July 16 Colorado Energy Roundup: Sec. Jewell adds Colowyo Mine visit; renewable energy mandate upheld

July 16, 2015 by michael · Comments Off
Filed under: CDPHE, Environmental Protection Agency, Legal, preferred energy, renewable energy 

A week after the Department of the Interior declined to move forward with an appeal in the Colowyo Mine case, and facing mounting pressure to visit the northwest portion of Colorado during a scheduled trip to Aspen, Sec. Sally Jewell appears to have conceded to a meeting with county commissioners:

Moffat County Commissioner John Kinkaid said Wednesday that Jewell has added a meeting with northwest Colorado county commissioners to her itinerary Friday following her speech at the Aspen Institute.

“We look forward to meeting Secretary Jewell this Friday evening,” Kinkaid said. “I hope that she will be able to give us some assurances that our miners can keep working.”

He said he expected the meeting to include commissioners from Moffat and Rio Blanco counties, whose communities would bear the brunt of a mine closure. The meeting will take place in Glenwood Springs.

Jewell had come under pressure to visit the area after it was announced that she would deliver remarks Friday at the Aspen Institute, about a three-hour drive from Craig, where residents are alarmed about the future of the mine.

We’ll keep you posted on developments of the planned meeting.

***

Colorado’s preferred energy renewable mandate was upheld this week:

The mandate, which voters passed in 2004 and expanded in 2010, was challenged by the free-market advocacy group Energy and Environment Legal Institute. The group argued that the renewable energy requirements violate the U.S. Constitution.

The lawsuit claimed that the requirement that large utilities such as Xcel Energy get 20 percent of their electricity from renewable sources violates constitutional protections for interstate commerce.

The plaintiffs argued that because electricity can go anywhere on the grid and come from anywhere on the grid, Colorado mandate illegally harms out-of-state companies.

The 10th Circuit Court of Appeals in Denver disagreed. The three-judge panel ruled that the mandate does not wrongly burden out-of-state coal producers. The judges also pointed out that Colorado voters approved the mandate.

The full text of the ruling can be found here.

***

For those who do not think increased energy costs–whether from increased cost of supply of fuel, onerous regulations, or government picking (more expensive) energy winners–affect lower and middle income families in Colorado, a new examination of the state’s Low-Income Energy Assistance Program (LEAP) reveals how devastating even modest price increases in energy can be:

About 430,000 households in Colorado — 22 percent of all households — are eligible for federal energy assistance.

These households have incomes below 150 percent of the federal poverty level, or about $36,372 for a family of four.

About 13 percent of Colorado households are below the federal poverty line of $24,250 for a family of four.

The federal Low-Income Energy Assistance Program, or LEAP, administered by local agencies, provided $47 million for heating bills during the 2014-15 season.

The article laments that program has a low reach at the present time, with only 19 percent of those eligible receiving outreach.

But the article’s lede is buried–even small, incremental increases have a large and outsized effect on low-income folks given the portion of income they spend on energy:

Xcel, the state’s largest electricity utility, calculates monthly payments based on 3 percent of a household’s income.

Average households pay 2 percent to 3 percent for energy, compared with low-income households, which often pay as much as 50 percent.

“That leaves very little for food, clothing, medicine,” said Pat Boland, Xcel’s manager of customer policy and assistance.

“Once we get them in the door, we want to keep them in the door,” Boland said in a presentation.

According to the article, Black Hills reaches only 10 percent of those eligible within its system. It pays for the assistance by charging other ratepayers, and is considering a rate hike to cover the program, which is currently losing money. That hike, along with three other rate increases since 2008, make Black Hills among the most expensive electricity providers in the state, the Post article said.

***

Despite a quiet 2015, fracking is still maintaining a low boil on the backburner of the state’s energy debate, and there is every indication that it won’t be simmering any time soon, and Democratic Rep. Jared Polis told the Associated Press that options remain:

Polis said fracking could be on the 2016 ballot if state officials don’t further regulate the industry. He stopped short of saying whether he would organize the effort, but he wants lawmakers and regulators to adopt three proposals that weren’t formally recommended by the task force.

