March 3 Colorado Energy Cheat Sheet: EPA’s McCarthy ‘good news about Gold King’; a Tesla will improve your ‘quality of life’
Filed under: Environmental Protection Agency, Legal, National Renewable Energy Laboratory, PUC, renewable energy, solar energy, wind energy
Environmental Protection Administrator Gina McCarthy: “But, the good news about Gold King is that, you know, it really was a bright color, but the bright color was because the iron was oxidizing. It meant we had actually less problem than how it usually leaks, [laugh] which is pretty constantly, and so it was only a half a day’s release of what generally comes from those mines and goes into those rivers.”
The Daily Caller’s Michael Bastasch had more on the story:
The EPA-caused spill unleashed the equivalent of “9 football fields spread out at one foot deep” for a couple hours, according to a report by University of Arizona researchers.
Mine waste from Gold King was only coming out at a rate of 112 gallons per minute in August 2014. After the spill, wastewater was coming out at a rate of 500 to 700 gallons per minute.
While there have thankfully been no reported short-term health problems from the spill, experts are worried the toxic metals, like arsenic and lead, that leaked from the mine could pose long-term health problems.
“There is a potential for such sediments to be stirred up and metals released during high water events or recreational use,” University of Arizona researchers wrote. “The metals could become concentrated in fish that live in the river and feed on things that grow in the sediments. Metals in the sediments could seep into the groundwater, resulting in impacts to drinking and irrigation water.”
And the question of culpability for the EPA remains, as a House committee finds additional evidence implicating the agency directly:
House Natural Resources Committee Chairman Rob Bishop, R-Utah, cornered Interior Secretary Sally Jewell Tuesday over an email he says contradicts her statements that a toxic mine spill the Environmental Protection Agency caused last year in Colorado was an “accident.”
The mine blowout released 3 million gallons of heavy-metal-tainted water into the Colorado Animas River and the waterways of New Mexico and Utah. Bishop’s committee recently subpoenaed the Interior Department in February to provide it with email communications between Interior and the Army Corps of Engineers.
Much of what they received back was completely redacted, Bishop said. But one email that Interior sent to the panel, unrelated to the subpoena, was revealing.
The email shows “that less than 48 hours after the blowout, your employee in Colorado talks to the EPA official in charge, and then emails all senior leadership at [the Bureau of Land Management], and basically says that EPA was deliberately removing a small portion of the plug to relieve pressure in the mine when the blowout occurred.”
ICYMI: Energy Policy Center associate analyst Simon Lomax’s latest column:
It was a rare moment of honesty from an environmental activist: “It is not easy to talk about the kind of massive changes that we need to make; about how we think, about what we eat, where it comes from, how we entertain ourselves, what kind of holidays we take,” said Kumi Naidoo, former executive director of Greenpeace International. “All of these things actually are very painful to talk about.”
Naidoo, who led Greenpeace for six years before departing late last year, made these remarks in mid-February at a climate-change forum in Germany. He was answering the question of an Icelandic official, who wanted to know why governments aren’t doing more to crack down on “meat consumption,” and other economic excesses that produce greenhouse gases. “We have to change the way we consume,” the official concluded at the end of her question.
On the same panel, three seats across from Naidoo, sat U.S. Sen. Sheldon Whitehouse (D-R.I.). As the former Greenpeace activist wrapped up his answer, the American lawmaker saw his climate and energy talking points going up in flames, and tried to get back on message.
“Let me just push back very gently on one point,” Whitehouse said, in comments first reported by The Harry Read Me File. “I don’t want to leave the impression that mankind must suffer in order to make these changes. The changes in consumption can actually be enjoyable and beneficial.”
Then he offered an example: “If you trade in your Mercedes for a Tesla, your quality of life just went up.”
Read it all here.
