Tag Archives: energy competition

New System Should Connect Wind and Solar Supply with Demand

While the clock ticks on climate change, Coloradans are blessed with an abundance of low-cost wind, solar and storage projects. Sadly, our current regulatory system doesn’t allow this clean energy to be delivered at high levels to the communities that want it.

It is now clear that it is past time to rethink whether Colorado should move beyond the monopoly (and near monopoly) structures that are keeping Colorado communities from decarbonizing their electricity as quickly and as cheaply as they could be. Recently, the city of Boulder conducted a “request for indicative pricing” and found that if the city could “go to market” (you know, like we do for everything from potato chips to cell phones) there is a significant number of providers willing to bring the city high levels of renewable energy in the early 2020s (e.g. 89%) at a cost well below that of Xcel Energy’s expected price.

In 2018, Xcel’s electricity generation in Colorado was still 73% fossil fuel — 40% coal and 33% natural gas. Xcel’s 27% renewable energy in Colorado in 2018 is better than it used to be, but it is still too little, too slow — and too expensive. Most recently, Xcel has brought on the Rush Creek Wind Project (without going to bid) at about $29/megawatt-hour when the price of competitively-bid wind farms would likely have been less than half of that.

By David Monniaux – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=308998

Since the beginning of this century, Xcel has been allowed to spend about $1.5 billion on new and old coal plants in Colorado — expenditures that are now widely recognized as mistakes. Clearly our current “regulated monopoly” system has not served the state well when we have made $1.5 billion of mistakes.Advertisement

Recently the Colorado Public Utilities Commission (which is supposed to protect ratepayers from Xcel’s monopoly power) has begun assigning accountability for Xcel’s mistaken investments in excess coal capacity. The PUC’s decision: 100% of the accountability goes to Xcel’s customers, who not only are expected to pay for the mistaken expenditures on coal, but also they are expected to pay Xcel its full level of profit on the mistakes. Clearly the Xcel-PUC system is broken.

Similarly, the city of Boulder has been trying for almost two decades to exercise its constitutional right to municipalize in order to reduce the carbon intensity of its electricity and make rapid progress in addressing the ravages of climate change. During this time, Xcel has done everything it can (which is a lot) to block Boulder’s progress. Most recently, Xcel has been allowed to back out of a property transfer agreement that Xcel and Boulder spent over a year negotiating, further delaying Boulder’s efforts to decarbonize its electricity supply. Again, it is clear the Xcel-PUC system is broken.

Outside of Xcel territory, much of rural Colorado is served by Tri-State, which also uses its power to keep communities from accessing the low-cost, low-carbon wind and solar that abounds in our state. In comparison, Holy Cross Electric, which serves the area around Aspen, set carbon reduction goals in 2018, and a few short months later they were able to enter into an agreement with Guzman Energy, which will take Holy Cross to almost 70% renewable electricity by 2021, without increasing costs. The difference is that Holy Cross was not served by Tri-State and was not hamstrung by the regulatory system that governs communities in Xcel’s territory.

While there are reforms that can be undertaken to improve the PUC’s regulatory process, it seems likely that the cumbersome regulatory system will not bring us optimal solutions — i.e., the most renewable energy at the lowest cost, the way a more competitive system would.

A group of citizen energy analysts from Boulder County, under the name of Energy Freedom Colorado (energyfreedomco.org) has prepared a white paper of options to help bring Colorado communities more energy options. The Community Energy Options analysis can be found on EFCO’s website, and citizens are working hard to bring these energy freedom options to Colorado.

Having witnessed the failures of Colorado’s regulated monopoly system, it now seems apparent that if Colorado allows market forces, competition and innovation to work, communities will be given more freedom to connect with our abundant low-carbon, Colorado-grown wind and solar electricity at the best possible prices.