Coalition of Ratepayers

Becker, Winter to Give Xcel a Blank Check

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Representative K.C. Becker and Senator Faith Winter have introduced legislation that would give Xcel Energy a green light and blank check to prematurely close existing power plants, replace them with expensive, intermittent resources, and then force captive electric ratepayers to pick up the tab with interest for the massive fuel switching scheme and workforce transition plans.

HB19-1313 “Electric Utility Plans to Further Reduce Carbon Dioxide Emission” is a blank check for Xcel – and only Xcel – because it applies solely to utilities that serve 500,000 or more ratepayers. Other utilities can “opt-in” to financially ravaging their customers. According to the bill summary:

A utility implementing a clean energy plan may recover its costs of implementation through rates, as approved by the PUC [Public Utilities Commission], and own any generating resources and infrastructure necessary to effectuate the plan.

We’ve seen this before, and it won’t end well for ratepayers as evidenced by our intervention in the Colorado Energy Plan (CEP), which we fought at the PUC. The monopoly utility is more than willing to build and build and build so it can fuel switch to utility-scale wind, solar, and batteries (which don’t really exist yet) at the expense of Colorado ratepayers.

Instead of saving ratepayers money, the Coalition proved that the CEP will cost them hundreds of millions of dollars. Further, we found Xcel’s modeling errors, which PUC staff did not.

Xcel can already file such plans with the PUC and has released a vision to reduce its carbon emissions 80 percent by 2030 and be 100 percent carbon-free by 2050. Hence, legislative direction is superfluous, and this bill should only be viewed as another avenue the Democrats are willing to travel in their attempt to reorder society through legislation.

Make no mistake; this bill will impact all Colorado residents – especially the state’s lower-income communities and those with static incomes, who in many cases are the elderly. In fact, AARP is against HB19-1313 because the organization understands an unnecessary increase in energy rates only harms its members and takes away their ability to spend money on necessary, more important matters.

If HB19-1313 passes, customers who cannot choose their electricity provider will pay for worker re-training programs and compliance costs, which will include building new generation capacity, storage capacity, and any new transmission and distribution lines.

This won’t be cheap. Utility bills will go up. Captive Xcel Energy customers are searching for a friend at the state capitol because it isn’t Speaker Becker or Senator Winter. We can’t afford to let the legislature give the monopoly a blank check.

Ratepayers need a voice; elect PUC commissioners

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The following article was written by Amy Cooke in response to the Public Utilities Commission’s ruling regarding the Coalition of Ratepayers’ request for attorney and expert witness fees.

While disappointed, the Coalition of Ratepayers isn’t surprised that the commissioners at the Colorado Public Utilities Commission denied us any and all financial relief even though the Coalition clearly met all criteria and was the only entity in the Colorado Energy Plan proceeding that seriously challenged Xcel’s “too good to be true” promise of new renewable energy at no cost to ratepayers.  

The Coalition is incredibly proud of the work we did and the information we brought forward on behalf of ratepayers. Had it not been for the Coalition, Xcel Energy electricity ratepayers would have been sold the false promise of new energy resources at no additional cost to ratepayers or even below-cost – a claim that Xcel ultimately could not prove and was unable to persuade the Commission was true.  Not only did the Coalition bring to light the numerous hidden costs of the Colorado Energy Plan, it also found an additional $87 million in errors that neither PUC staff nor the Office of Consumer Counsel (OCC) found in their analysis of the CEP. 

Regulatory proceedings are expensive, exclusive, and opaque. The PUC seems to want to keep it that way. The decision to deny ratepayers relief in their efforts to challenge the Xcel’s misleading claims will have a chilling effect going forward, all to the benefit of monopoly utilities.  In light of our experience as outsiders defending ratepayers in the regulatory process, it’s clear that these proceedings are more like Kabuki Theater with predetermined outcomes at ratepayers’ expense. Ratepayers have no voice and no choice. 

