Opinion: Xcel’s demand letter


On Dec. 20, Xcel Energy sent a demand letter to Boulder city officials, outlining what it requires the City of Boulder to agree to if Xcel were to continue its solar and energy efficiency programs (this letter preceded the somewhat confusing one that many Boulder ratepayers just received.) No surprise, Xcel’s proposals ignore both legal and economic realities.
Xcel opened its Dec. 20 letter by threatening to terminate both its energy efficiency and renewable energy programs in Boulder because Boulder citizens voted to continue the evaluation of creating a municipal electric utility. Xcel claims these programs are “discretionary” even though all ratepayers pay for them, and state law requires that all customers of utilities like Xcel be treated without discrimination based on location. So Xcel’s opening gambit is on very shaky grounds.
Xcel’s specifics are also suspect. If Boulder goes “muni,” Xcel wants to claim compensation for pre-2012 Solar Rewards rebates that helped pay for solar PV systems, and for payments for the purchase of Renewable Energy Credits (RECs) from these same systems. But the way I read my PV contract with Xcel, it appears that that Xcel paid for the RECs and owns them whether Boulder stays with Xcel or not. So the way I see it, Xcel is owed exactly zero.
In fact, Xcel should be thrilled to own the RECs without having to serve PV owners. Remember a couple of years ago, Xcel went to the PUC to try to get a special rate increase imposed on PV owners, claiming that these folks were not paying their fair share of the distribution and transmission system costs. If Boulder goes “muni,” Xcel will still own the RECs, but will avoid this expense. So arguably, Xcel should be compensating Boulder, not vice versa.
For Demand Side Management (DSM) programs (investments in customer energy efficiency and conservation), Xcel wants Boulder to reimburse it for all the money that goes into these programs beginning in 2012, and be compensated for the all the value of these investments made prior to 2012. But Xcel ignored the money Boulder customers paid to fund these programs. After all, Xcel is just the middleman – it collects money in rates and gives it back as rebates.
Xcel also wants compensation for some vague claim that the energy reduction from these DSM programs has “value” to their system, possibly by helping them avoid building new generation. But if Boulder were to municipalize, then energy use by Boulder customers on Xcel’s system would drop all the way to zero. So, using the same argument, Xcel should then compensate Boulder for this far greater “value.”
Xcel wants to cut Boulder off from Solar Gardens and WindSource (both of which were conceived in Boulder, by the way.) Solar Gardens are just big PV installations, privately owned and structured. At the scale Solar Gardens are being considered, the utility’s only real role is to do virtual net metering; the utility reduces participants’ bills according to the output of their portion of the PV installation. Thus, as long as all participants are in Boulder, there is no cost to Xcel if a Solar Garden becomes part of a Boulder “muni.”
As to Windsource, Xcel is now proposing to cut its premium by over half (see the Jan. 28 Camera article). But Xcel’s renewable energy portfolio has hardly changed, so perhaps Windsource customers should get rebates for the years that Xcel apparently overcharged us. Also, if Boulder goes “muni” and its customers begin buying renewable energy directly, then Xcel can always sell any wind RECs in excess of the Colorado Renewable Energy Standard to California, as it has been doing at a substantial profit.
Apparently Xcel has become accustomed to expecting its outrageous demands to be met, witness for example the Clean Air Clean Jobs Act with financial returns guaranteed by the Legislature, and SmartGridCity for which the PUC has already awarded Xcel $29 million and with possibly more to come. But the new PUC chairman is apparently much more hard-nosed, so that era may be over. The City of Boulder should act accordingly — keep the lines of communication open, but make it clear to Xcel that unfair demands will be rejected, not bargained over.

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