One would let local governments impose stricter rules than the Colorado Oil and Gas Conservation Commission, charged with regulating drilling statewide. Another would change the commission’s role from facilitating oil and gas development to simply regulating it. The third would set up a panel to resolve disputes between energy companies and local governments or property owners before they land in court.

It remains to be seen whether or not activists, with or without Polis’s sponsorship, pursue a strategy like they did in 2013, targeting friendly and even tossup municipalities with fracking bans and moratoria, or wait for statewide opportunities in the 2016 Presidential election cycle.

***

The Bureau of Land Management has closed off nearly 100,000 acres of federal land from future leasing:

The Bureau of Land Management rejected all 19 protests from conservation groups, the oil and gas industry and other interests in approving a new resource management plan for the Colorado River Valley Field Office.

The Colorado River Valley Field Office, in Silt, manages more than 500,000 acres of land and more than 700,000 acres of subsurface federal minerals in Garfield, Mesa, Rio Blanco, Pitkin, Eagle and Routt counties. The agency says the majority of the 147,500 acres with high potential for oil and gas production under the office’s jurisdiction are already leased and will continue producing under the plan.

The plan closes 98,100 acres for future leasing, including in the Garfield Creek State Wildlife Area near New Castle, areas managed for wilderness characteristics, areas of critical environmental concern, municipalities and designated recreation areas.

***

In addition to the endangered Colowyo Mine, another Colorado mine with 150 employees faces environmental review and possible closure:

A second Craig-area coal mine apparently also will have to undergo a remedial federal environmental review process if it hopes to avoid a shutdown based on a recent court order.

The Trapper Mine near Craig is now looking at going through the same kind of review currently underway in the case of the Colowyo Mine between Craig and Meeker following a federal judge’s ruling in May.

U.S. District Court Judge R. Brooke Jackson, in a suit brought by WildEarth Guardians, found that the federal Office of Surface Mining Reclamation and Enforcement illegally approved expansions of the two mines because it failed to provide public notice of the decisions and account for the environmental impacts.

The Trapper Mine faces discrepancies over permitted areas and coverage under filings with Judge Jackson, who did not impose a similar ruling as that issued for the Colowyo Mine.

In a notice filed last week to alert the court about the new information, the Trapper attorneys said they support doing remedial environmental analysis involving the Trapper Mine after the Colowyo review is done.

Bob Postle, manager of the program support division for the OSMRE’s western region, said the notice has “just been filed, and we’re now working through how we’re going to address it.”

Given the discrepancies, it isn’t clear at this moment whether a new or remedial environmental review is necessary, according to Trapper’s legal counsel.

***

In a meeting with Republican Senator Cory Gardner, western slope businesses and entrepreneurs described facing onerous regulatory burdens imposed by DC bureaucrats:

A Moffat County sheepherder, Delta hardware shop owner and Grand Junction manufacturer all walked into a meeting Friday with U.S. Sen. Cory Gardner, R-Colo., each with much the same punchline in mind.

The common theme: The federal government is reaching too far into their businesses, discouraging them from seeking out new ways of doing business and growing.

Constraining regulations have “taken the creativity out of business,” Jim Kendrick, owner of Delta Hardware, told Gardner. “The move is to make us all do business the same way. That’s stifling growth.”

Gardner met with two dozen western Colorado business and economic leaders at Colorado Mesa University in hopes of finding ways to improve the state’s sputtering rural economy.

“I spend all my time on regulatory compliance and none of it on product development,” one Department of Defense contractor said. That would result in pushing more business to bigger vendors able to hurdle all of the regulatory red tape due to a larger staff.

