Colorado consumers repeatedly have shown they support renewable energy, but their enthusiasm for doing right by the environment shouldn’t make them forever pay unnecessarily high costs.
So, the Colorado Public Utility Commission must get straight answers about Xcel Energy’s new plan for pricing wind-generated electricity.
In 2004, voters approved Amendment 37, which requires large utilities to generate 10 percent of their electricity from renewable energy sources by 2010. But under a separate program in place since 1998, more than 30,000 customers already were voluntarily paying a slight premium to Xcel for electricity produced from wind energy. Called Windsource, the older program will remain in effect even as Amendment 37 is implemented, mostly because Amendment 37’s sponsors wanted to encourage new investment in green energy and didn’t want Xcel to get credit for wind power that already was in place.
However, the separate accounting for Windsource has become a flash point in Xcel’s overall request to raise electrical prices. Among other things, Xcel wants to boost the premium that Windsource customers pay from $3.79 to $4.29 per 100 kilowatt-hours. Xcel says the change will allow it to fully recover the costs of the wind energy program, something the company says it can’t do under the existing pricing system.
While we’re all for a public utility being able to recover its legitimate costs, we’re also very skeptical that Xcel’s new Windsource pricing plan can be justified. One possible effect of Xcel’s plan could be to permanently fix the cost of wind energy above that of fossil fuels. Such a result would run afoul of common sense as well as market economics: When natural gas prices spiked last winter, Windsource customers saved up to $5 on their monthly bills compared to consumers who got all their electricity from fossil fuels.
Xcel denies it’s trying to make Windsource permanently more expensive.
However, even customers who don’t pay the premium still benefit from the Windsource program, because Windsource reduces the need for Xcel to buy more natural gas. Already, natural gas is the most expensive fuel for electrical generation, and gas prices are expected to rise again in the future. By contrast, wind is always free, so it serves as a hedge against electrical price spikes for all customers.
In fact, after analyzing the data that Xcel put in its request to the PUC, some environmental groups concluded that the price of Windsource should go down, not up.
The PUC should figure out if that’s right. Either way, the commission shouldn’t let Xcel run Windsource as just a cash cow.
