Xcel’s voluntary wind power customers in Colorado will be hit with higher bills beginning next year.
But regular customers will benefit from lower electric bills, according to Xcel filings with regulators late Tuesday.
The utility says fully subscribed customers of WindSource will have to pay higher premiums – about $13 more per month compared with regular customers – because they aren’t benefiting from declining natural gas prices enjoyed by regular customers. Fully subscribed customers get all their electricity from wind power.
Also, savings from wind power seen in past years, when wind farms were replacing old and costly natural gas-fired power plants, are declining as wind farms are replacing newer and more efficient power plants.
“Initially, wind was replacing the most inefficient natural gas plants, but as we go along and add more wind further down the line, we replace power from more efficient natural gas plants or possibly less-efficient coal plants,” said Xcel pricing consultant Dan Ahrens. “So, the economic benefits get eaten up”
The new rates, if approved by the Colorado Public Utilities Commission, will take effect Jan. 1. Spokeswoman Deborah Collette said the request could be considered at the commission’s meeting on Dec. 19, during which “action may be taken”
New rates for fully subscribed WindSource customers will average $69.94 a month, up $7.22 from the current $62.72 a month.
New rates for regular residential customers will average $56.88 a month, 16 cents lower than the current $57.04. Those customers depend on Xcel’s general system, which generates 59 percent electricity from coal, 35 percent from natural gas, and 3 percent each from hydro and wind.
Xcel’s filing underscores the higher cost to customers if more wind power is added to the generation system, said Stan Lewandowski, general manager of Intermountain Rural Electric Association, the state’s largest rural electric co-operative serving more than 130,000 customers.
Lewandowski has been a vocal critic of a Gov. Bill Ritter-backed proposal, passed by lawmakers this year, which requires Colorado utilities to get 20 percent of their electricity from renewable sources (sun, wind, plants and animal waste) by 2020 – double the goal of 10 percent by 2015 that was set by Amendment 37, which voters passed in November 2004.
Rural electric co-ops would have to get at least 10 percent of their electricity from renewable sources by 2020.
Customers eventually would pay the cost incurred by utilities to comply with the standards.
“I think you got two problems with wind,” Lewandowski said. “When you have over 10 percent (of your total power from wind), the cost gets too much and you have problems with reliability”
However, wind industry advocates said the current lower price of coal and natural gas does not reflect their true price. Also, those fuels likely will pay a carbon tax in the near future that would make them a more expensive source of power generation compared to wind, a freely available source.
Since the passage of renewable-energy standards by Colorado lawmakers, the wind industry has created thousands of construction jobs and hundreds of direct and indirect jobs, said Craig Cox of the Interwest Energy Alliance, a Denver-based group that lobbies for the wind industry.
A study by the group estimates savings of $251 million to Xcel customers from wind energy over the next 20 years.
“We believe a carbon tax (on fossil fuels) is inevitable,” said Mike Mike Mendelsohn, a senior policy analyst with Western Resource Advocates.
“Once a carbon tax is incorporated in the price of electricity, then Xcel’s planned portfolio of renewable resources and energy conservation programs will be less expensive than an alternative portfolio of greater reliance on traditional resources such as coal and natural gas”
Paying a price for renewable energy
* Xcel customers who opt to get all of their energy from wind power likely will get hit with higher bills next year. The breakdown:
$69.94 will be the average Xcel Windsource customer bill beginning Jan. 1.*
$62.72 is the current average bill for Windsource customers.
$56.88 will be the average Xcel residential customer bill beginning Jan. 1.*
$57.04 is the current average bill a regular residential customer pays.
By Gargi Chakrabarty
13 December 2007
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