Regarding HB 1365, Here Are Two Numbers To Remember

December 13, 2010 by williamyeatman · Comments Off
Filed under: Archive, HB 1365 
  • $8
    Doesn’t anyone remember the summer of 2008 when natural gas prices spiked to $8 dollar/mmbtu? Currently, coal supplies almost 70% of Xcel’s electricity portfolio; In 2018, thanks to the Clean Air Clean Jobs Act, coal will supply less than half, while natural gas’s share will increase to more than 40%. The upshot is that Xcel customers will be on the hook for a lot more natural gas. In addition to costing more than three times coal, natural gas prices historically have proven much more volatile than coal prices.
  • $210 million
    Doesn’t anyone remember when Xcel energy spent $210 million on state-of-the-art sulfur dioxide pollution controls on Cherokee 2, 3, and 4 in 2001? Last week, the PUC approved an HB 1365 implementation plan that would retire these plants early, despite the $210 million pollution controls installed nine years ago. The upshot is that Xcel ratepayers are now on the hook for the full cost of these capital expenditures, for which they received only half of the value (due to the early closure of these plants). That’s a waste of roughly $100 million.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute.

Heading into HB 1365 Crunch Time, A Rundown of Who Is Hoping for What

December 7, 2010 by williamyeatman · Comments Off
Filed under: Archive, HB 1365 

As reported yesterday by Mark Jaffe in the Denver Post, the PUC on Monday partially ruled on Xcel’s HB 1365 implementation plan. Nothing controversial was determined; instead, the PUC approved elements that were common to all of the plans “on the table.”*

The disputed subject matter was left for today—namely, what is to be done with the 352 megawatt Cherokee 4 plant in Adams County?

Heading into crunch time, here’s a rundown of who wants what and why.

What Xcel Wants:

Xcel has two goals. First, it wants to build as much stuff as possible. The more it builds, the larger the expenditures on which it can reap a 10.5% rate of return. Xcel’s second goal is to seize an increased share of the wholesale electricity market at the expense of independent power producers. Currently, Xcel generates 50% of the power it sells, and it wants to increase that figure to 60%.

In order to furthest advance these goals, Xcel wants to retire Cherokee 4, and in its stead build a 314 megawatt 1×1 combined cycle natural gas plant in 2017. That way, Xcel would get a 10.5% return on the construction costs of building a $345 million new gas plant AND it would increase its share of the wholesale electricity market by almost 140 megawatts (assuming Xcel converts the 1×1 combined cycle plant into a 2×1 combined cycle plant, as it has said it intends to do). This strategy is embodied in Plan 6.2J.

Read more

Can CDPHE Be Trusted To Measure Ozone?

November 23, 2010 by williamyeatman · Comments Off
Filed under: Archive, CDPHE, HB 1365 

Earlier this month, I asked whether CDPHE (a.k.a., “the Department”) is cooking the books on Colorado ozone. In particular, it struck me as suspicious that the Department used data from 2006, an anomalously active wildfire season, as inputs for models used to project ambient air concentrations of ozone through 2020. You can read all about it here, but in a nutshell, wildfires inflate ozone, so the CDPHE’s use of the second-most active wildfire season on record as a constant in an ozone model is inappropriate…unless, of course, it was trying to exaggerate the threat of a federal crackdown on air quality in order to, say, pass legislation that mandates fuel switching, like HB 1365. Remember, the Denver-area’s non-attainment for federal ozone regulations was a major reason put forth by the Ritter administration in support of Clean Air Clean Jobs Act.

**Here’s the Wikipedia entry on ozone; for this post, all you need to know is that nitrogen oxides (NOx) are a primary precursor for the creation of ozone

In the two weeks since I wrote that post, I’ve become even more suspicious of the CDPHE’s ozone practices. Here’s why. On page 1-4 of the “2015 and 2020 Ozone Projections for the Denver Area,” ENVIRON (the modeling company) explains that input data for NOx emissions was provided by the Department. On page 2-24, EVIRON states that NOx emissions from point sources were projected to increase 23% by 2015 and 46% by 2020. So CDPHE told the modelers that NOx was expected to increase in Colorado.

