Blake: Enviros, Xcel team up to stick it to ratepayers

Published May 5, 2007 at midnight

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It took two to do the renewable-energy tango during the recently completed legislative session: The environmental community and its new best friend, Xcel Energy.

Not long ago, the big utility was considered a reactionary enemy of renewable-energy schemes. It was burdened by this old-fashioned notion that it should keep the cost of power as low as possible, and renewables cost more.

But the enviros finally figured how to turn an enemy into a friend: Just make sure Xcel is entitled by law to stick the extra cost of renewables onto the back of ordinary ratepayers, and thus continue to provide shareholders with the rate of return they're guaranteed by law.

Taxation by regulation, some have called it. And what's nice about it from Xcel's standpoint is that it's very difficult for ratepayers to figure out from month to month how much extra they're paying.

Consider Senate Bill 100, which entitles utilities to recapture the costs of new transmission lines while they're still being built. Historically, they couldn't start to recover their construction costs until the lines went into service. That's because regulated utilities were supposed to be treated like ordinary corporations, who can't earn back the costs of building a new store, say, until it opened.

If we're not careful, oil companies are going to want to be regulated by the PUC too, so they can recover the cost of a new well while they're still drilling - even if the hole turns out to be dry.

House Bill 1037 instructs utilities supplying natural gas and electricity to begin energy-saving programs that provide rebates to customers who install more energy-efficient lights, appliances and insulation.

To pay for the rebates the Public Utilities Commission is required to allow the utilities a rate of return higher than on other investments, meaning it can collect surcharges on bills to residential and commercial customers.

In an ordinary world, those who invest in energy-efficient appliances would reap their own savings directly. They would have to figure out first whether the extra cost of efficient appliances was worth the long-term savings. But under this bill they would be entitled to rebates from the utility. They'll be subsidized by other ratepayers who couldn't afford to invest in the new appliances.

House Bill 1281 doubles the minimum amount of renewable energy that Xcel and other investor-owned utilities must produce by 2020. But it allows them to recover the extra cost of producing it from all ratepayers. So there was no reason for Xcel et al. to resist, and they didn't. The bill is especially generous to the wealthy few who can afford to install solar panels on their homes, allowing them to collect generous checks from the utilities for most of their cost. The checks will ultimately be paid by poor and middle-income ratepayers.

Perhaps the most radical energy measure of the session was Senate Bill 22, which will turn the PUC into a sort of welfare agency by allowing it to authorize Xcel to charge the wealthy and middle class more so that it can charge the poor less.

Historically the PUC has been forbidden to discriminate among types of ratepayers.

Although not technically a renewable-energy measure, it will feel the effects of the new policies. Rising energy bills will cause more people to plead for special treatment by the PUC.

Historically the PUC's work has been fairly mechanical, deciding what rates should be so that shareholders can earn a certain return.

But now it will have to become very political, deciding whether to favor veterans, or old folks, or the handicapped, or whoever makes the best case. And Xcel loves SB 22, because it figures to have fewer deadbeats to go after. The middle-class and wealthy will be helping to pay their bills.

blakep@RockyMountainNews.com or 303-954-5119.

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