Category Archives: Politics

Colorado’s Magnificent Clean Energy Potential–Xcel’s 2009 “RFP”

Submitted by Leslie Glustrom on May 9, 2010 – 2:13pm

In April 2009, Xcel Energy received the results of its “Request for Proposals,” or “RFP,” for filling future generation needs on its Colorado system. In the midst of a brutal economic crisis, Xcel received over 15,000 MW of clean energy bids–even though it had only sought about 1,000 MW. For reference, Xcel’s peak system demand with a 16% reserve margin is usually between 7,000 and 8,000 MW.

A Denver Business Journal article on the bids is here and a graph showing the bids is attached.

Of the bids received by Xcel, over 7,000 MW of wind and solar bids were proposed for development in the 2011 and 2012 time frame as indicated in Xcel’s May 2009 “30 Day Report” on the bids in the 07A-447E Docket at the Colorado Public Utilities Commission.

Xcel’s Analysis of the bids indicates that adding more renewable energy to the system as we head into a carbon-constrained world is likely to lower system costs, not raise them as shown in Figures 15 and 16 of Xcel’s August 2009 “120 Day Report” on the April 2009 bids.

Both the 30-Day Report and the 120 Day Report on the April 2009 RFP bids were prepared as part of Phase II of Xcel’s 2007 Resource Plan found in Docket 07A-447E at the Colorado PUC with full details available at https://www.dora.state.co.us/pls/efi/EFI.Show_Docket?p_session_id=&p_docket_id=07A-447E .

While replacing fossil fuel resources needs to happen in a considered fashion to ensure system reliability, it is clear that Colorado has magnificent renewable energy resources and an abundance of project developers ready to turn these resources into clean electricity.

As we unleash the entrepreneurial abilities of Colorado’s clean energy developers, we will also help to keep Colorado’s energy dollars in the state, creating jobs, tax revenues and multiplier effects.

Presently, well over $100 million leaves the State of Colorado annually to pay for coal deliveries from Wyoming. With abundant wind and solar in the state, it appears that the amount of money leaving the state to pay for coal could be significantly reduced.

Comanche 3–The Billion Dollar Mistake

Xcel has spent over $1 Billion to build the new 750 MW Unit 3 coal plant in Pueblo (which Xcel refers to as “Comanche 3”) and they are presently trying to bring the coal plant on line. Yet, there are a growing number of signs that the coal plant is a “Billion Dollar Mistake.”

The coal plant has been plagued by engineering and noise issues which are discussed in a recent report to the Colorado PUC here. There is a Powerpoint (starting on page 7 of 35) included in the “Verified Report” at this link which details the problems that Xcel has been experiencing with leaking steam tubes, boiler pumps that won’t work and a high pitched noise that is causing tremendous disturbance to local residents who are becoming depressed and distraught, with many of them moving into hotels (which at least Xcel is paying for) because they can not bear the noise any longer and the sleep deprivation has become too much. Of course moving into a hotel is also a tremendous disturbance to one’s life and the residents’ health issues are becoming exacerbated by the continuous noise that disrupts their sleep and creates serious additional stress.

You can read the comments of the local citizens who are being affected by the noise issue on the PUC website under Docket 10M-135E.

Operating the coal plant will cost approximately $1 billion per decade and add large amounts of CO2, mercury and other pollutants to the environment. Soon Colorado will have to decide whether it is worth putting good money after bad when it comes to the coal plant or whether the money spent operating the plant would be better spent building out the renewable energy infrastrucuture that will keep Colorado powered in the 21st century as coal and pollution control (and likely carbon) costs mount.

Here is a report detailing the history and the expected future costs of operating the coal plant attached.

Xcel has received three rate increases in the last four years totalling over $300 million dollars of additional annual revenue paid by Colorado rate payers and the largest driver in these back-to-back rate increases has been the Unit 3 coal plant.

More information is available on request.

Colorado’s Billion Dollar Mistake

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Xcel’s 2009 Coal Prices Match Price Predicted for 2035–Ooops…

In its last Resource Plan Xcel predicted that its coal prices would stay relatively flat–increasing about 2% a year for the next several decades. Historical prices back to 1998 can be seen in LWG 1-4, part (b).  Until Xcel’s long term coal contracts began expiring in 2005, the average price paid for coal was under $1/MMBTU (million BTUs).

Once the long term coal contracts expired, Xcel’s coal costs have been mounting significantly-averaging over 10%/year. In 2009, Xcel paid over $1.50/MMBTU. In Xcel’s 2009 Annual 10-k report submitted to the Securities and Exchange Commission, Xcel reported paying $1.52/MMBTU for its coal in Colorado. (See page 21 for Xcel’s Colorado coal costs.) In response to the Discovery Question LWG 5-3 (Docket 09A-772E), Xcel provided a 2009 coal cost of $1.61/MMBTU. The reason for the discrepancy is not clear–but either way this is a 50% increase in price in four years–way beyond the 2% per year price increase that was predicted in the last Xcel Resource Plan.

With a coal price in excess of $1.50/MMBTU in 2009, Xcel paid a price for coal in 2009 that it didn’t expect to pay until 2035. Ooops!

A careful assessment of production statistics and the geology of existing coal mines and an analysis of future constraints on coal production indicate that future price increases for coal are likely. While all fossil fuels are subject to complex forces of supply and demand and their price is volatile, the fact that coal is a solid, makes it difficult to work around the very real geologic constraints that exist on economically accessible coal.

More information on coal supplies is available in the extensive Clean Energy Action report issued in February 2009 entitled, “Coal–Cheap and Abundant–Or Is It?”