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HB 1365 Update: Independent Power Producers Pitch a Plan That Is Sure To Be Ignored

November 5, 2010 by williamyeatman · Comments Off
Filed under: Archive 

Primer on HB 1365
Primer on HB 1365 Plans Now in Play
Study on the Dubious Foundations of HB 1365
Archive of HB 1365 Posts

Independent Power Producers Pitch a Plan That Is Sure To Be Ignored

In the course of PUC deliberations on HB 1365, there’s been a long running dispute between Xcel and independent power producers (electricity generators that compete with Xcel on the wholesale power market) over whether the utility must consider implementation plans put forth by the IPPs. In a nutshell, Xcel isn’t interested in hearing the IPPs’ input, because an important part of Xcel’s strategy is to increase its market share at the expense of IPPs.

Xcel has a veto over whichever HB 1365 implementation plan the PUC ultimately adopts, so it seems like a waste of time to consider an IPP plan that is sure to be opposed by the utility. Nonetheless, Commissioner Matt Baker requested to hear the IPP proposal.

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Review of November 3 PUC Hearing on HB 1365: Xcel Axes Coal, Environmentalist Plans

November 3, 2010 by williamyeatman · Comments Off
Filed under: Archive 

Review of November 3 PUC Hearing on HB 1365

Primer on the Many Implementation Plans that the PUC Is Considering
Primer on HB 1365
Timeline of Implementation Plans
Study on the Dubious Foundations of HB 1365
Archive of HB 1365 Posts
Oped Last Week in Denver Daily News: Ritter’s Phantom Carbon Tax

Xcel Identifies Which Plans It Would Accept

As I noted this morning, HB 1365 gives Xcel the power to veto any of the twelve implementation plans being considered by the PUC. This afternoon, Xcel Vice President of Rates and Regulatory Affairs Karen Hyde identified those plans that are “off the table.”

Here are the plans that have been dropped.

  • Plans 2A & 4C: Ms. Hyde said that Xcel would not consider these two plans because they both would install top of the line nitrogen oxides pollution controls on the 152 megawatt Cherokee 3 coal fired power plant northwest of Denver, instead of closing the plant down. According to Xcel, the pollution controls are less cost-effective than shuttering the plant. This is malarkey. The real reason that Xcel rejected Plans 2A and 4 C is that they only allow for 314 megawatts of replacement electricity generation powered by natural gas.  The utility wants to build at least 650 megawatts of replacement generation, so that it can increase its share of the wholesale electricity market, at the expense of independent power producers.
  • Benchmark Plan 1: This is the plan endorsed by coal interests. It would install pollution controls at eight coal fired power plants. Xcel has long indicated that it finds Benchmark Plan 1 unacceptable.
  • Benchmark Plan 1.1: This is a version of Benchmark 1. It would install pollution controls at five coal fired power plants.
  • Plan 6H: This is Western Resource Advocates’ plan. I discussed this plan in Saturday’s update. Like Benchmark Plan 1, Xcel has long indicated that it would reject WRA’s plan, due to reliability concerns.

Read more

Preview of November 3 PUC Hearing on HB 1365

November 3, 2010 by williamyeatman · Comments Off
Filed under: Archive 

Primer on the Many Implementation Plans that the PUC Is Considering
Primer on HB 1365
Timeline of Implementation Plans
Study on the Dubious Foundations of HB 1365
Archive of HB 1365 Posts
Oped Last Week in Denver Daily News: Ritter’s Phantom Carbon Tax

CDPHE Clears Xcel’s Two New Fuel Switching Plans

Before the PUC can “approve, deny, or modify” Xcel’s HB 1365 implementation plan, the Colorado Department of Public Health and Environment must certify that the plan would meet “reasonably foreseeable” state and federal air quality regulations. Monday evening, the CDPHE filed supplemental testimony stating that Xcel’s two new fuel switching plans are HB 1365-compliant.

