Minneapolis is Xcel’s home town, and a much bigger market than Boulder. The city is now talking about allowing their franchise agreement to lapse, in order to pursue more aggressive renewable energy policies than state law will allow if they’re served by the monopoly utility. The article gives a nod to Boulder’s votes over the last two years to explore the alternatives to franchise agreements, including the formation of a municipal utility. It’s great to see another much larger city looking at its options, and as far as pushing the overall utility business model to change, it’s great to see this happening within Xcel’s service territory. There’s a threshold out there somewhere, beyond which the current arrangement is no longer stable, and even the utility will start begging for something different. The faster we can get there, the better.
Arizona has decided to include externalized costs like water use and pollution in their utility resource planning process, with the predictable result that they’ve selected a resource portfolio heavy on renewables and energy efficiency, and light on coal. Hopefully other states will follow their lead!
It’s often been said that “time is money,” and it turns out to be more than an aphorism.
I’m going to try and tell you a story about discounting, which is one of the ways that we convert between time and money. The story has broad implications for the energy investments we choose. It’s not entirely straightforward, and if it’s going to make sense there are some background pieces you’re going to need. The background is important because the ending depends not only on understanding what is being done, but why. This story happens to be about Xcel Energy and Colorado, but the same thing happens in other places, with other companies, and in other contexts too.
To greens my argument may seem circumspect. I’m not going to challenge the doctrine of Everlasting Economic Growth. I’m not going to look at the large externalized costs of burning fossil fuels. I’m not going to argue against the monopoly electrical utility model. Those are important discussions to have — they’re just not the one I’m having here. What I’m trying to do is show that a minor change in the way we calculate the cost of future energy can drastically alter what kind of power we decide to invest in for the next century, even if we only look at the decision in selfish financial terms.
To the finance geeks among you, much of the background will be familiar, but the situation may seem strange unless you’re familiar with how regulated monopolies work. I haven’t been able to find anyone familiar with energy finance who thinks what we’re currently doing makes sense, but if you’ve got a thoughtful rebuttal, I’m genuinely interested to hear it.
Xcel appears to be backing away from new transmission lines to the San Luis Valley. This infrastructure is required to implement the several hundred megawatts of solar-thermal generation that they proposed in their 2007 resource plan. Solar thermal is the only renewable power (other than pumped hydro, which has limited availability) for which energy storage is potentially feasible right now (e.g. using huge tanks of molten salt). It’s interesting to contrast the utility’s statements on the San Luis Valley project with what they’re saying about the Pawnee retrofit, and what they said about the Comanche 3 plant.
Leslie Glustrom is to be barred from intervening in the Colorado Public Utilities Commission dockets. She’s been doing the kind of discovery and oversight work that the regulatory body and the Office of Consumer Council should be doing on their own, but apparently lack the spine to carry out. This is bad for our energy system, and bad for our democracy.