Coalition of Ratepayers

Media Release: Customers want Xcel to pay for CEP

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New Polling Suggests Xcel Ratepayers Are Unwilling to Foot the Bill for Executives and Shareholders

85% of Xcel Customers Think the Company Should Pay for the Costs Incurred from Colorado Energy Plan’s Details

 

DENVER, July 30, 2018 – Eighty-five percent of Colorado’s Xcel Energy customers do not want to pay the $2.5 billion cost for the company’s Colorado Energy Plan (CEP), according to a poll released by the Coalition of Ratepayers.

Xcel Energy, headquartered in Minneapolis, is a regulated, for-profit monopoly utility serving roughly 1.4 million electricity customers throughout Colorado. The utility currently is seeking regulatory approval of the CEP, a massive fuel switching scheme away from base load hydrocarbons in favor of various sources, primarily intermittent industrial wind.

The poll, conducted by Magellan Strategies, found that 85 percent of Xcel’s customers believe Xcel shareholders should incur more of the cost – and the associated financial risk – of the proposed CEP. Only three percent of respondents were content with Xcel customers assuming the entirety of the plan’s financial burden (the remaining 12 percent of respondents were unsure).

The poll comes just ahead of an August 1st hearing at the Colorado Public Utilities Commission to consider whether Xcel will be allowed to shutter prematurely two of the state’s most efficient coal-fired units, Comanche I and II located in Pueblo.

Because of a 2004 agreement, Xcel committed customers to pay nearly $200 million to upgrade the Comanche units, making them some of the most environmentally superior in the state in order to keep them operational until 2035. As part of the CEP, Xcel now wants to close the units a decade early.

The Coalition of Ratepayers, which commissioned the poll, is also an intervenor in the CEP and Comanche retirement proceedings in front of the PUC and has presented testimony challenging Xcel’s claim that its plan will save ratepayers money.

“We’ve been told repeatedly that the more wind and solar Xcel builds, the more money we will save and yet, none of those savings have materialized. When customers hear the cost of this current plan, they don’t want to pay for it. Based on what has happened with electricity bills who can blame them? Some of our members have seen bills go up 100 percent,” said Amy Oliver Cooke of the Coalition of Ratepayers.

“They may like wind and solar, but this poll shows customers think it’s time Xcel’s well-compensated executives and stockholders should have some skin in the game. If the CEP is such a great idea, then the company should risk stockholders’ money not Colorado ratepayers who have no voice and no choice. It’s time Xcel executives and stockholders paid their own bills,” Cooke added.

Upon learning that Xcel’s executive compensation is tied to stock performance rather than the performance of its power stations, 74 percent of respondents to Magellan Strategies’ polling concluded that the utility’s corporate leadership is more beholden to company stockholders than customers, with only seven percent believing that the company looks out for its ratepayers first.

“This poll shows Xcel customers don’t want to be guinea pigs in Xcel’s profit enrichment scheme. The only sure thing in Xcel’s $2.5 billion proposal to build out new facilities is that Xcel Energy will make tens of millions of dollars – and likely over $100 million – in additional profits. If Xcel believes this $2.5 billion build-out of new facilities will someday pay for itself, then let Xcel executives and Xcel shareholders – not captive ratepayers – foot the $2.5 billion bill, “said James Taylor, Senior Fellow for Environment and Energy Policy at the Heartland Institute.

Xcel customers will know their fate by mid-September when the Commission is expected to release its decision. Should the Commission rule in Xcel’s favor, the company’s Wall Street shareholders will reap significant profits, while Colorado ratepayers will pay the price.

The Colorado Public Utilities Commission is aware of all of this, despite allies of Xcel having tried – and failed – to suppress evidence that confirms the economic boondoggle that this proposal promises. The Coalition of Ratepayers is optimistic that following the hearings on August 1, the Commission will side with the people of Colorado, not a for-profit monopoly beholden to Wall Street banks rather than its customers.

The Coalition of Ratepayers is a Colorado nonprofit focused on issues impacting small business and residential ratepayers that otherwise have no voice. To learn more, please visit www.i2i.org/coalition-of-ratepayers.