PUC Refuses To Reconsider Admissibility of Xcel’s New Version of Its Old Preferred Plan

As I noted in yesterday’s PUC hearing preview, Chairman Binz had promised to revisit his “tentative” decision to allow Xcel to put forth an accelerated version of its preferred plan, despite strong opposition from the PUC Staff. [N.B. confused about all these plans? Click here.] Yesterday morning, Chairman Binz asked Commissioner James Tarpey and Commissioner Matt Baker whether they wanted “to clarify the lay of the land,” referring to a reconsideration of Xcel’s new version of its old preferred plan. Commissioners Baker and Tarpey demurred.

Hearings Ended Yesterday

Cross examination of direct and rebuttal testimony ended yesterday early afternoon. That ends this round of hearings. Hearings will resume on November 18. Chairman Binz announced a new November schedule,

  • November 9: Direct testimony on Xcel’s four new HB 1365 implementation plans is due.
  • November 15: Rebuttal testimony is due
  • November 18-20: The next round of hearings.

Why Is the PUC Meeting Today?

HB 1365 gives Xcel the right to withdraw its plan (i.e., the right to walk away) if it “disagrees with the [PUC’s] modifications.” This is essentially a veto power.

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Confused about All Those HB 1365 Plans? Then This Post Is for You!

November 1, 2010 by williamyeatman · Comments Off
Filed under: Archive 

There are at least twelve HB 1365 plans being considered by the PUC, and it can get very confusing trying to follow them all. But don’t fret—I’ve done the work for you! Here’s a handy primer on the plans now in play.

HB 1365 Requires a Plan, Not Action

HB 1365, the Clean Air Clean Jobs Act, requires Xcel to propose a plan by August 15 2010 that would:

  • Meet “reasonably foreseeable” state and federal air quality regulations.
  • Achieve at least 70% reductions in nitrogen oxides emissions from at least 900 megawatts of coal fired power plants.
  • Be implemented by December 31, 2017

The PUC must approve, deny, or modify Xcel’s proposed plan by December 15, 2010, but only after the Department of Public Health and Environment (“CDPHE”) determines that the plan would meet “reasonably foreseeable” air quality regulations.

The legislation gives Xcel the right to withdraw its plan if it “disagrees with the [PUC’s] modifications.”

Xcel’s Preferred Plan

During the spring and summer months, Xcel formulated nine possible scenarios to comply with HB 1365. On August 13, after performing an economic analysis of the nine potential plans, the utility chose one—Plan 6.1E—as its preferred strategy. For a review of Plan 6.1 E, click here.

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[1:05 PM Update] November 1 PUC Hearing on HB 1365: PUC Rebuffs Peabody’s Request for Shortened Response; CDPHE Determination Not Expected till 5 PM

November 1, 2010 by williamyeatman · Comments Off
Filed under: Archive 

[N.B. The PUC quickly addressed the items I noted in this morning’s preview]

PUC Rebuffs Peabody’s Request for Shortened Response

As I noted this morning, Peabody Energy last Friday filed a motion to dismiss the proceeding. The coal company requested that the PUC require parties to respond to the motion by tomorrow (November 2), in order to expedite a final decision, but the PUC this morning set November 15 as the response deadline. Chairman Ron Binz promised to “do all I can to have a decision [on the motion] by the resumption of hearings” on November 18.

Three Plans Remain in Limbo

Also this morning, Chairman Binz indicated that the Colorado Department of Public Health and Environment will wait until 5 PM to file its determination on whether Xcel’s two new fuel switching plans [Plan 6E FS and Plan 6.1E FS—see the “Crash Course” below] comply with all “reasonably foreseeable” air quality regulations. If the CDPHE finds that the plans do not meet reasonably foreseeable air quality regulations, they will be discarded.

