Category Archives: Natural Gas

Xcel’s Colorado Energy Plan “Stipulation” – Another Xcel “Deal” That is Not a Deal At All

In late August 2017, Xcel-Colorado (Public Service Company of Colorado or “PSCo”) submitted a plan to the Colorado Public Utilities Commission (“PUC”) which it named the Colorado Energy Plan or “CEP.”  The Colorado Energy Plan was submitted to the PUC as a “Stipulation” in Docket 16A-0396E and the CEP is sometimes referred to as “The Stipulation.”  While Xcel’s Colorado Energy Plan includes moving up the retirement date for two coal plants—Comanche 1 and 2 in Pueblo, Colorado—the Plan also contains a number of adverse provisions including:

  • Reducing Xcel’s Renewable Energy Standard Adjustment which is supposed to be used to support renewable energy additions and using the “head room” created by that reduction to pay off the undepreciated portion of Comanche 1 and 2.
  • Paying Xcel their full level of profit (known as “return at the WACC” or Weighted Average Cost of Capital of about 7 %) on the now stranded coal plants.
  • Establishing ownership targets for Xcel ownership of replacement generation, potentially reducing the competitive nature of Colorado’s energy market.
  • Including natural gas in the replacement generation and potentially constraining the analysis of the over 50,000 MW of very cost-effective wind, solar and storage bids that Xcel received in November 2018.  The CEP would consider adding about 2000 MW of wind and solar to Xcel’s Colorado system, leaving over 90% of the wind, solar and storage bids “on the table.”

Clean Energy Action Board member Leslie Glustrom submitted extensive comments on the “Stipulation” and a final statement.

Photo Courtesy of Alan Best

In addition, Clean Energy Action hosted several trainings on the CEP/Stipulation in late January 2018 and numerous citizens that attended the trainings testified at the Colorado PUC on February 1, 2018 in Docket 16A-0396E.  Many citizens pointed out that Xcel’s Colorado Energy Plan “deal” was not as good a “deal” as Xcel wanted the Commission to believe it was.

On Wednesday March 14, 2018 the Colorado PUC allowed Xcel to bring forth a plan that retires Comanche 1 and 2 early, but did not accept many other parts of the Colorado Energy Plan “Stipulation.”  The decision is here.

Unfortunately the Colorado PUC did not specify that Xcel should develop a plan that no longer uses “must-run” requirements for Xcel’s Colorado coal plants, but it did require a “least-cost” modeling run which should begin to show the vast potential for lowering utility costs by incorporating low-cost wind, solar and storage onto Xcel’s Colorado system.  Importantly, the sensitivity runs with lower discount rates should show even greater savings from adding wind, solar and storage resources.  The modeling report is expected in late April 2018.

The mission of Clean Energy Action is to “accelerate the transition to the post-fossil fuel world,” and we are strong supporters of retiring coal and natural gas plants, but we will also advocate for a “just transition” that does not unduly burden utility ratepayers. The Colorado Energy Plan, while containing some admirable proposals, transfers too much accountability for stranded fossil fuel assets from Xcel to its customers.

U.S. Energy Information Administration Projections Far from Accurate

EIA projections missed unprecedented growth in solar PV installations and a sharp downturn in coal production over the last decade.

For a more detailed analysis of inaccuracy in the EIA’s projections, see CEA’s white paper on the topic here.

Policymakers, utility commissions, investors, and energy companies rely on the U.S. Energy Information Administration’s (EIA’s) data for a wide range of energy analyses and while the historical data provided by the EIA has been extremely useful in many arenas, the EIA’s projections of future trends are often far from accurate. Our research summarizes a few examples of previously reported inaccuracies in EIA projections (for example, here, here, and here), but also provides what we believe to be the first look at the EIA’s inaccurate projections of U.S. coal production in almost a decade.

