcel to make.
Since the turn of this century, Xcel has spent about $1 billion on the Comanche 3 coal plant in Pueblo to serve the Denver-Boulder area, and now the Public Utilities Commission is turning a blind eye, yet again, while Xcel spends hundreds of millions of dollars on old Colorado coal plants in 2014 and 2015.
Under the current system, Xcel fully expects its customers to not only pay for these coal plant expenditures, but to also provide Xcel a return of between 7 percent and 8 percent on the money. In addition, Xcel will pass 100 percent of future coal costs through to customers under the Electric Commodity Adjustment mechanism.
This risk-free way of generating profit is good business as long as you can get the PUC to agree to it — which the PUC routinely does.
The financial world is abuzz with discussions of “unburnable carbon” and the need to avoid investments in fossil fuel assets that are likely to become stranded given the urgency of addressing the climate crisis.
None of this is being discussed as the Colorado PUC stands ready to approve hundreds of millions of dollars of expenditures on old Colorado coal plants as part of the ongoing Xcel rate case.
The PUC seems to have an unspoken rule that when you walk through the doors of the commission, all discussion and concerns about the planet and unburnable carbon will be left at the door.
In the 21st century, that is not only unconscionable, it is also leading Colorado into a very risky economic situation.
Even if there were no concerns about climate change, ocean acidification, boiling off Colorado’s precious water supplies to produce electricity, or the copious amounts of air, water and coal ash pollution created by coal plants, it still would be a bad idea to allow large investments in coal plants in the 21st century.
First of all, as the costs for wind and solar plummet and storage technologies evolve rapidly, the opportunity to move beyond coal for purely financial reasons becomes ever more viable.
Second, resources built in this century should be extremely flexible in their operation to match the variable nature of the wind and solar that Colorado is so blessed with. Flexible is precisely what baseload coal plants are not — and we shouldn’t be investing in them.
Finally, coal plants need a supply of coal to operate and the truth about coal is that most of the U.S. coal that can be mined at a profit is gone. The U.S. coal industry is running seriously in the red, stock prices have cratered, the largest companies are facing billions of dollars of debt and Wall Street has largely left the U.S. coal industry for dead. (For more depth, see here, and here, and here and here.)
Consequently, it is completely unclear who will be mining U.S. coal in the coming years and decades — what’s less for the five more decades that Xcel’s Comanche 3 coal plant is scheduled to operate.
Spending money on coal plants in light of these harsh realities is the height of economic (to say nothing of planetary) folly — but that is exactly what the Colorado PUC is letting Colorado’s largest utility do.
While the PUC is firmly keeping its eyes covered and its ears plugged to the realities of the 21st century, it is long past time that the state’s economic and political leaders took a hard look at the facts that the PUC is ignoring and put an end to Colorado’s stranded asset machine.