 

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IREA cites Coalition testimony; Xcel fuel switching plan ‘not in ratepayers best interest’

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The state’s largest electric cooperative Intermountain Rural Electric Association (IREA) issued a strongly worded repudiation of Xcel Energy’s proposed “Colorado Energy Plan Portfolio” (CEPP) in comments published last week on the Colorado Public Utilities Commissions Web site. In their 14-page comments on Xcel’s required 120 day report, the non-profit electric provider cites the Coalition of Ratepayers and our expert witness Charles Griffey numerous times. Including these quotes:

IREA agrees with the Coalition of Ratepayers that any projected NPV savings that are not modeled to occur until decades out and not until after the retirement of Comanche Units 1 and 2 are highly speculative….

Mr. Griffey has raised several unanswered questions concerning instances in which it appears the Company has either intentionally or unintentionally favored the Preferred CEPP in order to project illusory savings versus the Preferred ERP.

As one of the nation’s fastest growing electric cooperatives, IREA’s comments are important and, hopefully, highly influential with the PUC because it serves over 150,000 members across 11 Colorado counties. IREA also purchases power wholesale from Xcel and is a partial owner of Comanche 3, which will remain operating for now regardless of what happens with units 1 and 2.

IREA also calls out CEPP supporters build at any cost mentality while also acknowledging that if not for “certain parties” — the Coalition of Ratepayers — all Colorado ratepayers, not just Xcel ratepayers, would be paying hundreds of millions of dollars more.

However, the stipulating parties’ fixation on retiring 650 MW of economic coal generation a decade ahead of schedule and at any cost has been a deeply flawed proposal from the outset. If not for the advocacy of certain parties and the analysis of their respective experts, Colorado ratepayers would have certainly been on the hook for hundreds of millions of dollars in hidden deferred tax asset costs and unnecessarily re-purposed RESA funds. Accounting for these dollars demonstrates that the Company’s efforts to portray the Preferred CEPP as cost-effective lack merit. The CEPP requires ratepayers to pay a premium for renewable generation levels that significantly exceed already-satisfied Renewable Energy Standard levels and is based on a deeply flawed model that inaccurately projects cost savings decades from now. The record before the Commission does not support the early retirement of Comanche Units 1 and 2…

Where would those hundreds of millions of dollars have gone? Into the pockets of Xcel’s stockholders. The Colorado Energy Plan is nothing more than a redistribution of wealth from captive ratepayers to Xcel stockholders and executives. A more appropriate title is the Corporate Enrichment Plan.

Perhaps the most compelling comment from IREA is this short but pointed statement:

In sum, it is not in ratepayers’ best interest to be burdened with the risk of retiring economic coal generation a decade early based on speculative assumptions of cost-savings that will only occur well after the units’ scheduled retirement.

We thank IREA for recognizing that.

Coalition of Ratepayers Responds to Xcel Energy Allies’ Attempt to Keep Ratepayers in the Dark

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MEDIA RELEASE

DENVER, July 25, 2018 – Earlier today, the Colorado Public Utilities Commission rejected a motion filed by allies of Xcel Energy, Western Resource Advocates,to suppress critical testimony from Charles Griffey, a thirty-year veteran of the energy and utilities industry and adjunct professor at Rice University in Houston, Texas, in an ongoing proceeding regarding Xcel’s Colorado Energy Plan (CEP).

The CEP is the monopoly utility’s massive $2.5 billion fuel-switching scheme away from hydrocarbons in favor of predominantly industrial wind and includes plans to prematurely close Comanche I and II power plants in Pueblo, Colorado.

The motion, filed by the Western Resource Advocates, flew in the face of due process and aimed to suppress the truth. The company and its allies say the CEP will save customers money. Griffey’s testimony proves otherwise.

Amy Oliver Cooke of the Coalition of Ratepayers offered this statement in reaction to the failed attempt to keep ratepayers and the PUC Commissioners in the dark:

We thank the commissioners and staff for their due diligence, recognizing the importance of all information being heard, and rejecting the WRA motion.

Xcel and its supporters have not been honest with the Commission, the public, and customers about the true cost of the Colorado Energy Plan.

Through our expert witness Mr. Griffey, the Coalition of Ratepayers challenged their math, so they tried striking from the record his testimony that shows Xcel’s plan to shut down the plants will be felt by seemingly everyone except the company’s lavishly-compensated executives and shareholders. It was unconscionable and smacked of desperation, and we are glad that the commission agreed.

