Expert laments 'perverse incentive' in energy program

By Troy Hooper
Real AspenApril 6, 2011
Xcel Energy is manipulating Colorado’s renewable energy policies to reap profits from ratepayers above and beyond the allowed amount, according to a Public Utilities Commission renewable energy expert.
Xcel Energy is planning to double its wind resources in the next decade.

“It is now well known that [Xcel] has far exceeded its available budget for renewable resources and that the Company has been loaning money to the [Renewable Energy Standard Amendment] fund – and earning its rate of return on those funds – to allow it to acquire more renewable resources than it needs for RES compliance,” renewable energy expert Richard Mignogna testified last month.

He questioned whether the PUC should put the brakes on its demand for wind. Mignogna argues that Xcel uses the interest it collects from ratepayers for its solar commitments to invest in wind resources that it then sells to California in order to turn a tidy profit.

“The Company’s renewable energy acquisitions have already far exceeded its RES obligations. Exacerbating this problem and creating a perverse incentive is the fact that the Company is earning a profit on the sale of the excess Renewable Energy Credits which were paid for with interest by ratepayers. The Company is profiting on both ends of this deal and has exercised inadequate fiscal restraint,” he wrote March 16.

Xcel, aka Public Service Co., has exceeded its available budget under the Renewable Energy Standard Amendment fund, which he claimed is projected to end 2011 with a $97 million deficit.

“While PSCo typically argues that it is only charging customers the two percent allowed by the statute, that argument is disingenuous. As we now know, the Company has been loaning money to the RESA, earning its rate of return on the funds advanced, so that it can acquire more RECs than it needs only to sell them into California so that it can then claim a percentage of those proceeds,” Mignogna wrote.

Xcel spokeswoman Michelle Aguayo blamed the negative RESA balance on payments the company had been making to the Solar Rewards Program ― payments it recently reduced ― and she said the shortfall has “relatively nothing to do” with excess renewable wind credits it has sold to California.

The renewable energy wind credits Xcel is selling are not funded out of RESA, she said. They were acquisitions that the PUC previously ordered based on the 2005 All Source Request for Proposals.

“Selling RECs into CA is a win-win for both our customers and the Company,” Aguayo said. “We are under no obligation to seek out buyers of RECs but we believe it is a prudent thing to do. We negotiate a good price on behalf of our customers. Both of these actions produce margins that are shared back with our customers. Clean energy is good for Colorado. The legislature gave us limited funds that we could use to purchase renewable energy. By selling excess RECs we are stretching this very limited fund of money. This is not being disingenuous.”

Still, in light of the acquisition of more renewable resources than is actually mandated, Mignogna questioned “whether acquiring any resource in the 2011 Wind RFP is prudent. The company should not be permitted to advance funds, and earn interest on them, simply to acquire resources that it may then sell into other jurisdictions so that it may profit additionally from the sale,” he testified.

Xcel, meanwhile, is planning to double its wind resources by 2020.

comments: 0 Comments on "Expert laments 'perverse incentive' in energy program"

Be the first to comment below.

Comment Form Info  Comment Information
Real Aspen encourages you to post comments on our articles and blogs. Logged in email is required for monitoring purposes. Your email will not be published and will not be distributed to any third-party. Abusive, obscene, profane, threatening, libelous or defamatory comments are prohibited. By posting a comment, you agree to this policy and our terms of use. To report an abusive posting, please contact us.

To make a comment, please log in or create an account. This helps us prevent spam and other malicious attacks.

Please log in to comment


Create a user account to comment

Snow Report

  24hr snow mid dpth snow cond.
A-Basin n/a n/a
Aspen n/a n/a closed
BC n/a n/a closed
Breckenridge n/a n/a closed
Buttermilk n/a n/a closed
Copper n/a n/a closed
Crest. Butte n/a n/a closed
Eldora n/a n/a closed
Heavenly n/a n/a closed
Highlands n/a n/a
Howelsen n/a n/a closed
Keystone n/a n/a closed
Kirkwood n/a n/a closed
Loveland n/a n/a
Monarch n/a n/a closed
Northstar n/a n/a closed
Powderhorn n/a n/a closed
Purgatory n/a n/a closed
Silverton n/a n/a closed
Ski Cooper n/a n/a closed
Ski Granby n/a n/a closed
Snowmass n/a n/a closed
Steamboat n/a n/a closed
Sunlight n/a n/a closed
Telluride n/a n/a closed
Vail n/a n/a closed
WinterPark n/a n/a closed
Wolf Creek n/a n/a closed
More Weather Reports
A teaser to the Winter X Games in Aspen
Methane from Bill Koch's coal mine powers Aspen Skiing Company
'Circle of Corduroy'