The projections published in the EIA’s Annual Energy Outlook (AEO) have invariably overestimated the cost of renewable electricity generation and fallen sadly short of predicting new additions of wind and solar capacity. For example, Figure 1 shows that the projections published in the EIA’s Annual Energy Outlook repeatedly underestimated U.S. utility-scale solar photovoltaic (PV) capacity from 2011 to 2015 and continue to predict that solar installations will largely stall through about 2025.

In reality, however, solar PV capacity is growing at an unprecedented rate. The Solar Energy Industries Association reported that by the third quarter of 2016, the cumulative U.S. utility-scale solar PV capacity (including capacity which was under contract but not yet operating) exceeded the AEO2015 projection for capacity in 2039. Accounting for planned capacity which had been announced but was not yet under contract by Q3 2016 indicates that utility-scale solar PV capacity will soon far surpass all AEO projections for 2040.

Solar PV Capacity and Projections
EIA reference case projections of U.S. utility-scale solar PV capacity and historical data (black, bold) as well as points which include planned capacity under contract in Q3 of 2016 and announced but pre-contract installations as of Q3 2016. Projection data taken from the EIA’s Annual Energy Outlook, historical data taken from Solar Energy Industries Association’s U.S. Solar Market Insight Reports.

In addition to missing the sharp rise in solar photovoltaic installations, EIA projections also missed a dramatic downturn in coal production over the last decade. They failed to pick up on the trend year after year and still predict flat or rising coal production through 2040, as shown in Figure 2.

History (black, bold) and annual EIA projections of U.S. coal production from 1997 to 2040. Note that the vertical axis starts at 950 million short tons for clarity. Data taken from: the EIA's Annual Energy Outlook.
History (black, bold) and annual EIA projections of U.S. coal production from 2006-2015. Note that the vertical axis starts at 950 million short tons for clarity. Data taken from: the EIA’s Annual Energy Outlook.

Disruptive innovations tend to precipitate new market trends that are notoriously difficult to predict. Just as the invention of the personal computer led to an abrupt decline in the typewriter industry in the late 1900’s, a massive transition toward renewable resources is transforming U.S. energy markets and so far EIA projections have failed to keep up with this transition. Every year, EIA forecasts predict a return to the trends of the 90’s, but the technological and political landscapes surrounding the U.S. energy industry are changing rapidly and historical precedent suggests that energy markets may never return to those of past decades.

For more details, readers are encouraged to download the full CEA White Paper here.

9th Annual Schultz Lecture

9th Annual Schultz Lecture: Reducing Greenhouse Gas Emissions from the Electric Power Sector

Paul Joskow, MIT professor of economics

Thursday, September 22nd
5:30 pm
University of Colorado School of Law
Wold Law Building, Wittemyer Courtroom

 

This event is free and open to the public. You must be registered to attend. More information and registration available here.

 

Electricity generation accounts for about 30% of U.S. greenhouse gas emissions. While emissions have declined by about 20% in the last ten years, much of this reduction is due to the fortuitous availability of cheap natural gas which
has provided incentives to substitute less CO2 intensive natural gas for coal as a generation fuel. The sector faces many challenges to meet long run 2050 goals of reducing emissions by as much as 80% from 2005 levels. These challenges include the diversity of federal, state and municipal regulation, the diverse and balkanized structure of the industry from state to state and region to region, the failure to enact policies to place a price on all carbon emissions,
the extensive reliance on subsidies and command and control regulation to promote renewables and energy efficiencies, uncertainties about aggressive assumptions about improvements in energy efficiency beyond long-term trends, pre-mature closure of carbon free nuclear generating technologies, integrating renewables efficiently into large regional grids, methane leaks, and transmission constraints. The lecture will discuss these challenges and suggest policies to reduce the costs and smooth the transition to a low carbon electricity sector.

Paul L. Joskow became President of the Alfred P. Sloan Foundation on January 1, 2008. He is also the Elizabeth and James Killian Professor of Economics, Emeritus at MIT. He received a BA from Cornell University in 1968 and a PhD in Economics from Yale University in 1972. See full biography here.