We contend that Xcel’s friends wouldn’t have tried to suppress evidence if they had nothing to fear. As we said in our response, ‘The truth should neither be buried nor ignored.’

On August 1, the Commission will hear arguments on Xcel’s application for the early retirement of and accelerated depreciation for Comanche I and II.

The Coalition of Ratepayers is a Colorado nonprofit focused on issues impacting small business and residential ratepayers that otherwise have no voice. To learn more, please visit www.i2i.org/coalition-of-ratepayers.

 

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The truth frightens Western Resource Advocates

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“Three things that cannot be long hidden: the sun, the moon, and the truth.”  Budda

Western Resource Advocates (WRA), a multi-state renewable energy advocacy group and intervenor supporting Xcel Energy’s Colorado Energy Plan (CEP), filed a motion on July 16 requesting that the Colorado Public Utilities Commission (PUC) disallow huge portions of the Coalition of Ratepayers expert witness Charles Griffey’s testimony (and here) that challenges Xcel’s CEP accounting.

The CEP is Xcel Energy’s massive $2.5 billion fuel-switching scheme away from hydrocarbons in favor of predominantly industrial wind.

WRA, which brags about destroying view sheds with unreliable industrial wind turbines, doesn’t think the cost to ratepayers is within the scope of the proceeding. Nor does WRA believe that the Coalition should have the right to critique questionable claims from Xcel, WRA, and the Sierra Club that the CEP is economical and in the public interest.

Coalition attorney Meredith Kapushion filed our response on Friday, July 20:

Contrary to WRA’s assertions, the testimony offered by Griffey is in direct response to prior testimony, is directly relevant to the interrelated issues and comports with the Commission’s rulings in this case.

Griffey’s testimony is a direct challenge to claims made in the AD/RR proceeding (Docket 17A-0797E) by Public Service Company of Colorado (“PSCo” or “the Company”), Sierra Club, and WRA that flatly endorse the economic conclusions of the 120-Day Report and make sweeping  pronouncements that the AD/RR application and the Preferred Colorado Energy Plan Portfolio (“CEPP”) are in the public interest. The very parties that support WRA’s Motion seeking to strike Griffey’s testimony are the same parties that introduced this issue in earlier testimony. They should not be allowed to proclaim the alleged benefits of the CEPP in the AD/RR proceeding without weathering any critique. It is both the hallmark of an adversarial system and the obligation of the Commission to consider the very type of argument and information that has been presented  by the Coalition to rebut these claims. The truth should neither be buried nor ignored. [Emphasis mine]

This leaves us wondering, what is it about the truth that has WRA, the Sierra Club, and Xcel so frightened? Perhaps it’s that Xcel and its supporters said the CEP would move forward ONLY if it saves Xcel’s customers money as the Colorado Springs Gazette reported, “Xcel’s caveat is that it would not go ahead with the project if it didn’t create savings for customers or at a minimum, not cost them more than they already pay.”

But, yet again, the Coalition found errors in Xcel’s most recent figures that give the illusion of but not actual cost savings as stated in our recent response:

When corrected for these errors, the early retirement of Comanche Units 1 & 2 will cost ratepayers at least $284 million on a present value basis through 2054 (even more when a shorter time horizon is considered). This is a $497 million difference from PSCo’s 120-Day Report and undermines the claims made in the AD/RR proceeding by PSCo, Sierra Club, and WRA that the CEPP saves ratepayers money and is in the public interest. 

Previous errors totaled $88 million, which Xcel acknowledged.

The truth is that WRA and their co-conspirators don’t want the truth. They want the plan.

If the PUC commissioners do decide to strike Griffey’s testimony then it also should strike significant portions of Xcel, WRA, and Sierra Club testimony as the Coalition requests. Hopefully, we find out on Wednesday, July 25 if truth prevails over fear.

“On the face of it, it must be a bad cause which will not bear discussion. Truth seeks light instead of shunning it.” Horace Mann, as quoted in the opening of our response.

 

Coloradans are taking on the state’s largest monopoly utility

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Originally published on thehill.com

Just because President Obama’s controversial and costly Clean Power Plan is dead at the federal level doesn’t mean Colorado ratepayers are out of financial danger. Nearly 1.4 million state electricity customers await a Colorado Public Utilities Commission (COPUC) decision on Xcel Energy’s legally tenuous Colorado Energy Plan (CEP).

