Wind power could blow in electric rate increase
Another new Utilities cost: $750,000 for certificates to meet state’s ‘renewable’ energy requirement this year

       Changes are in the wind for Colorado Springs Utilities.
       One potential impact is a 1-to-2-percent electric-rate increase once the city starts buying wind power, which is more expensive than traditionally used coal. A willingness to pay that much more for “renewable energy” was supported by more than three-quarters of about 1,000 Utilities customers who participated in two surveys (through random phone calls and a website form) last year, according to a recent report from the city enterprise to the Utility Board (City Council).
       “The data that's comes back is saying there is a shift happening with the customers in our community. We need to take this into account,” Utilities CEO Jerry Forte commented.
       The board/council offered no objection to the rate-hike concept at the Jan. 16 meeting. Mayor Lionel Rivera agreed that survey results showed “most people would accept a moderate increase.” The only demurring comment came from council member Scott Hente, who was concerned about the “other 199,000” customers who did not respond to the survey (even though the opportunity was included in everyone's bills). “That's why I want to be careful when there's such a small portion of the customer base,” he said.
       A rate hike will not happen right away because the Utilities grid has not yet purchased any wind sources, let alone put them on line. Its only current renewable sources (at least as they're defined by state law) are a few hydroelectric generation units, but these together do not equal the required renewable level, which is 1 percent of the company's resources.
       So how is Utilities staying legal in using less?
       The answer is that the entity has bought “green certificates.” These pieces of paper, purchased from a California supplier, represent a Springs Utilities investment in two to three megawatts of renewable power this year, even if that power is not actually in its grid, explained Steve Knopp, the entity's renewable energy manager.
       Utilities can in turn market such certificates to customers, who would be “buying the greenness of the energy,” he said.
       Coal, Utilities' main source of electric power, is not defined as renewable because of the perceived environmental impacts in mining and processing it. Neither, for that matter (to Utilities' dismay), is some of its large-scale hydroelectric power; in all, hydro comprises about 9 percent of Utilities' current resources.
       The state law, in which the Colorado Legislature went “beyond,” as Knopp put it, the voter-approved Amendment 37 of 2004, requires utility providers to have 1 percent renewable power now, 3 percent in 2011, 6 percent in 2015, and 10 percent in 2020.
       Springs Utilities' cost for the certificates, at the 1 percent level this year, is about $750,000, Knopp said. Customer rates did not go up correspondingly because “it's a very small increment [of Utilities costs]” and “we've really been on a path to reduce costs,” he said. “This just means we have to work harder.”
       The enterprise has bought enough certificates “to cover us through 2015,” he added. He believes a fair price was obtained, but duplicating such a deal would be much harder in 2015 because competition for certificates will have driven prices up.
       Utilities was already looking into wind power before its presentation to City Council. Of the two main renewable options (solar is the other), it is the more affordable. A survey about two years ago had shown some customer interest in these possibilities, but those numbers were even more noticeable in the '07 surveys, Debbie Pelican of Utilities told the City Council/Utility Board.
       Here are current cost comparisons, per megawatt hour, as provided by Knopp:
  • Coal - $25-30.
  • Wind - $55-70.
  • Solar - about $250.
           Utilities began developing a request for proposals for wind power in the latter part of 2007. The goal is to find the most economical provider for up to 100 megawatts of capacity. It gets complicated because the cost of transmission has to be factored in; also, the wind only blows an average of 35 percent of the time. Another issue is that the state law give economic advantages to buying from an in-state wind farm.
           Reliability should not be an issue. “Wind power has matured a lot over the last five years,” Knopp said. “Big companies have gotten involved.” He described a wind farm he visited north of Greeley, with towers more than 600 feet high.
           Another consideration is political trends - for instance, there are those who want government action against global warming - that could lead to environmental laws making coal less affordable and wind and solar more so. Already, Utilities has backed away from its one-time plan to bring a new coal-fired power plant on line by 2014. Now, the date for a new plant has been pushed back to 2016, and Knopp said the entity is open-minded about what kind of fuel(s) it would use.
           On the other side of the issue are those who want to see renewables used for all, not just some, of Springs Utilities' power in order to reach “sustainability” in terms of power resources. Doing this would probably increase costs by 35 to 40 percent, Utilities officials have estimated, and then there's the question of whether all customers should pay that extra cost or just those who want the system to be “green.”
           City Council had opposed Amendment 37, charging in a 2004 resolution that it “creates a mandate that does not correspond with the local needs of this community, imposes unwarranted costs upon Colorado Springs Utilities' customers and removes local control over resource management decisions.”
           Now, Knopp admits that Utilities is feeling its way along in considering modern energy options. We're learning,” he said, “and trying to get up to speed on the renewable game.”

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