Have not had much on wind energy in a while, and the latest headline is somewhat revealing–wind sources acknowledge their lethal impact on birds, and propose to use technology to shut them down whenever a bird is nearby, making the energy source even more erratic and intermittent, not to mention the wear and tear of stop/start on the turbines themselves:
What if a wind turbine knew to shut down when a bird was too close? That vision is the goal of ongoing research in Golden, and birds themselves are helping to develop a solution.
The National Renewable Energy Laboratory has been conducting avian research alongside various industry partners to drastically reduce avian deaths by wind turbine collisions.
Colorado has 1,916 operating wind turbines statewide, placing it eighth in the nation for the number of turbines within a state.
Although those wind turbines accounted for only a small percentage of bird deaths annually, Jason Roadman, a technical engineer for NREL said that percentage should be zero.
“Renewable energy is something that I and a lot of people strongly believe in, so we want to make it as low impact as possible,” Roadman said. “The rates of wild bird collisions are fairly low on these solar-wind farms, but they’re not zero. So anything we can do to reduce the footprint of the negative effects of alternative energy, we’ll make every effort toward.”
Leaving the question of turbine resiliency and energy generation fluctuation aside, the admission that such measures are necessary to alleviate the threat to birds, including the heavily protected eagles and other raptors, is quite a step from a few years ago, when wind proponents minimized any such concern and sought takings extensions to prop up one of the industry’s most glaring shortcomings.
To say it’s been a rough 18 months for oil and gas would be an understatement, and the effect of the drop in commodities prices is being reflected in new figures from local businesses and communities:
Anadarko Petroleum Corp., one of the biggest oil and gas companies working in Colorado, will have only one drilling rig operating in the state during 2016 — down from an average of seven in 2015.
The Texas company (NYSE: APC), based in The Woodlands, a suburb of Houston, on Tuesday followed its peers by releasing budget figures and plans for 2016 that are a far cry from last year.
Hammered by a bust in oil and gas prices brought on by an international glut in supplies, oil and gas companies have slashed budgets, laid off employees and sold assets in the struggle to survive.
Anadarko, which has operations in the U.S. and around the world, said Tuesday it expects to spend between $2.6 billion and $2.8 billion this year, down nearly 50 percent from its 2015 budget.
About half that money, $1.1 billion, will be spent in the United States, and about half that amount — approximately $500 million — spent in the Colorado’s Denver-Julesburg Basin during 2016, according to the company.
By comparison, Anadarko said a year ago it expected to spend about $1.8 billion on its Colorado operations in 2015.
Cuts like Anadarko’s have already manifested in places heavily involved in natural resource development, like northern Colorado’s Weld County:
Weld County’s economy appears to have entered a hard skid, now confirmed by larger-than-expected downward revisions to the number of people employed in oil and gas and mining statewide.
Preliminary employment counts last month estimated the county gained a net 3,800 payroll jobs between December 2014 and last December.
But revisions based on the Quarterly Census of Employment and Wages for the third quarter from the Colorado Department of Labor and Employment out Wednesday now project the county lost 500 jobs last year.
“It is playing out as we expected. It has just been more delayed than expected,” said Brian Lewandowski, associate director of the business research division at the University of Colorado at Boulder’s Leeds School of Business.
Weld County accounted for about 90 percent of the state’s oil production last year, and oil and gas producers account for about three-quarters of employment in the mining sector, Lewandowski said.
Mining has also been hit hard:
The QCEW revisions show what was initially measured as a modest 3.9 percent year-over-year decline in mining employment is running closer to a 20.7 percent drop.
Viewed another way, the loss of 1,400 mining sector jobs last year is now estimated at closer to 7,500, a nearly fivefold increase.
And while the number crunchers characterize the information as “delayed”–due to being lagging indicators following the commodity prices dropping–the impact was within a year, not a much longer or slowed trend that plays out over time.