No unelected commission of three should have the kind of power the PUC has without some kind of voter say. In order to restore integrity in the process and allow ratepayers a voice, we believe it is in the best interest of Coloradans that they elect their commissioners. Further, since the OCC is no longer interested in representing ratepayers, it should be stripped of that authority or consider an elected ombudsman who acts on behalf of ratepayers. 

Going forward, it will be the Coalition’s goal to reform Colorado’s PUC making it more assessible and welcoming to all ratepayers, regardless of their ability to pay the high cost of entry, and to reshape the OCC so that ratepayers rather than monopolies are its focus.

Imagine 1500 feet of (electrical) freedom…

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By Brit Naas and Amy Cooke

What if we could break free from the massive transmission lines and power plants and the utility-scale wind farms that are hundreds of miles away? It’s not impossible. From cryptocurrency to ride and home sharing companies, decentralized and sharing economy platforms are altering sectors in a way that was unfathomable twenty years ago. 

We at the Independence Institute believe the power industry is about to see a similar renaissance, as companies like LO3 Energy work to make residential microgrids a reality – where neighbor-to-neighbor transactions occur with regularity. 

As with any change – whether cultural or economic – movement away from the status quo usually doesn’t happen overnight. This is especially true for the power industry. For nearly a century, private, for-profit regulated monopolies have dominated the electricity sector, reaping in billions of dollars for their shareholders courtesy of captive ratepayers.  

Theoretically, Colorado’s Public Utilities Commission and our state legislature serve as watchdogs over these for-profit monopolies. Publicly traded monopoly corporations are guaranteed a profit for their “just and reasonable” rates to provide service to ratepayers, who have no choice in their electricity providers. Monthly utility bills, sometimes larded up with additional fees for unnecessary corporate expansion, have become more of a wealth transfer system between captive customers and corporations’ shareholders. 

Obviously, monopoly utilities do not yield this privileged position voluntarily. From Tri-State Generation and Transmission to Xcel Energy, they are notorious for their efforts to resist change that could lower or even eliminate their guaranteed profit margins.  

Delta-Montrose, a rural electric cooperative that services Montrose, Delta, and Gunnison counties, is currently trying to withdraw from Tri-State because its members want the freedom to determine the type of sources that generate their electricity. It had hoped the process would have been nonconfrontational and fair for both parties, but Tri-State is resisting and has asserted that the co-op cannot withdraw. Not only is Tri-State’s position most likely illegal, it is also subversive to Delta-Montrose’s members’ autonomy and self-determination. 

Xcel, Colorado’s largest electric utility, is the glaring case study of how our centralized electricity generation and distribution business model is a disservice to customers and a financial windfall to the monopoly. 

It has been wildly successful at lining its shareholder’s pockets by appealing to the renewables-at-any-cost crowd. Self-described environmentalists such as the Sierra Club, Western Resource Advocates, and Conservation Colorado have formed an unholy alliance with Xcel. 

These special interest groups with their own deep pockets and a myopic view of utility-scale wind and solar have aided and abetted Xcel’s unjust enrichment at the expense of innovation, free markets, the environment, and most importantly – those of us paying the bills, otherwise known as ratepayers. 

Protected by an army of lobbyists, government officials, and entrenched interest groups, any hint of reform with the potential to threaten Xcel’s stranglehold on its 1.4 million captive ratepayers is met with open hostility and blatant lies. Despite the plethora of money-saving pledges, have your rates gone down? Furthermore, Xcel has used the “unholy alliance” to strengthen its financial and monopoly position. 

Depending on need and political will, Xcel has used its position either to circumvent the Public Utilities Commission by going directly to the state legislature, or to circumvent the state legislature by going directly to the Public Utilities Commission. 

It’s a clever strategy but not fool-proof for Xcel and its sycophants. Not all legislators are enamored with Xcel’s lying and bullying to protect its financial gravy train. In the 2018 session, a bipartisan group of legislators led by Senator Steve Fenberg (D-Boulder) showed a willingness to chip away at the monopoly’s stranglehold as one of the first states to pass a “right to store” bill (SB18-009). With Governor John Hickenlooper’s signature, Xcel residential customers now have an option to store their own electricity free from the monopoly’s interference.  

