Xcel forecast: Wind Plan would boost renewable-energy rank for Colorado

Xcel Energy plans to transform Colorado into one of the biggest wind-power states in the nation, despite state lawmakers’ attempts to thwart bills that would encourage using renewable energy.

On Friday, the utility proposed to triple its wind-power capacity to 740 megawatts by 2006 – power that would serve the Front Range. If approved, Colorado would move to No. 3, up from No. 8, among wind-energy-producing states, behind California and Texas.

By Gargi Chakrabarty, Rocky Mountain News

http://www.insidedenver.com/drmn/business/article/0,1299,DRMN_4_2851557,00.html

Now, the state produces 240 megawatts from wind power. One megawatt of power serves the electricity needs of roughly 400 to 900 households.

Xcel also proposed having a two-thirds ownership, or $939 million, in a new 750-megawatt coal-fired plant in Pueblo. It is negotiating with Intermountain and Holy Cross rural electric companies for the remaining one-third stake in the $1.3 billion plant.

"Obviously Xcel is doing a good job of adding renewable resources to its portfolio," said Jake Mercer, an analyst with Piper Jaffray in Minneapolis. "It is a good sign to me they are looking to own a large percentage of the coal-fired plant."

Including these two projects, Xcel plans to add 3,600 megawatts to its system in the next decade. The Public Utilities Commission, which got the proposal late Friday, is expected to rule by year-end.

The utility, which serves 1.2 million electric customers in Colorado, will seek competitive bids from private power producers for the remaining 2,350 megawatts.

"We will seek bids as soon as the PUC approves it," said Fred Stoffel, Xcel’s vice president of policy development, noting that Xcel will welcome all sorts of plans, including gas, solar and wind energy.

Power generated from the 162-megawatt Lamar wind farm near Denver is priced at 3.26 cents per kilowatt-hour. This compares with 4.5 to 5.5 cents per kWh for natural gas, 4 to 5 cents per kWh for new coal and 10 to 15 cents per kWh for solar.

"Wind is a hedge against price volatility in other fuels like natural gas," said Craig Cox, executive director of the Interwest Energy Alliance, a group that lobbies for the wind-energy industry. "What other conventional technology can you know the price of 15 years from now like you can with wind?"

Colorado legislators have repeatedly thumbed down bills aimed at boosting renewable energy use. House Bill 1273 by Lola Spradley, R-Beulah, would have required Xcel to generate 500 megawatts by 2006 and 900 megawatts by 2010 from renewable sources. It was defeated last month.

Stoffel said Xcel would ask state regulators to approve its wind-energy request by June, so that it can seek bids from private producers soon afterward.

By then, the federal tax credit on wind-energy production – 1.8 cents per kWh – which expired on Dec. 31, 2003, could be reinstated, Stoffel said.

Xcel doesn’t want to build the wind farms; instead, it wants private producers to build them, and then sell the electricity at wholesale rates to it.

"Our model showed the advantages of coal and renewable energy, primarily wind," Stoffel said. "Including the tax credit, wind does displace natural gas at times. So wind is an economical choice for us."

If approved by regulators, Xcel plans to start the coal plant this year and complete it by late 2009. Unlike the wind plants, Stoffel said Xcel doesn’t want to seek bids on the coal plant because the utility can do a better job of bringing it online in time.

Although the cost of electricity fueled by coal and wind is lower than other types of fuel at current prices, there are some drawbacks.

Wind doesn’t blow all the time, and it takes a longer time to build a coal-fired plant than a natural gas one, warned analyst Mercer.

"There are risks involved," Mercer said. "But once the plants are up and running, they are far cheaper to customers."

Top wind-energy-producing states

Rank/State Megawatts

1. California 2,042.6

2. Texas 1,293.0

3. Minnesota 562.7

4. Iowa 471.2

5. Wyoming 284.6

6. Oregon 259.4

7. Washington 243.8

8. Colorado 240.0

9. New Mexico 206.6

10. Oklahoma 176.3

Source: Interwest Energy Alliance