A similar downturn has already been seen in severance taxes in the same area, as we noted a month ago in the Cheat Sheet:
Pushing for bans on fracking or other measures to limit responsible natural resource development will only exacerbate problems at the local level, putting education, infrastructure, and other critical services at risk, on top of the drop noted here in the Denver Post due to commodity prices tanking:
Because 97 percent of Platte Valley’s budget comes from taxes paid on mineral production and equipment — a property tax known as ad valorem — McClain said his district could be looking at a budget reduction between $300,000 and nearly $1 million next school year.
How that plays out in terms of potential cuts or program impacts is yet to be seen, he said.
“You’re always concerned about your folks,” McClain said. “You worry about it taking the forward momentum and positivity out.”
It’s not just schools that are suffering. Municipal budgets, local businesses and even hospitals in mineral-rich pockets of Colorado are watching closely to see how long prices remain depressed.
Combine that with a 72.3 percent drop in severance tax revenue–down to $77.6 million this year compared with $280 million last fiscal year–and you’ll get, in the words of the Post, “the state’s direct distributions of those proceeds to cities, counties, towns and schools will be reduced from a little more than $40 million in 2015 to just $11.9 million this year.
Xcel Energy filed a new renewable energy plan with the Colorado Public Utilities Commission Monday that could more than double its portfolio of solar power in the state over the next three years.
“Our plan is all about our energy future in Colorado, and allowing our customers to choose and pay for the energy sources that they believe are best for them,” David Eves, president of Public Service Co. of Colorado, said in a statement.
The plan would add 421 megawatts of new power from renewable sources, enough for 126,300 homes, over the next three years. The bulk of that amount, 401 megawatts, would come from solar.
Xcel Energy, which currently obtains more than 22 percent of its power from renewable sources, said it is on track to meet or beat the state mandate of 30 percent from renewable sources by 2020.
The solar industry, however, is not impressed with Xcel, saying the utility should do more to encourage distributed generation:
But one leading solar advocate questioned the utility’s sincerity, given that Xcel, in a separate rate case, has asked for cuts to what it pays customers who put solar power onto the grid.
“Xcel’s view of the energy future is not the only one that Coloradans should consider. The public really needs to have a say here,” said Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association.
Xcel currently offers to take on 2 megawatts of additional solar power at the start of each month, but that capacity is reserved within 15 to 20 minutes.
“We don’t think there should be an allocation, a ‘Mother may I have some capacity’ system,’ ” Cantwell said. “The industry is ready to play a much bigger part in Colorado’s energy future.”
Solar remains captive to the need for government mandates, rebates, handouts, and incentives to spur growth beyond the natural market preference of customers desiring to install the preferred energy source. The cost of panels may be declining (again, due in no small part to taxpayer-funded R&D grants, state and federal mandates, and other subsidies), but the cost of a system remains daunting.
If you have any doubt about the extent of government programs to encourage solar and other renewables, take a look of this list compiled by the Department of Energy. It lists 129 programs for Colorado alone.
As for the resources necessary for renewables and battery storage, here’s a new report from the Institute for Energy Research, as they show that renewables increase dependency on foreign sources:
One of the common reasons people claim to support wind and solar technologies is to reduce dependence on foreign sources of energy. For example, green energy supporter Jay Faison told the Wall Street Journal “If we expand our clean energy technologies, we’ll create more jobs, reduce our dependence on foreign sources of energy…”[i] The problem is that green energy actually increases reliance on imports instead of reducing imports.
Green energy technologies are dependent on rare earth minerals and lithium for batteries–both of which are primarily imported into the United States. Most of the world’s rare earth minerals are produced in China (85 percent); and that country supplies the United States with most of its rare earth imports (71 percent). The United States only produces 24 percent of the rare earth minerals that it needs.[ii] In 2013, the United States imported 54 percent of the lithium it used, with Chile and Argentina supplying 96 percent of those imports.[iii] Some believe that lithium may be the “new oil”, eclipsing oil as a source for geopolitical and economic power.[iv] Clearly, Tesla, who is building a gigafactory in Nevada to produce lithium-ion batteries for its cars and Powerwall storage device, needs access to low-cost lithium. In contrast to these figures, the United States now imports only 27 percent of the oil it uses domestically.[v]
And about that reliability argument:
Green energy is so unreliable and intermittent that it could wreck the power grid, according to industry and government experts.
