Steve Pomerance

What got me thinking about this topic was the article in the Camera a few days ago announcing the upcoming debate on fracking between County Commissioner Elise Jones and Governor John Hickenlooper. To quote the Camera, “the goal of the 45-minute session is to provide a state-versus-local perspective on the effects of fracking, including public health concerns, the environmental impacts and local economic considerations.” To me, an equally important issue is the use of natural gas as the “transition fuel.” Hickenlooper speaks of it this way, but if he really grasped its significance, he’d be raising a whole host of other issues. Of primary importance is that methane (70-90 percent of natural gas) is a potent greenhouse gas that, per the EPA, has 25 times the global warming potential of CO2 over a 100-year period, with the effect concentrated in the first decades. Although burning methane may produce half as much CO2 per unit of electric energy produced as coal, any gas leaking from

Investor owned utilities, like Xcel, that own their own generation, transmission and distribution, make money by investing their equity capital and borrowed debt in hardware (power plants, transmission lines, etc.) and earning a regulated rate of return on these investments. This rate of return is determined by the Public Utilities Commission and is ultimately set by looking at other utilities in similar circumstances. This somewhat circular process, together with the ability of utilities to spend large sums on legal and accounting staff, has led to a double whammy of high returns on equity (over 10 percent/year) with very low risk, witness the PUC allowing Xcel to recover $29 million back on its SmartGridCity debacle. So these monopolies are completely unlike normal companies, which must perform competitively to make any money at all. That’s the regulatory “bargain” we all have had to live with. Because the return on equity is so certain, it becomes in effect a relatively fixed ob

On Tuesday night the Boulder City Council discussed the report on the potential for Boulder to create its own municipal electric utility, like Longmont, Fort Collins and many other Colorado cities. The conclusion of the report was that a muni could deliver rates competitive with or below Xcel’s, a lot more renewable energy and much lower GHG emissions, and as good or better reliability, all on a solid financial basis, assuming that Boulder does not have to pay Xcel an exorbitant amount for “stranded costs.” The modeling results compared a number of different options. A critical aspect was to ensure that the Xcel “baseline” option, to which the muni options were compared, was conservative. So the Xcel option was given the benefit of the doubt on whether Xcel’s planned $3.5 billion capital investment program was fully incorporated into rate projections for Xcel, and whether coal costs will continue to rise faster than Xcel’s official estimates. The Low Cost and the Low Cost/No Coal