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Utility moving faster than the politicians -- Colorado renewables vote

The largest electricity and natural gas retailer in Colorado is dumping cash into a political campaign opposing a statewide renewable energy standard. At the same time the utility is forging ahead with plans to add 500 MW of wind power within the next three years. It argues there is no irony in its position -- it wants to be left alone to build wind faster than the state standard is aiming for.

Xcel Energy, the largest electricity and natural gas retailer in Colorado, not only won approval last month to forge ahead on a plan to increase its wind supply by 500 MW, it also released a solicitation for supply of that energy already by 2007. The 500 MW, added to the 242 MW of wind generation that makes up 4% of Xcel's supply portfolio today, will raise wind power's share of Xcel's electricity sales to 10%.

At the same time as proceeding with aggressive plans for wind development, Xcel is also dumping money-about $20,000 so far-into a political campaign opposing a ballot initiative that would set a statewide renewable energy standard (RES). Xcel argues there is no irony in its opposition to the ballot measure, even though it twice supported adopting a renewables standard in state legislative action earlier this year. It points out that if approved by voters in November, the measure will push Xcel and six other utilities in the state to reach a 10% target for renewables by 2015-fully eight years behind Xcel's voluntary actions to hit that level by 2007.

The ballot measure is an administrative burden which will achieve no gains for renewables and will create redundant regulatory oversight, says the utility's Margarita Alarcon. "We're already well on our way to achieving these goals," she says. "Going at it in this manner overlooks the accomplishments we've already made." Furthermore, the inclusion of a demand for 4% of the renewables requirement to come from solar resources will greatly increase costs to the utility's customers, Alarcon says. The cost to Colorado consumers to add the 10% of renewables will range from $580 million to $1.5 billion, she concludes.

The initiative, which was put on the state's November ballot by Coloradans for Clean Energy, calls for the largest seven of the state's 60 electric utilities to meet the 10% minimum standard for renewables by 2015. It is supported by Colorado House Speaker Lola Spradley, a Republican who sponsored the legislative bills this year, and by Congressman Mark Udall, a Democrat.

Secure and stable

"It is a crucial time to think about our energy security," Udall says. "We need to prepare for the future by reducing our dependence on unstable foreign energy sources. Renewable energy is a step toward a secure, stable energy future."

The Colorado Public Utilities Commission approved last month Xcel's plan to move ahead on the 500 MW of wind generation while reserving a decision on the remainder of the utility's 3600 MW supply portfolio proposal until the end of the year. That plan includes the addition of a base load 750 MW coal fired generating unit at the utility's Comanche Generating Station near Pueblo.

According to Xcel's least cost plan, which it filed with the PUC in April, it expects the 500 MW of additional wind resources to cost $0.028-$0.035/kWh after factoring in wind's federal production tax credit (PTC) worth $0.018/kWh. That compares favourably, Alarcon says, to the cost of coal generation at $0.04-$0.05/kWh and natural gas $0.05/kWh. Solar is much more expensive at a cost upwards of $0.10-$0.15/kWh, she says.

The huge support for wind generation is a turnaround for the utility, which in 2001 had rejected the 162 MW Colorado Green project in Lamar as too costly. It later transpired the utility had underestimated the future price of natural gas. The project was completed in December and Xcel now says wind is a low cost resource when factoring in the risk of fuel costs, including natural gas, which has risen to new highs over the last year.

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