The U.S. Federal Energy Regulatory Commission (FERC) is currently investigating how green energy undermines the reliability of the electrical grid. FERC believe there is a “significant risk” of electricity in the United States becoming unreliable because “wind and solar don’t offer the services the shuttered coal plants provided.” Environmental regulations could make operating coal or natural gas power plant unprofitable, which could compromise the reliability of the entire power grid.
“The intermittency of renewable sources of electricity is already threatening reliability in Britain,” Myron Ebell, director of the Center for Energy and Environment at the libertarian Competitive Enterprise Institute, told The Daily Caller News Foundation. ”This is because there are so many windmills that conventional power plants are being closed as uneconomic and so when the wind doesn’t blow there is not adequate backup power available. To avoid blackouts, the government is now paying large sums to have several hundred big diesel generators on standby. If this sounds crazy, it is.”
Growing transmission costs for wind-generated electricity have prompted Xcel Energy to seek approval for rate hikes to smaller utilities using Xcel’s transmission lines to reach their consumers:
Xcel wants the utilities to pay for its costs associated with having supplies of reserve power ready to go in case the wind suddenly dies, said Terri Eaton, Xcel’s director of federal regulatory and compliance efforts.
Currently, those costs are paid by Xcel’s business and residential customers, Eaton said.
If the transmission lines customers can supply their own back-up power supplies, they wouldn’t be charged under the proposed rates, she said.
Readily available, back-up power supplies are critical to keep the transmission grid in balance and avoid blackouts that can occur when a big source of power suddenly disappears, Eaton said.
Xcel’s hikes would hit rural cooperatives and other utilities should the Federal Energy Regulatory Commission approve the rate hike at the beginning of 2015.
But what, exactly, does Eaton mean when she refers to “reserve power ready to go in case the wind suddenly dies”?
“We’ve seen some dramatic wind fall-offs in really short periods of time,” Eaton said.
Xcel has already experienced such falls offs, when “several hundreds of megawatts of wind” drops dramatically — and swiftly — due to changes in the wind, she said.
“Sometimes the wind is just howling, and an hour later the wind has calmed — and it’s in those circumstances that we need to have reserves available to pick up the load,” Eaton said.
In such cases, backup power supplies typically come from natural gas-fueled power plants, she said.
The tariff proposed by Xcel would help cover the costs when the wind “suddenly dies.”
The intermittency of wind has been widely discussed, and no amount of forecasting or improved efficiency will spin a wind turbine’s blades if the wind isn’t blowing.
In 2012, a study examined wind generation in Illinois at the height of a summer heat wave, when energy demands rise to yearly highs. The author found that just 5 percent of installed wind capacity was available during that outbreak of record temperatures, and at times, “virtually nonexistent.”
Earlier this year, wind energy proponents touted the example provided in Texas–wind had saved the day. But a closer examination of the figures from the Electric Reliability Council of Texas (ERCOT) demonstrated that contrary to claims that wind had bailed out conventional sources of electricity by ensuring grid reliability, wind had actually fallen so substantially that Texas turned to other sources to meet the extra 1,000 megawatts of demand on January 6. Both scheduled and unscheduled plant closure elsewhere had left Texas with a gap during a record cold snap, a gap that wind was unable to fill.
As the Institute for Energy Research wrote in January, only 3.2 percent of the energy needs of the Texas grid operated by ERCOT came from wind, while 83 percent of Texas wind turbines “were unavailable during peak demand.”
ERCOT itself continues to rate its “wind power at 8.7 percent of its installed capacity” for 2014 during the periods of highest demands, which typically occur in mid-to-late summer. For nearly 12,000 megawatts of installed wind capacity, only 990 megawatts are considered reliable for forecasts computed by ERCOT for 2014. That’s like having the equivalent of 12 1,000 megawatt power plants built and only 1 online when summer energy demand spikes.
