Three groups filed petitions Monday asking the Colorado Public Utilities Commission (PUC) to reconsider its decision granting Xcel Energy approval of the company’s Colorado Energy Plan Portfolio (CEPP). The plan calls for a dramatic shift in generating capacity away from baseload hydrocarbons in favor of industrial wind and utility scale solar energy with some battery storage.
The Coalition of Ratepayers* (Coalition) joined the Intermountain Rural Electric Association (IREA) on its motion requesting reconsideration on grounds that the PUC disregarded accelerated depreciation costs that make the CEPP the “materially more expensive portfolio” despite Xcel’s promise to save ratepayers money.
The International Brotherhood of Electrical Workers Local #111 (IBEW) also asked for reconsideration citing the PUC failed to properly consider state law requirements that the impact of power plant closures on local communities be fully assessed.
With the now-approved CEPP Xcel plans to decommission roughly 660 megawatts of coal-fired generation at the Comanche Power Plant near Pueblo ahead of schedule and replace that capacity with more than 2,000 megawatts of wind turbines, solar panels and batteries.
When Xcel builds generating units federal tax law allows it to depreciate those assets over a number of years, which effectively lowers its taxes and increases profits to investors. But if Xcel shuts down Comanche 1 and 2 before the depreciation schedule is completed, the company won’t get to use that deduction to lower its tax bill, just as consumers who junk a car before it’s fully depreciated forfeit that tax advantage.
Xcel wants Colorado electric customers to pay the hundreds of millions of dollars in accelerated depreciation costs, but it didn’t want those dollars included when the PUC considered the CEPP because those additional dollars make the CEPP much more expensive.
Both IREA and the Coalition cried foul over the omission and urge the commission to reconsider its decision, be transparent, and consider all the costs folded into the CEPP.
Coalition expert Charles S. Griffey testified at the PUC hearing that the exclusion of the costs to ratepayers to pay back Xcel for that lost depreciation tax advantage “creates a shell game where approximately $175 million in net present value simply vanishes.”
When pressed at the hearing by PUC Commissioner Frances J. Koncijla to explain the exclusion, Xcel power plant economist Jon T. Landrum acknowledged Mr. Griffey’s points and then, instead of providing an economic argument for putting the burden on ratepayers, recursively said, “the reason I think that [accelerated depreciation cost should be excluded] is because this is the proposal that is before the Commission.”
According to Landrum, the PUC should simply exclude those dollars that customers will have to pay because that’s what Xcel asked for in the CEPP. The PUC ultimately agreed.
In its application the IBEW says “The Commission’s decision gives short shrift to its statutory obligation to consider employment and the long-term economic viability of communities in evaluating the proposed electric resource plan, paying little more than lip-service to the ‘jobs’ portion of the Clean Air, Clean Jobs Act.”
The IBEW says it was “sandbagged” by Xcel through procedural ploys that ignored the requirements of state law for reviewing community economic impacts.
David Wojick, Ph.D, of the Committee for A Constructive Tomorrow (CFACT) submitted public comments urging reconsideration of the decision. Wojick outlined a number of concerns related to the technical aspects of the CEPP, including the potential for “the risk of prolonged blackout under low wind, peak demand conditions.”
Wojick wrote, “Wind power cannot replace coal power for peak demand. The hottest and coldest periods create peak demand and these are often periods of low wind.”
He provided weather charts showing a 7-day heat wave in July, 2018 and a February cold snap where very few of the recorded wind speeds were high enough to generate any wind power.
“Replacing coal therefore requires wind plus storage, which the Public Service Plan does not have,” he added. “The only storage is for the solar component, not wind.”
“Moreover, the wind storage must be extensive, on the order of 4 to 5 days or more,” he continued. “The point is that this much storage is likely to be very expensive, probably prohibitively expensive, especially compared to using the existing coal plants.”
Wojick also pointed out that one of the major justifications used by the PUC, “exceptionally low bid prices from its competitive solicitation” makes dangerous assumptions about the ability of the winning bidders to complete the projects.
“It is a maxim of sound business that accepting ‘extremely low bid prices’ is always risky,” said Wojick. “In this case the risk is severe because lack of performance might mean a blackout.”
A decision by the PUC is expected within the next few weeks.
*Complete Colorado is a part of the Independence Institute, which is a member of the Coalition of Ratepayers