With COPUC approval, Xcel, the state’s largest monopoly utility, plans to shift its generating portfolio from away from majority hydrocarbons (coal and natural gas) in favor of industrial wind, solar, and battery storage.

Besides building out industrial wind and solar, the $2.5 billion CEP would retire prematurely 660 megawatts (enough to power roughly 660,000 homes) of relatively young, low-cost, highly-utilized, environmentally state-of-art coal-fueled power plants.

The company makes the wild claim that the CEP will save ratepayers money or at the very least not cost anything. That claim is one of the reasons why my employer, the Independence Institute, is leading the Coalition of Ratepayers, a Colorado non-profit concerned with issues impacting small business and residential ratepayers that otherwise have no advocate and no voice.

Our coalition petitioned and was granted intervenor status in the CEP proceeding in front of the commission.

Coalition witness Charles Griffey, a nationally recognized electric utility expert, discovered Xcel has its thumb on the financial scale, titling it in the company’s favor. Among Griffey’s discoveries — $88 million worth of errors in Xcel’s modeling, which the company was forced to acknowledge; a failure to account for hundreds of millions of dollars in sunk costs and transmission costs; and a legally questionable accounting gimmick that would use funds from a renewable energy fee to pay for the coal plant retirements.

Further, Xcel is doing this without state legislative approval, something the company a year ago said should be the purview of the Colorado General Assembly.

“If we are going to fundamentally restructure the way that we do resource planning in Colorado … then that is a question for the General Assembly,” stated Xcel VP Alice Jackson in Jan. 30, 2017 written testimony to the COPUC.

Yet, the General Assembly rejected such a plan during the 2017 legislative session, which ended in May. By summer 2017, Xcel didn’t believe it needed legislative approval. Instead, the company is relying upon a Gov. John Hickenlooper executive order issued on July 11, 2017, as its authority to seek regulatory approval of the CEP. The order directs Hickenlooper’s executive branch agencies to cooperate with any company that wants to voluntarily reduce carbon emissions.

Watch what you wish for — circumventing the General Assembly is dangerous territory.

If the COPUC, whose commissioners are appointed by the governor, goes along with this scheme, they would clear the way for future governors to do the same thing on the backs of captive ratepayers.

The next governor could issue an executive order voluntarily asking for 100 percent renewables, which we’ve calculated to cost $44.88 billion dollars just for the conversion, or 100 percent nuclear, which is the logical choice for those who claim to care about emissions, or, perhaps, 100 percent coal.

What the CEP really reveals is the dirty secret of monopoly utilities. With flat or declining retail sales revenue due in part to conservation efforts, for-profit monopolies must build on the backs of captive ratepayers in order to survive financially. Ultimately their fiduciary responsibility is to shareholders, not ratepayers.

The CEP is all about Xcel building and adding to its asset base on which the company earns an authorized return on equity of nearly 10 percent. This plan allows Xcel to own 50 percent of the new renewable and 75 percent of natural gas capacity, while at the same time recovering the cost of early retirement of perfectly useful coal generation.

If extra power is needed or even if more wind power is desired, Xcel could just purchase excess energy from other suppliers in more of a market situation, which is cheaper for customers but doesn’t provide more profits for Xcel shareholders.

Colorado electricity consumers have nowhere to turn. They can’t choose their provider, and Colorado’s Office of Consumer Counsel, once considered a consumer watchdog, signed on to the CEP without adequately vetting the plan.

Since 2006, Xcel’s assets have increased a whopping 77 percent. The company’s profits have increased 93.89 percent, and profit margins have increased from 12 percent in 2006 to nearly 22 percent in 2016. Also impressive has been Xcel’s profit per ratepayer, which has jumped 76.7 percent from $178.09 in 2006 to $314.75 in 2016. All of this with low load and customer growth.

If Xcel had any competition, we’d be applauding them for doing so well in a tough market. But they don’t, and it’s why we formed the Coalition of Ratepayers.

Fighting a monopoly like Xcel isn’t cheap. It will cost the coalition hundreds of thousands of dollars. Considering we’ve already kept $88 million in consumers’ pockets rather than the bank account of a monopoly utility, we think that’s a pretty good return on our investment.

Amy Cooke is the executive vice president and director of the energy and environmental policy center at the Independence Institute.