As a percentage, ERCOT figures wind to provide just 1.3 percent of the total amount of energy it needs this summer, rising to 2.2 percent by 2017 according to its own projections.
As for Colorado, under Senate Bill 252, rural cooperatives must reach 20 percent renewable energy by 2020.
Tri-State Generation and Transmission Association spokesman Lee Boughey acknowledged the rising costs of integrating ever-greater amounts of intermittent energy supplies like wind.
“As more intermittent resources are added in the region, we understand the need to address the higher costs of integrating and balancing power,” Boughey told the Denver Business Journal.
Those costs were highlighted in a March post that examined the integration of wind and other intermittent energy sources to the reliability of the grid operated by Public Service and regulated by the Public Utilities Commission (PUC), under the state’s preferred energy mandate:
The concern over infrastructure costs and the cost to ratepayers, as well as the challenge of incorporating ever-larger amounts of intermittent generation sources like solar and wind, is not a new topic at the PUC.
In June 2012 comments by PUC staff engineer Inez Dominguez indicated that off-peak load and wind generation in particular was “alarming.”
The integration of intermittent sources like wind would overwhelm the system, either with higher costs or decreased reliability. Bringing in wind and curtailing conventional, coal-fired generation during off-peak periods would result “in an economic penalty to the Public Service customers because more expensive wind generation would be supplying their load.”
Cutting off the wind, however, would also penalize ratepayers, as the “take or pay” agreements give wind first priority.
But the Public Service engineer also highlighted reliability concerns. “In its simplest terms as it concerns the customers, reliability deals with keeping the lights on. This reliability issue may occur when the wind suddenly stops blowing and a significant amount of wind generation is lost to the balancing authority,” Dominguez said.
“When this event happens, the balancing authority needs to replace the lost generation quickly enough to keep from tripping off the load. This means that the generation in reserve to cover such an event has to be quick enough in its response to cover the lost generation,” Dominguez continued.
For Colorado ratepayers, this backup generation comes from “gas fired combustion turbine generation reserves” that displace “more economic base load coal fired generation,” only adding to the cost, and “complexity” of the load balancing requirements.
According to Dominguez, these examples suggested a “flag that Public Service may have too much wind generation.”
According to Xcel Energy’s regulatory filings, the utility spent $275 million in ratepayer subsidies for customer-sited solar panel systems from 2008-2012.*
That breaks down to:
Cost of these solar subsidies for each of Xcel Energy’s 1.4 million Colorado customers.
Percentage of Xcel Energy customers (approximately 9,200) that benefit from lower electricity rates by having subsidized solar panels installed on their property. Although only a fraction of 1 percent of Xcel Energy customers benefit from solar subsidies, 100% of customers pay for the cost of these subsidies.
Cost in Xcel Energy ratepayer subsidies for each of the 3,600 employees that work “throughout the value chain” of Colorado’s solar industry (job numbers are from the Solar Energy Industries Association).
Capital cost per kilowatt capacity of the solar panels subsidized by Xcel Energy ratepayers.** This compares to $2,040/kilowatt for the 750 megawatt Comanche 3 coal-fired power plant in Pueblo,*** and $1,400/kilowatt for a combined cycle natural gas plant.
*See page 1, final column of Xcel Energy, December 2012 RESA budget Report, filed 2 February 2013.
**Capacity of Xcel Energy’s distributed generation solar panel assets—44.9 megawatts—was taken from Section 2.11 of the Technical Appendix to Xcel Energy’s 2011 Electric Resource Plannb (page 341).
***The Comanche 3 cost data is derived from following assumptions: Capital cost–$1.3 billion; and capacity 637 megawatts (85% capacity factor of 750 megawatt nameplate capacity).
By Peter Blake
This column appeared originally on Complete Colorado Page 2.
