At What Cost? The Electric Generation Crisis

Thomas Corlett Sr., LEED Certified AP
CRES Southeastern Colorado Chapter

The United States is facing an electric energy revolution moving from older, dirtier, costlier generation to sustainable, cleaner and more efficient generation. But the lack of attention by regulators and politicians to our health and environment is serious and urgent. At issue is urgency and the unacceptable interpretation of cost.

Colorado is very slowly evolving along the forefront of change but rapid acceptance is thwarted by the ‘system.’ Since voters approved the State Renewable Energy Standard (RES) in November 2004 – nearly 11 years ago – the state is struggling to replace fossil-fueled electricity. Only 17% is provided by renewables so far.

Here’s what former Rep. Lola Spradley had to say about the RES back in the day: “Reducing our nation and our state’s reliance on foreign energy is an issue that should cross all party lines.”

Back then, CRES and other energy efficiency and renewable energy advocates agreed with most lawmakers that replacing ‘foreign energy’ — as from another country, was an acceptable mantra due to the impact on the U.S. deficit.

Now in 2015, we look at ‘foreign’ differently. Now, ‘foreign’ means the main contributor to climate change via fossil fuel generation and transportation. And, it’s not where it comes from, because the U.S. is replacing some oil and coal with temporarily cheap domestic natural gas. Integrating natural gas may be a temporary step in the right direction, but it’s still carbon pollution and market forces will not allow a timely retreat.

The temporary cost of adapting to energy efficiency and renewable energy (EE/RE) is much less damaging economically than the long-term cost to our health, our grandchildrens’ well-being and the planet in general.

Political will is insufficient for change. When PUC Commissioner Glenn Vaad was Rep. Vaad, he opposed an effort to allow the PUC to consider carbon costs in resource planning decisions. Gubernatorial candidate Bob Beauprez called climate change ‘overhyped.’

Governor John Hickenlooper mentioned in his campaign speeches that 97% of scientists agreed climate change is real and he concurred that human activity is causing it, but he’s recently considering opposing the proposed EPA emissions caps. Current attacks on renewables include political reduction of the Colorado RES, and the fact that Investor Owned Utilities (IOUs) and Rural Electric Associations are fighting RES compliance.

The energy revolution will impact most Colorado electric facilities. The IOUs such as Xcel Energy and Black Hills Energy are obligated to engage with the Colorado Public Utilities Commission for compliance with the Renewable Energy Standard (RES), but Gov. Ritter’s 2007 Climate Change Policy is lackluster so it’s not part of the equation.

Municipalized generation like Colorado Springs and Ft. Collins have City Council oversight, so the local government rather than the PUC must expend political capital to affect rapid change. Boulder is municipalizing to change.

One major factor is the perceived definition of ‘cost’ by the generating utilities, the PUC and by the Legislature. Typically, the cost of generating electricity includes the capital cost, the financing charges, and the production or operating costs (including fuel and maintenance of the technology) at the point of connection to an electrical load or the electricity grid.

Cost as viewed by the utilities and the PUC is a complex lexicon and calculation that basically allows the regulated utilities their low-risk 9%+- Return On Investment or Equity; all this while keeping rates and reliability as high as is tolerable.

Utility financial models include utility expenses and fuel, but do not include ‘externalities’ like health costs attributed to pollution. Estimates of the external costs of electricity generation from coal suggest that 95% of the external cost consists of the adverse health effects on the population, according to the Health Care Research Collaborative at the University of Illinois.

Also, cost should include any subsidies available to generation entities as well as the health cost. Renewable detractors always mention rebates and mandates that favor EE/RE but rarely talk about coal and gas subsidies. In June 2010, the U.S. Energy Information Administration (EIA) said $557 billion was spent to subsidize fossil fuels globally in 2008, compared to $43 billion in support of renewable energy. Wikipedia notes that the EIA shows bias in favor of fossil fuels. If EE/RE were subsidized at the same level as fossil fuels, we would have a much shorter integration time line with nil fuel and health cost. We must get the attention of legislators and regulators on this subject.

When former PUC Commissioner James Tarpey resigned in 2013, he advised an audience that the Governor-appointed three-member Public Utilities Commission has a 4-year scope on variances, and they come in late to any docket. The more the PUC gets to know the city, company or person in advance of a complaint or docket filing, the better the result.

Nevertheless, the process can be tedious and expensive. He went on to say they (PUC) appreciate one-on-one meetings, and opportunities are provided for interested persons to meet with staff for direction. The Commission has an internal Consumer Advocate and stakeholders should also take advantage of the Office of Consumer Council and the State Energy Office. Tarpey also suggested organizations create rapport with investor-owned utilities and trade associations like CoSEIA and CREA for understanding. Interested parties are advised to begin these conversations immediately. In fact, there are several bills currently (a/o April 1st) that are EE/RE focused, but HB-15-1250 is aimed at changing the cost equation for Investor Owned Utilities.

Therefore and once again, it’s up to each of us, legislators, local government and stakeholders to become more aware of state climate policy, the PUC process, the new political climate, and timing if we are to achieve our mission of aggressively replacing fossil fuels with energy efficiency and renewables. Elected officials must redefine the urgency and the true cost of electric generation for us to go from 17% to 100% renewables.