Colorado Regulators and Xcel Energy Craft Fuel Switching Strategy - In Secret!

Consumers, workers, businesses, and local governments are up in arms over Xcel Energy’s cozy relationship with state regulators, as witnessed by the events unfolding before the Colorado Air Quality Control Division. House Bill 1365 requires state regulators to consult in good faith with Public Service Company (Xcel) to design an emissions reduction plan to “meet the current and reasonably foreseeable requirements of the Clean Air Act and state law in a cost-effective and flexible manner.” Now the bureaucrats charged with seeing to the fair and balanced implementation of the law are fighting a petition by local governments that would allow the public to attend and participate in what are now closed door meetings, and allow for public access to the records from these meetings.

The reason given by the Air Pollution Control Division, incredibly, is the claim that it is not a “state public body,” as defined by the Colorado Open Meetings Law. The Division is seeking to keep consumers in the dark as they discuss with Xcel critical energy choices that will have a substantial impact on the rates that consumers pay for electricity. As part of the emissions reduction plan the utility is required to submit per HB 1365, Xcel is expected to propose very soon that it will shutter several coal fired power plants and switch to high cost natural gas to generate electricity for Colorado electricity consumers. Among the parties that will be affected by this plan are the local governments of northwest Colorado – whose citizens and the communities in which they live will suffer from the lost jobs and economic development that comes from coal mining in northwest Colorado. Xcel Energy - once again – is defining the rules behind closed doors that will allow them to make high cost energy choices for consumers.

The electricity consumers of Colorado deserve better. These back room discussions between Xcel and the Air Pollution Control Division will ultimately form the basis for the assessment of the costs that electricity consumers will have to bear once the emission reduction plan is approved. If the Division is allowed to make these decisions behind closed doors they will not have the benefit of public input and discussion to provide them with critical information that they will need to assess the true costs associated with regulating emissions from coal versus the true cost of natural gas emissions.

The Colorado Mining Association (CMA) has already pointed out several flaws in Xcel’s modeling scenarios of costs, as Xcel – in pleadings filed with the Public Utilities Commission - has already overstated the costs of continued coal use and underestimated the costs associated with natural gas. For example, Xcel’s modeling ignores the fact that switching its existing coal units to natural gas would cost Colorado ratepayers roughly $100-140/ton avoided CO2 emissions. These fuel switching costs are far higher than then the projected costs to implement federal Green House Gas regulation ($15-30/ton), Department of Energy projected Carbon Capture and Sequestration costs ($65-75/ton), and other alternatives that would allow for the continued use of coal.

The point is simple: The Air Pollution Control Division, which will play a critical role in assessing the “reasonably foreseeable costs” associated with various fuel options, should open its process to public review and scrutiny. To continue to conduct these discussions behind closed doors violates both the letter and spirit of the Colorado Open Meetings Law. The underlying legislation – House Bill 1365 – was itself the product of closed door negotiations between the Governor, Xcel Energy, the natural gas lobby, and anti-coal interests. Unfortunately, the secretive process continues, and if it is not made subject to the light of day, Colorado ratepayers will pay the ultimate price. That is just plain wrong.
Stuart A. Sanderson, President