When the runners are closing in on the finish line, move the tape farther back.
That’s the usual strategy employed by greens when it comes to establishing renewable energy standards for electricity production. It’s a marathon that never ends, and the added cost to consumers is secondary, if not irrelevant.
Colorado’s power producers are awaiting introduction of a bill that would raise the minimums yet again. But their lobbyists don’t know the details — and neither does the prospective sponsor, apparently.
There’s plenty of “radio chatter,” said Jeani Frickey, a lobbyist for Colorado’s rural electric associations, but “we don’t have anything specific yet.”
“I’ve not seen any bill drafts, or even outlines of ideas,” said Mike Beasley, an Xcel Energy lobbyist.
An aid to Rep. Su Ryden confirmed that the Aurora Democrat is going to be a sponsor of a bill, but even she hasn’t seen it. “A lot of different people” are still working on the bill.
The ever-rising renewable standards began back in 2004, when Colorado voters approved Amendment 37, an initiative that required regulated, investor-owned utilities to produce 10 percent of their electricity through renewable energy by 2015.
Three years later the legislature, assuming that one popular vote gave them carte blanche to do the work themselves from then on, raised the minimum to 20 percent by 2020. At the same time it established a 10 percent mandate on REAs, co-ops, which are not under the Public Utilities Commission.
In 2010 lawmakers raised the minimum to 30 percent for regulated utilities by 2020. The REAs were left at 10 percent. Now it’s three years later, again, and history tells us that lawmakers will be back with yet higher standards.
Some predict the figure will go to 40 percent for Xcel and Black Hills Energy, and 20 percent for the REAs. Others believe that only the REAs will be raised. But they’re only guesses, and the figures could be adjusted during the legislative process anyway.
By the way, you might think that hydroelectric power would count as a renewable, since no fuel is required and it produces, as Frickey noted, “zero greenhouse gas emissions.”
But Colorado enviros refuse to recognize water power as a renewable. Perhaps they’re afraid it would lead to the damming of various rivers. But if it did count, the REAs would already be over their required 10 percent just using existing dams. Tri-State Generation & Transmission, which supplies 18 of Colorado’s 22 REAs with electricity, gets 12 percent of its power from water, said Tri-State spokesman Lee Boughey. It’s generated by the Western Area Power Administration, an agency of the Energy Department.
REAs would be a natural target for the Democratic-controlled legislature. They cover 73 percent of Colorado’s land but less than 25 percent of the state’s population, said REA lobbyist Geoff Hier. Democrats predominate along the Front Range, where Xcel provides most of the power, and Republicans in the hinterlands.
One group working on the bill is Conservation Colorado, a recently formed amalgam of the state’s Conservation Voters and its Environmental Coalition.
Last September, before the merger was formalized, the leaders of the two groups wrote a letter to legislative candidates urging their support for “Colorado’s Path to a Clean Energy Future.” [Read entire letter below]
They seemed to be targeting the REAs. Noting that Xcel has a 30 percent mandate, “most rural and municipal energy providers have only made a 10 percent commitment that is below the national average,” says the letter. It went on to blame coal plants and autos for air pollution and urged a four-point program:
- “Decreasing the emissions that cause climate change” by at least 2 percent a year;
- Ensuring that “over a third” of Colorado’s electricity comes from renewable technologies;
- Requiring all utilities to offer “energy efficiency” programs that will help customers save energy.
- Encouraging the installation of charging stations for electric vehicles.
- Senate Bill 126, now in the House, would help promote the last point.
It’s hard to predict how Xcel or the REAs will react when a bill is finally introduced. In 2004, Xcel fought the first mandate. But then the greens got smart and stopped treating it as an evil corporate enemy while Xcel came to realize its job was to make money, not provide cheap power. It’s entitled to 10 percent return on investment, no matter what the cost of fuel or capital equipment.
The PUC helped by no longer requiring utilities to apply the “least cost” principle when building facilities or buying fuel. What’s more, the PUC made retail fuel prices subservient to more nebulous environmental goals.