Finally, Chairman Binz said that the PUC will not take up the admissibility of Plan 6.2 J [this is an accelerated version of its preferred plan—see “Crash Course” below] until the PUC receives the CDPHE’s determination on the two fuel switching plans. Last week, the PUC agreed to “tentatively” consider Plan 6.2 J, even though the PUC Staff said that it wouldn’t have enough time to review the plan, and therefore recommended that it be removed from consideration.

Read more

Preview of November 1 PUC Hearing on HB 1365

November 1, 2010 by williamyeatman · 1 Comment
Filed under: Archive 

HB 1365 Primer
Timeline
Archive of Posts on HB 1365 PUC Hearings
Policy Paper on Dubious Foundations of HB 1365

Crash Course on Xcel’s New HB 1365 Implementation Plans

[N.B. I am repeating this refresher on Xcel’s new plans because I think it’s a handy reference]

Xcel last week proposed four alternative plans to comply with HB 1365, after its original plan was vacated by the PUC on October 21. The four alternative plans are similar. They all call for the retirement of four coal plants and top-of the line pollution controls for three others. A primary difference among them is their respective treatment of the 351 megawatt Cherokee 4 coal fired power plant located in northwest Denver. In particular,

  • Plan 5B would install top of the line nitrogen oxide controls at Cherokee 4 by 2017
  • Plan 6.2J would replace Cherokee 4 with new gas generation by 2017
  • Plan 6E FS would fuel switch at Cherokee 4 by 2017, and then replace it with a new gas plant by 2018
  • Plan 6.1E FS would fuel switch at Cherokee 4 by 2017, and then replace it with a new gas plant by 2022.

CDPHE Will Determine Today Whether Xcel’s New Few Switching Plans Are HB 1365 Compliant

Under HB 1365, the PUC must approve, deny, or modify Xcel’s proposed implementation plan by December 15, 2010, but only after the Department of Public Health and Environment (CDPHE) determines that the plan would meet “reasonably foreseeable” air quality regulations. Last Tuesday, CDPHE witness Paul Tourangeau testified that Xcel’s recommended Plan 5B and Plan 6.2J would meet all reasonably foreseeable air quality requirements, but he said that his office was still assessing the two fuel switching plans (Plan 6E FS and Plan 6.1E FS). The CDPHE is expected to make its determination on the fuel switching plans today.

Ruling Expected on Accelerated Version of Xcel’s Preferred Plan

Last Thursday, the PUC staff requested that the PUC “whittle down” Xcel’s four new implementation plans, in order to make it easier to accommodate the very tight timeframe set by HB 1365. Specifically, the PUC Staff asked the PUC to excise Xcel Plan 6.2 J, an accelerated version of Xcel’s original, preferred plan, because it did not have the time to analyze it. At the strong urging of Commission Matt Baker, the PUC “tentatively” sided with the utility, and agreed to consider the new plan. However, a final determination on 6.2J is expected today.

Decision Due on Peabody’s Motion To Dismiss Proceedings

On Friday, Peabody Energy filed a motion for the PUC to dismiss the proceeding, “because to continue in its current posture would violate the Act (HB 1365, the Clean Air Clean Jobs Act), basic principles of due process, and the Commission’s own regulations.” The coal company argues that Colorado lawmakers intended for Xcel to submit one—and only one—proposal to implement HB 1365, which the utility did on August 13. This original plan, however, was scuttled by the PUC on October 21, because it violated a deadline in HB 1365. Thus stymied Xcel last week presented a new “recommended” plan in addition to three new alternative plans [see “Crash Course” at top]. Peabody contends that PUC would be acting arbitrarily by considering a second implementation proposal, due to the fact that the law only allows for one.

On Saturday morning, PUC Chairman Ron Binz indicated that the Commission would rule on Peabody’s motion by today.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute, a free market think tank in Washington D.C.

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