Natural Gas– What are the Cost and Supply Prospects Moving Forward? A Community Discussion

Missed this event?  View PPT slides here and a video of the talk here.

 

Natural Gas– What are the Cost and Supply Prospects Moving Forward?

A Community Discussion

 

Monday, August 29th
6 pm
Boulder Public Library
Boulder Creek Room, 1001 Arapahoe Ave, Boulder 

 

Clean Energy Action has pioneered detailed analysis of US coal cost and supply issues. Now we are working to get a deeper understanding  of natural gas supply issues.

CEA Intern and PhD Physics Candidate Molly May will present a detailed look at natural gas cost and supply issues and invite comment and suggestions for future research.

If you want a good foundation on natural gas supply issues, this will be a great way to get it.

If you are already and expert on natural gas cost and supply issues, please come help us learn what you know!

Infrared Video Reveals Gas Leaks

More than Meets the Eye

While the naked eye cannot detect methane, infrared photography can. Forward looking infrared technology – the same thermal imaging technology used by the military  to track targets that give off heat – allows us to visualize large plumes of methane and volatile organic compounds escaping from fracking sites.

Be the Change and Earth Works put this technology to use, surveying 24 fracking sites in Colorado, facilities regulated by state rules that Governor Hickenlooper has called a “model demonstrating the success that can come from collaboration.” The infrared video shows gas leaks of startling size.

Phil Doe, Environmental Director of Be the Change, expressed his skepticism of the effectiveness of these rules in his testimony on the EPA’s methane emissions regulations.

Operationally, these sites are governed by Colorado’s new air quality rules.  Oil and gas interests inevitably refer to these rules, implemented in 2013, as the strongest air quality rules devised by any state to regulate fracking pollution.  They are in fact stronger than EPA’s proposed rules, for they measure more oil field pollution sites, though not all, and are not limited to just new wells as in EPA’s proposed rule.  Still the question remains, is public health and wellbeing actually being protected by the state’s rules?  Will EPA’s weaker rules add any substantive protection for the public’s health?

Watch some of the videos and decide for yourself if Colorado’s rules are serving public wellbeing. If you are struck by the volume of these leaks, know that it is (highly) unlikely that action by the Governor’s Colorado Oil and Gas Conservation Commission will change things for the better. Although the Governor appointed a Task Force to recommend rule changes for oil and gas operations, little material change appears forthcoming.

Rule Changes

A recent letter (full text here) from Jim Fitzgerald, a Bayfield rancher and member of the Commission’s Task Force charged with recommending new rules for oil and gas operations, helps explain the current situation at the Task Force. He wrote to the Commission describing himself as a “very disgruntled member of” the Task Force.

Jim goes on to point out that the Task Force’s recommendations  “are only a small portion of what [the Commission] should be considering for adoption.” Several “important proposals to give local governments more standing have not been considered.” How come?

The Task Force, charged with recommending changes to the rules, had its own rules changed. While decisions regarding legislation were understood to require a supermajority vote, Jim writes that “it was understood by many , if not most of the members that any proposal that did not require new or amended legislation and which received a simple majority of support” would be passed on to the Commission for consideration.

Yet after majority approval of statements concerning the public interest and local regulation, the Department of Natural Resources informed Task Force members that “all proposals would need a two-thirds vote in order to be considered for adoption.” Thus the Task Force’s recommendations exclude common sense proposals like:

  • Recommendation #7: “The public interest is best served when local government land use planning and permit processes work parallel with and in accord with the state oil and gas regulations and processes.”
  • Recommendation #2: “Amend the Rules of the COGCC to acknowledge that local government land use regulations may be stricter than similar COGCC regulations and that such regulations must be complied with by oil and gas operators.”

13 majority-approved proposals absent from the Task Force’s list of recommendations.

The rules governing oil and gas operations may change, as may the procedures for making those rules, but still the question remains: will they address the leaks we can now see escaping from fracking sites in Colorado?