Environmentalists steer Xcel Energy’s planning process at the expense of Xcel’s customers

On Monday I took a short drive to Becker, Minnesota to testify before the House Job Growth and Energy Affordability Committee at a special session on the federal Clean Power Plan and its possible impact on the 2,400 MW Sherco coal plant that anchors the Becker community.  I highlighted the fact that Minnesota’s electricity prices are already growing less competitive and how these higher prices destroy jobs in Becker and across the state. 

Maintaining Sherco is an important part of a diverse and affordable electricity system.  However, the federal Clean Power Plan threatens Sherco and affordability by requiring unnecessary and unfair reductions in carbon emissions in Minnesota.  The plan requires the state to reduce carbon dioxide emissions by 40 percent by 2030 and fails to account for the billions of dollars Minnesota customers already invested to reduce emissions. 

But it’s not just the Clean Power Plan that threatens electricity affordability and jobs in Minnesota.  Xcel Energy, the owner of the Sherco plant, has already released long range plans to reduce emissions 40 percent by 2030, which calls for operating “Sherco Units 1 and 2 at reduced levels through 2030.”  The plan also offers alternative scenarios where Scherco Units 1 and 2 are shut down.

Xcel customers invested heavily in upgrading Sherco’s pollution controls and other maintenance in recent years.  A significant part of that investment will be lost if Sherco’s output is reduced or eliminated.  Not only will the investment be lost, but customers will need to fund new generation that’s not needed right now.  In the first five years of their plan, Xcel admits they “have no capacity needs.” And capacity “needs” beyond five years are in part driven by reducing Sherco’s output. Nonetheless, Xcel asks their customers to fund new generation to meet the state’s Solar Energy Standard and Xcel’s self-imposed goal of reducing carbon emissions by 30 percent by 2020 and 40 percent by 2030.

How is it that Xcel appears to already be on board with the Obama administration’s Clean Power Plan?  They did after all take part in the White House ceremony to announce the Clean Power Plan and are shooting for similar carbon reductions.

Here’s the unsettling truth: Environmental activist organizations that advocate sharp and expensive reductions in carbon emissions now play a large role in steering Xcel’s planning process.    These organizations are members of RE-AMP, a network of environmental organizations “with the goal of reducing global warming pollution economy-wide 80% by 2050.”  Some are even actively working to force Xcel to shut down Sherco Units 1 and 2.

This isn’t just conjecture or supposition.  Xcel readily admits to the role environmental activists have played in guiding their vision for Minnesota’s energy future through the e21 Initiative

According to a letter Xcel sent to the Minnesota Public Utilities Commission last December, the e21 Initiative “brought together a diverse group of stakeholders to create a vision for aligning Minnesota’s regulatory framework with State policy goals, changing customer expectations, new technologies, and innovation.”

Xcel went on to unequivocally state, “We support this vision and would like to help make it a reality.”  They have further explained how their long-range plan must be “viewed in the context of the e21 Initiative” and their request to “discuss a potential roadmap for advancing the e21 vision.”

This e21 vision—the vision Xcel now advances—is largely funded and shaped by environmental activists. 

The e21 Phase I Report cites four funders: The Energy Foundation, the Joyce Foundation, Xcel Energy and Minnesota Power.  The two foundations—one based in San Francisco and the other based in Chicago—pour millions of dollars into Minnesota to support the work of environmental activists.  In 2013 alone the foundations contributed a combined $3.2 million to Minnesota-based environmental organizations.

The Great Plains Institute for Sustainable Development, a RE-AMP member, clearly led the e21 process.  The project is housed on their website, they are the first convener listed in the e21 report and they provided over a quarter of the project team members.   Moreover, they received $547,000 in grants from the Energy Foundation and $225,000 from the Joyce Foundation in 2013, no doubt to help fund the e21 Initiative. 

And despite claims of a diverse set of stakeholders, only four of the twenty-one e21 participants and two of the eleven e21 project team members might be viewed as representing the interests of people subject to higher electricity rates.  

Clearly the e21 Initiative was weighted from the start to deliver recommendations aligned with environmental activists’ agenda, not electricity customers. 

Minnesota environmental activists have long set their sights on closing down every coal plant in the region, no matter the cost to customers and no matter the jobs lost.  With that goal in mind, Xcel customers should be shocked the utility joined, funded and now enthusiastically supports the environmentalists’ e21 vision.   

Minnesota Power customers should also be concerned, but so far the utility has not publicly endorsed the e21 vision like Xcel.  That said, Minnesota Power announced earlier this summer that they would soon close down their Taconite Harbor 1 and 2 coal plants, much to the delight of environmentalists.  It’s not clear what this means for communities in northern Minnesota.  Maybe the plants were at the end of their useful life, maybe not.

All of this is moving forward at a time when Minnesota’s electricity prices are growing, and growing less competitive.  Since 2007, the state’s inflation-adjusted electricity prices increased by 18.3 percent while the national average increased by just 6.4 percent. 

What accounts for these rising prices?

One of the main differences between Minnesota and the nation is that the state is now well into implementing the Next Generation Energy Act of 2007’s renewable energy and energy efficiency requirements. 

The e21 vision supported by Xcel and Obama’s Clean Power Plan would add to these costly requirements and lead to further rate increases on Minnesota electricity customers.

It’s not too late to step in and at least add some balance to the forces shaping Minnesota’s energy future.  The phenomenal turnout of over 300 people at the House hearing in Becker on Monday shows environmentalists don’t have the only voice.  It’s time for these other voices—voices for affordability and reliability—to grow louder.