Xcel ended up backing the 2010 bill, just as the REA’s backed the move to 10 percent renewable for them.
If renewables were economically competitive in the marketplace, there would be no need for legislation. Utilities would turn to them automatically. But so far, they’re not. Wind survived only because Congress belatedly extended its special tax credits. Solar is even less competitive.
Xcel already is allowed to charge you an extra 2 percent per month to pay for its renewable facilities and fuel.
Three years ago, when Bill Ritter was still governor, a coalition of natural gas companies, Xcel and greens worked behind closed doors for months before dropping House Bill 1365 into the hopper on March 15. It required Xcel to close down three coal-fired plants or convert them to natural gas by 2017. It was then rushed through the legislative process in a couple of weeks as more than 30 lobbyists worked the halls.
A similar rush-rush process recently worked for the gun bills. Perhaps it will be tried again when the renewable energy bill is introduced.
Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at email@example.com
Colorado is home to 5,000 wind energy jobs, according to a new, totally unbiased report from the American Wind Energy Association, this country’s premier wind energy lobby. Of course, the study is bogus. I wish I could tell you how the books were cooked. Unfortunately, I can’t read the report, because the AWEA put it behind a $125 pay wall. For now, you’ll have to trust me when I say that wind energy lobbyists are like all other shills; any report they produce will contain gross exaggerations. That’s what they’re paid to do.
Setting aside the AWEA’s bunk study, it is true that there are thousands of wind energy jobs in Colorado. Thanks to wind energy lobbyists, the General Assembly has enacted a spate of expensive energy policies, collectively known as the “New Energy Economy,” which force Coloradans to buy wind energy, among other things. It stands to reason that such policies—those that force Coloradans to use wind energy—would “create” jobs in the wind energy industry.
Is this a good thing? History suggests not. Otherwise, Communism would have worked, right? For a much more sophisticated explanation of the impossible economics of Soviet-style green energy production quotas, see this excellent Independence Institute guest oped by Ari Armstrong. For a technical discussion explaining how wind power is devalued by its intermittent, unreliable nature, check out this testimony, by former California Energy Commission Commissioner Tom Tanton, from a lawsuit being brought against the Colorado Renewable Electricity Standard (full disclosure: I am contributing to this lawsuit. See my testimony here).
Another red flag is the tenuousness of wind energy sector employment. Because the renewable energy industry is based on political support, it is faced with bankruptcy every time political winds change. And that happens a lot. Most recently, it happened last December, when AWEA’s top lobbyist warned that the industry would hemorrhage 55,000 jobs, unless the Congress extended a particularly generous subsidy.
It is also true markets predicated on government policies in lieu of supply and demand, such as the wind energy market, are prone to bottlenecks and oversupply. These defects lead to unfortunate outcomes, such as useless wind farms unconnected to the grid, and the sudden “furlough” of 500 Colorado wind energy jobs.
Let’s not forget the customer impact. The PUC has allowed Xcel to use a variety of budget tricks and accounting gimmicks to hide the true cost of renewable power, but there’s no hiding the increase in utility bills! Absent fuzzy math, wind energy is more expensive than conventional energy. Period.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute
Under Colorado’s green energy production quota, also known as a Renewable Electricity Standard, the cost of acquiring renewable energy like wind and solar power is limited to 2 percent of annual electricity sales.
The rules are very clear on this matter. According to the Public Utilities Commission’s Rule 3661(h)iv, “to the extent the RES plan exceeds this maximum retail rate impact over the RES planning period, the investor owned [utility] shall modify the RES plan to limit the acquisition of eligible energy resources so as not to exceed the maximum retail rate impact for the RES planning period.” (Formatting added).
Unfortunately for Coloradans, the PUC has demonstrated that it has little interest in enforcing the rate cap. As I explain here, the PUC authorized a bevy of budget tricks that allow Xcel to circumvent the rate impact limit.
