Business/Economy, Energy, Environment, Exclusives, Legal, Original Report, Scott Weiser, Uncategorized

Xcel Energy seeking a Colorado rate hike to fund grid wildfire maintenance

DENVER–Xcel Energy is asking the Public Utilities Commission (PUC) to allow it to increase customers’ electric bills to pay for legally-required maintenance of its power lines and rights of way to reduce the potential for power line-caused wildfires in Colorado.

Responding in part to the bankruptcy of California’s largest public utility, Pacific Gas & Electric (PG&E) after the deadly 2018 Camp fire in Northern California, Xcel created a Wildfire Mitigation Plan (WMP) to take a closer look at how it can avoid starting wildfires with its power lines.

The WMP includes “accelerated and enhanced equipment, repair, and replacement, system protection and wind strength modeling programs, and asset data gathering; system protection enhancements; expanded and incremental vegetation management; metrics, tracking and reporting; community and stakeholder outreach; and ongoing assessment of other activities for future consideration.”

Even as electricity rates continue to rise due to Xcel’s Colorado Energy Plan and Governor Polis’ 100% renewable energy mandate, the PUC previously approved a $10.7 million charge to customers for both capital improvements and operations and maintenance for wildfire mitigation efforts as part of a 2019 rate hike. Now Xcel is asking for a $17.1 million increase to cover the costs for 2021 and is asking for future rate hikes to fund its plan into the future.

A 2017 report by the Denver-based Independence Institute* stated that from 2006 through 2015, Xcel’s profits “increased 93.89% and profit margins have increased from 12% in 2006 to nearly 22% in 2016. The report notes that “profits per ratepayer increased a staggering 76.7 percent from $178.09 in 2006 to $314.75 in 2016.”

Xcel’s 2019 annual report showed earnings per share for investors at $2.47 and dividend payouts of $1.62 per share.

On June 16, PG&E CEO and President Bill Johnson pled guilty on behalf of the company to one count of unlawfully starting a fire and 85 counts of involuntary manslaughter for the massive Camp fire that killed residents and wiped out the town of Paradise. An investigation determined that faulty equipment that had not been properly maintained, some for nearly 100 years, was responsible for starting the fire.

The bankruptcy settlement includes $25.5 billion in financial losses to victims, insurance companies and public entities and includes damages for other fires in 2017 and 2018. According to a 2019 report in the Wall Street Journal, PG&E power lines have caused more than 1,500 fires from 2014 to 2017. Critics of PG&E claimed that the company had been ignoring maintenance to enhance profits for decades.

Regarding its request for a rate increase rider, Xcel says “There is no book on specifically how to do this, and utility wildfire mitigation plans are the product of an emerging field that does not yet have a uniform set of codes and standards.”

But there has always been a basic standard for power line safety, and forest fires caused by power lines are not a new phenomenon.

Colorado public utility regulations require power companies to inspect equipment and distribution lines, “in such manner and with such frequency as is in accord with good practice, in order that the same may be maintained in proper condition for use in rendering safe and adequate service.”

More specifically regulations state, “Each pole, post, tower or other structure used for the support or attachment of electrical conductors, guys, or lamps, must be inspected by the utility owning or using it with sufficient frequency to determine the necessity for replacement or repair.”

As part of the plan as filed with the PUC in 2019, Xcel inspected “more than 2,900 miles of electric transmission line,” analyzed “801 transmission structures for extreme loading conditions,” and replaced “more than 2,300” of 66,680 wood distribution poles.

The authorization to bill customers for the ongoing WMP is “expected allow the Company timely recovery of eligible distribution capital expenditures and O&M expense above the level included in base rates through 2025, associated with implementing approved WMP programs and activities,” according to Xcel.

Claiming that the rate increase rider is “in the public interest,” Xcel writes in the petition, “The activities associated with the Company’s WMP will be critical in the coming years to ensure the safety and reliability of Public Service’s system in the face of the growing threat posed by wildfires in Colorado.”

Left unanswered is the question of the responsibility of power companies under Colorado laws and regulations to regularly inspect and maintain their facilities as a part of the ordinary costs of doing business rather than as additional costs imposed on ratepayers.

The PUC has not yet set the petition for a public hearing. Citizens and customers have the right to attend such meetings and submit comments in writing. Information on how to do so can be found at the PUC website.

*Complete Colorado is a project of the Independence Institute.

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