This brings us back to the idea of 1500 feet of freedom. We urge those same courageous lawmakers to craft and pass legislation that will allow individuals to buy or sell power produced and/or stored within 1500 feet of them without regulatory and monopoly interference. 

Let’s say a business owns a mini solar garden or a natural gas generator, but it doesn’t need all of the power it can produce. That business could contract with a neighboring business to sell its excess power. Assuming they comply with all local building codes, the contract is between the two businesses free from PUC or Xcel interference. This would also work for neighbors. One neighbor may invest in solar panels while the next-door neighbor invests in battery storage. They decide to share the power and capital costs. All of this happens without regulatory or utility meddling. 

We believe a commercial or residential customer should be able to use the electricity they’re producing and storing as they see fit. This could mean using it themselves or selling it to those within 1500 feet of them.

As evidenced by an experiment conducted by the Brooklyn Microgrid in 2016, we have the technological ability to trade electricity via a peer-to-peer model. Three years ago, two participants in the Brooklyn Microgrid completed the project’s first peer-to-peer, or in this case, neighbor-to-neighbor transaction. One had solar panels that produced excess energy, the other wanted to purchase that excess energy. There was no middleman, just two neighbors who agreed upon a price and completed the deal.  

According to the Brooklyn Microgrid’s website, this first transaction was a “sandbox experiment.” However, this year, the Brooklyn Microgrid is going live, and both the sellers and buyers are going to experience energy choice. 

The technology is there, and 1500 feet of freedom puts innovation over regulation. It could reduce the need for behemoth-sized power plants and the hundreds of miles of transmission lines that go along with them. It could put money in individuals’ pockets rather than just corporate executives and shareholders. And it would put individuals in charge of power production and usage. 

Now is the time to unshackle ratepayers from the confines of a centralized grid and monopoly utility and propel the power industry into the twenty-first century. 

The Coalition of Ratepayers Case Study

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The Coalition of Ratepayers is a Colorado non-profit composed of small businesses and individuals. It has been an active party in two electric utility regulatory proceedings: the Rush Creek Wind Farm and the Colorado Energy Plan (CEP). 

The Coalition first intervened against the Rush Creek Wind Farm, and although the Public Utilities Commission (PUC) approved it, the Coalition’s involvement in that case as a PUC recognized party helped set it up to participate in the Colorado Energy Plan (CEP) proceeding, which was larger and more impactful.  

The following study discusses the Coalition and its work in the regulatory sphere, pertaining mainly to the Colorado Energy Plan but also touching on its participation in the Rush Creek Wind Farm case. It also suggests ways to reform the Public Utilities Commission and discloses an avenue the Coalition is exploring that will make intervening more feasible.

As is stated in the report, “Participating in public utility proceedings is not for the faint of heart.” There are many hurdles any party has to contend with, and for new participants, those hurdles seem much higher. As a relatively new party, this was true for the Coalition of Ratepayers, and at the beginning of the CEP, most parties derided and thought very little of it. However, by the end, the Coalition had become Xcel’s chief opponent. Its legal team was exceptional, and its expert witness was fantastic, revealing $87 million worth of errors in Xcel’s modeling and accounting. By the Commissioner’s own statements, the Coalition of Ratepayers had provided much to the proceeding.

The Public Utilities Commission ultimately approved the CEP, but the Coalition was able to disprove Xcel’s claims that it was a money saving plan.

Therefore, while it may be difficult to participate in regulatory proceedings and combat the ever-encroaching bureaucracy, it is essential. We hope our case study can be a resource to groups that go against Colorado’s or any state’s regulatory regime. 

Coalition of Ratepayers Case StudyDownload

Don’t be dull, embrace microgrids

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By Casey Freeman

First article in our series about microgrids

Xcel Energy and Black Hills Energy are Colorado’s two regulated electric monopolies. Xcel is the larger of the two and provides retail service to the greater Denver Metro Area, Greeley, and Grand Junction, while Black Hills services Pueblo and the surrounding area. These utilities operate in a regulated market with no competition and provide power to a combined customer base of approximately 1.5 million. Both are Colorado Public Utilities Commission (PUC) regulated, for-profit corporations and award annual dividends to their shareholders.