These loopholes are largely hidden from the public view, as they are shrouded in the arcane procedures of utility accounting. Ostensibly, the PUC purports to care about enforcing the rate cap on green energy….or so I thought until I read the Friday, March 4 transcript from the PUC hearing Room A. On that day, the PUC demonstrated a naked disregard for cost controls.
The hearing was on Xcel’s decision to suspend the Solar*Rewards subsidy for the installation of photovoltaic panels. Make no mistake about it: Xcel’s decision to eighty-six this solar subsidy was correct. Simply put, the program had become a fiscal albatross around the necks of Colorado ratepayers.
For all the ink that Colorado’s public officials have spilled on the subject of the New Energy Economy, there’s been little discussion of its cost.
Ex-Governor Bill Ritter, for example, recently took to the pages of the New York Times to brag about his energy legacy. While he made an unsubstantiated claim about creating “thousands of new jobs,” he ignored the inconvenient truth that Xcel’s rates increased precipitously during his tenure, despite the fact that electricity demand was down due to an economic recession.
To be sure, it’s difficult to isolate an annual cost figure for the New Energy Economy. For starters, there’s a lot of policies to investigate; as ex-Governor Ritter noted in his New York Times op-ed, he enacted a suite of expensive energy policies (57 laws, to be exact). Moreover, utility accounting is arcane and largely opaque. So discerning the sum cost of these disparate measures is not easy, which is why no one has yet calculated the annual cost of the New Energy Economy…until now.
In a recent post, I explained how Xcel maneuvers around the 2 percent annual rate cap on green energy spending. In a nutshell, the utility avoids the rate cap with accounting tricks that function to underestimate the cost of renewable energy and overestimate the cost convention energy. Thus, Xcel suppresses the annual “incremental cost” of green energy, which is subject to the rate cap, by millions of dollars.
Unfortunately, Xcel’s green energy cost accounting is even more suspect that I had originally thought. That’s because the Public Utilities Commission, in Decision No C09-0990, allows Xcel to “lock down” ongoing incremental costs of renewable energy sources for five years after they are obtained. As a result, the budgeting tricks adumbrated above (and explained in detail here) are “locked in” for half a decade.
Absent this loophole, each year the PUC would review the actual ongoing costs of green energy; with it, the PUC essentially takes Xcel at its word. To riff on a popular phrase, the PUC’s approach is to “trust, but don’t verify.”
Through 2020, Xcel projects energy sales to increase an average of 1.1 percent annually, but it projects sales revenue to increase 4.7 percent annually, according to its 2009 Renewable Electricity Standard compliance plan.
Why would revenue outpace sales by such a significant margin? The answer, of course, is that green energy costs more than conventional energy, and ex-Governor Bill Ritter’s New Energy Economy locked Colorado into a decade of green expensive energy growth.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute
In addition to being cost-effective—even by solar power’s expensive standards—Xcel’s controversial Solar*Rewards subsidy program is also regressive. That is, it’s a subsidy for the rich, borne disproportionately by the poor.
Elsewhere, I discuss how Solar*Rewards program, a far-too-generous subsidy for the installation of solar photovoltaic panels, became a political hot potato in Colorado (for a detailed primer, see here; for more accessible explanations, see here or here). Suffice it to say, Xcel is seeking to curtail solar subsidies, because they cost a lot of money but produce only a little electricity. To wit, Xcel ratepayers are expected to this year pay almost 4 percent of their bills (about $100 million) on the Solar*Rewards program, in order to obtain about half a percent of its electricity. That’s a bad deal.
But it’s actually worse than a bad deal. That’s because solar panels, like electric cars, are almost exclusively the play-things of the well-off. Even after the (roughly) $10,000 ratepayer subsidy, a Solar*Rewards applicant must pony up another $10,000 to pay for the other half of what it costs to install the panels. Only the upper class has this sort of money to put to something as frivolous as solar panels.