On May 20, 2019, after closed-door negotiations with a few environmental groups and the labor union LIUNA, Xcel Energy announced an agreement on early retirement of its coal plants, new solar commitments, and buying a fracked gas plant.
While Xcel retiring its coal plants, committing to ramped up energy efficiency, and adding 3,000 megawatts of new solar by 2030 are significant wins for Minnesota’s health, environment, climate goals, and energy customers, it comes at a high cost.
Xcel shareholders make out handsomely from the deal. The monopoly utility wins a cease fire over its proposal to purchase an existing gas plant in Mankato. Taken together with the proposed Becker gas plant that it won through legislative hijinks two years ago, the projects will add well over one billion dollars to the company’s rate base - i.e. the amount energy users pay a guaranteed rate of return to Xcel upon.
The settlement also includes an offer of utility ownership of half the proposed 3,000 megawatts of solar. At today’s prices, that’s close to another $2 billion in utility spending. Xcel is also pursuing an extension of the Monticello nuclear license. That’s also potentially lucrative, since on every dollar spent, shareholders collect a 9 to 10 percent return. All told, shareholders could have just locked in nearly $500 million in profits.
The returns for Minnesota customers?
In the headline move, Xcel will retire their remaining coal plants by 2030. This commitment is somewhat less impressive than it sounds, since such plants are closing across the country because they can’t compete with clean energy. Arguably, utility regulators with the public interest at heart would insist on such retirements, regardless.*
More disturbing, the utility plans to replace a substantial portion of the retiring coal capacity with fracked-gas-fired power. Supposedly, the utility can do this without harming its 80 percent carbon reduction goal, but this involves a rather glaring omission. Aside from the well-documented health and environmental concerns around the extraction of fracked gas, gas extraction rigs and pipelines leak. With a greenhouse impact 100 times more powerful than the carbon dioxide released during power generation, leaked methane has been shown––in a recent study of Minnesota’s grid––to largely erase the greenhouse gas emission gains of switching from coal to gas.
That’s beside the fact that these fossil-based plants’ licences would expire after Xcel has committed to be “carbon free.”
“In other words,” Community Power board president John Farrell concludes, “Xcel shareholders could earn a half a billion dollars in profits from a settlement that falls short of the carbon reduction goals the utility had already publicly committed to.”
Should the clean energy groups have compromised? Setting retirement dates for coal plants is no small matter in a climate crisis. It’s hard to blame them for wanting to secure a win, even if it’s simply firming up the utility’s public commitments. Rather, this settlement exhibits a stunning lack of faith in the monopoly utility’s regulators, the five-member Public Utilities Commission. Regulators should already be demanding early coal plant retirement to save customers money. Just because Xcel snuck one gas plant past regulators in a legislative end-around doesn’t mean they should roll over for a second time. And energy efficiency commitments shouldn’t be voluntary when they represent the cheapest source of energy.
Elizabeth Dickinson, St Paul community member, makes an analogy: “The rush to embrace Xcel as the proverbial knight in shining armor disguises the fact that you, me, and all of us are paying for the armor, the horse, the knight… and also the accumulating nuclear waste and gas emissions!”
“This settlement is sweet to shareholders and sour to customers,” Community Power organizer Michelle Wenderlich comments.
But it’s hard to blame the advocates. They’ve had too much experience.
*You may forgive our skepticism, however. See MN Power’s recent gas plant proposal and the Line 3 tar sands pipeline discussion for counter examples.
Press contact:
Michelle Wenderlich (they/them)
Organizer, Community Power
(585) 732-3815
Vibrant Clean Energy, LLC, “MINNESOTA’S SMARTER GRID,” July 31st, 2018
About Community Power:
Community Power seeks to educate and activate residents of Minnesota cities and towns to create clean, local, equitable, affordable and reliable energy systems.
We are a coalition formed non-profit interested in expanding energy options for Minneapolis as well as cities and towns across Minnesota. We support local renewable energy, environmental justice, conservation + energy efficiency, and democratic control of our energy system. We are always seeking more community partners who are excited to co-develop strategy and engage a broader base of Minnesotans toward this vision.