As Colorado public policy including renewable mandates and fuel switching have driven up electricity rates, there has been substantial concern over how these utilities treat ratepayers, and not without cause. In 2010, Black Hills raised its rates 13 percent, and from 2012 to 2017, increased them an additional three times. Around 7,000 people per year were receiving disconnect notices, and to reconnect, customers must pay the missed bill in full along with a fee and a three-month deposit. The cost can end up being higher than $2,000, which is devastating for the residents of cities like Pueblo where the median household income in 2016 was $35,770 compared to a statewide average of $62,520.

While a reconnecting fee alone is a difficult hurdle to overcome, loss of electricity carries with it much heavier problems like social services breaking apart families, forfeiture of public housing, and the inability to preserve perishable goods. A remedy Black Hills offers is the Black Hills Energy Assistance Program or BHEAP, a program for low-income households in which customers who meet specific income requirements can receive a deduction of $60 from their monthly bill. However, this assistance is at the expense of other customers who are charged a monthly fee to sustain the program.

For ratepayers in Colorado, there is no other option but to endure the service of their electric provider since a regulated market prevents customers from choosing a different company.

Certainly, giving consumers the freedom to choose their own provider is better than being forced into a monopoly utility. But deregulation isn’t without its own problems. For example, the 2002 Texas State Legislature passed a law that deregulated the energy market and allowed competition between electricity providers. It was meant to address the detriments of a regulated energy market. Then Governor George W. Bush summarized his support saying: “Competition in the electric industry will benefit Texans by reducing rates and offering consumers more choices about the power they use.”

Market manipulation in the form of subsidies for preferred energy sources has made the reality of deregulation a bit different than originally hoped. Consumers do enjoy a wider range of choice in energy suppliers, but rates have been more volatile and subject to dramatic increases. Subsidies for renewable energy from both the state and federal government have artificially depressed wholesale intermittent energy prices. As a result, baseload power sources are becoming uneconomical and closing, causing a scarcity in energy supply. This is damaging to ratepayers because in times of scarcity, power providers will raise electric retail rates to prepare for surging wholesale electric rates.

And in the summer of 2018, this was especially problematic. Three coal-fired power plants closed in the spring just ahead of Texas experiencing record-breaking temperatures that caused a dramatic increase in electricity demand during the summer. Wholesale pricing averaged $200/MWh during peak hours, which was a $150 increase from the previous year, and in May, wholesale prices spiked to $1,500/MWh.

Simply put, when power producers chase subsides, baseload power sources close and wholesale electricity prices are more than likely to surge, ultimately increasing retail electric rates and hurting ratepayers.

Does Texas’ failure at deregulation indicate a regulated market structure is the only alternative then? The short answer is no. In addition to the issues that many Colorado ratepayers have to contend with, Dr. Lynne Kiesling, an accomplished author and professor of Economics at Purdue University, believes a regulated energy market “stifles innovation.”

Kiesling makes a compelling argument that America has been using the same business model for over a century, which she believes has resulted in a sector devoid of new ideas on energy generation and usage. Beyond lousy service and rising rates, consumers have little incentive to become personally involved with their energy consumption, and the lack of competition incentivizes utilities to chase bad investments because they’re more profitable than innovation that save ratepayers money.

According to Kiesling, the regulated market has dulled both parties, the customer and the utility, which now seem content with mediocrity.

Currently, there are two options for ratepayers: a regulated or deregulated business model. But as regulated utilities continue to gouge customers and manipulate the market, and wholesale deregulation only seems to offer another bleak outlook, it’s time to look beyond the status quo and embrace innovation.

Could microgrids be the answer? Maybe. Colorado already has experimented with them. Stay tuned for the next article in this series.

Article 2, Article 3, Article 4

Casey Freeman is an intern in the Energy & Environmental Policy Center at the Independence Institute. She is pursuing a bachelor’s degree in political science with a focus on legal studies from the Metropolitan State University of Denver.