The company wants $589.7 million by the end of 2025 to maintain infrastructure and keep trees at bay. Consumer advocates say that’s not necessary. Lucy Haggard, Colorado Sun, Jan 20, 2021
Xcel Energy wants to charge its Colorado customers $589.7 million during the next five years to reduce their risk of causing wildfires, but consumer advocates aren’t buying it.
Xcel’s subsidiary, Public Service Company of Colorado, has cited the catastrophic wildfires in California started by Pacific Gas and Electric as motivation for the proposal. Xcel, which has 1.5 million electric customers in the state, is asking customers to pay for the work with a monthly fee on their bills.
While the cost is relatively small — less than 1% of a bill’s monthly total — groups representing consumers and businesses say Xcel should spread out some of the financial burden for this work to shareholders and not just customers, especially during an unstable economy.
The state Office of Consumer Counsel, which represents residential and small-business customers, and Colorado Energy Consumers, representing some of the state’s largest commercial and industrial electricity customers, also disagree with the proposal’s focus on preventing what modeling says has a 1% likelihood of happening.
“Mitigating the effects of climate change, including potential wildfire risks, is definitely in the public interest. But we’d like to see it done in a way that shares any risk between consumers and the company’s shareholders,” OCC director Cindy Schonhaut said. “We don’t want to see the tragedies that happened over the last few years in California with wildfires and utilities become an opportunity to create a windfall for the utility.”
The debate on Xcel’s request is outlined in filings and hearings before a Public Utilities Commission administrative law judge that concluded Tuesday.
Colorado is still reeling from the worst wildfire year on record. Hundreds of thousands of acres burned, fueled in large part by an extended drought. Three of the state’s largest recorded wildfires — Cameron Peak, East Troublesome and Pine Gulch — occurred in 2020.
Filed with the PUC on July 17, the proposed Wildfire Protection Rider would charge customers based on the amount of electricity used, through the end of 2025.
Xcel was allowed to increase customer bills in 2019 to cover approximately $11 million spent on previous wildfire mitigation work, but the PUC required the company to develop a more comprehensive plan for future projects. The new plan would guide projects — including vegetation management and infrastructure updates in a designated Wildfire Risk Zone — that the proposed rider would fund. The rider would also pay for some work the company did in 2019 and 2020.
Both the company and consumer advocates support the mitigation work outlined in the WMP, though they disagree on how to fund it.
A rider allows a utility to recoup costs from projects almost immediately, instead of waiting years to ask the PUC for an official rate increase. The rapid repayment lowers the risk for a company’s shareholders, but could end up overcharging customers in the short term. Xcel has promised a yearly true-up process that would refund customers if the rider collects more than the utility needs.
In an official rate increase process, companies’ requests to raise rates can be denied or adjusted, meaning the money they’ve already spent may not be fully recouped through ratepayers. Xcel executives have, especially since the beginning of the pandemic, said the company intends to avoid rate cases. In Xcel’s second quarter earnings call, Chief Operating Officer Bob Frenzel stated the company’s rate case aversion to stakeholders.
But the Office of Consumer Counsel has argued that a rate case is the most appropriate way to recover the cost of wildfire mitigation, especially for scenarios that have less than a 1% chance of occurring.
Xcel has cited the 2018 Camp fire in northern California as a significant motivator for accelerating its wildfire mitigation work. The rider proposal comes just over two years after the Camp fire burned more than 153,000 acres, destroyed nearly 19,000 buildings and killed 85 people. The fire started from a faulty electric line owned by Pacific Gas and Electric and was the most costly disaster of 2018 at $16.5 billion in total losses.
PG&E filed Chapter 11 bankruptcy soon after the fire. CEO and President Bill Johnson pleaded guilty to 84 counts of involuntary manslaughter and one felony count of unlawfully starting a fire in a county court last year on the company’s behalf, accepting a $3.5 million fine and $25.5 billion settlement.
The company recently announced that customers will have higher electric bills to pay for wildfire mitigation work. PG&E has also instituted large-scale power shutoffs when high winds and dry conditions exacerbate fire conditions, sometimes cutting power to millions of customers statewide, to prevent its equipment from sparking a fire.
In testimony to the PUC, Xcel Regional Vice President for Rates and Regulatory Affairs Brooke Trammell said the risk of a utility-related fire in Colorado like that of the Camp fire is relatively low, but taking steps to mitigate such a disaster would reduce the potential cost of recovery to $1 billion from $2.6 billion. Equipment worth $2.4 million was damaged in the Grizzly Creek and Williams Fork fires, the company told The Colorado Sun.
“We believe that the company’s focus on preventing the most catastrophic wildfires is the most appropriate and prudent course of action given the potential consequences of such an event to the public and the environment,” Trammell wrote in testimony filed with the PUC, adding that the company “does not agree that it is sound regulatory policy to wait for a disastrous event to occur before taking remedial action to solve or mitigate the risk.”
Xcel has already been doing work aimed at preventing utility-caused wildfires and has said it will continue to do this work if the mitigation plan is approved without the rider. The company says that a rider would help accelerate the pace of projects, but the OCC has argued an accelerated pace is not necessary to prevent scenarios with a low likelihood of occurring.
The Office of Consumer Counsel partnered with Colorado Energy Consumers and PUC staff to offer a stipulation, or settlement, to Xcel that would accept the plan as written. Instead of a rider, the company would be allowed to defer the cost of the highest risk infrastructure improvements until it comes before the PUC for its next rate case. Xcel opposed the terms.
A PUC administrative law judge is expected to make a recommendation to the commission on both the plan and the rider within a few weeks.
31 Countries, States, And Cities Have Gas/Diesel Car Bans In Place
January 2nd, 2021 by Steve Hanley
There is a fundamental difference of opinion between those who think government has a duty to create the rules for an orderly society and those who think government should stay out of the way and let people create their own commercial and personal relationships. Never the twain shall meet, apparently.
The conflict becomes most acute when the response to an overheating planet is the topic of discussion. There is a large (and growing) number of people who think the free market is all humanity needs to craft responses to global warming. If water is scarce, it will become more expensive. That in turn will induce people to make economic choices like whether to stay and pay the higher prices or move to where prices are lower. It’s the magic of Adam Smith’s “unseen hand” at work and it guarantees the most efficient use of capital. It also insures that some people will become very, very wealthy and what’s wrong with that?
The other side of the coin is the laws and policies created by governments can encourage actors in the private sector to take risks they would otherwise avoid. Government loan guarantees unlock access to capital for all sorts of clean tech ventures from solar panel makers to lithium mines. Governments can also underwrite basic scientific research that is too expensive for private enterprise to tackle and help accelerate the commercial acceptance of new technologies.
Focus On Electric Vehicles
Let’s focus on electric vehicles. If people want EVs, let them vote with their wallets. If prices are too high, few will buy them and that’s the way things should be if you are a free market advocate. Forget rebates, tax credits, and the like. If charging infrastructure is required, let private industry build it. Tesla has done so without any government help. Why can’t other companies do the same? There were no government incentives to encourage people to buy conventional cars or build gas stations, why should there be any for electric cars and EV charging networks today?
Logically, the free market advocates are correct. We didn’t need rebates to encourage people to buy cell phones or microwaves or VCRs (remember them?). What’s the big deal about electric vehicles? Why should they get preferential treatment? There are three answers.
One, human activity has contributed to the planet getting hotter, putting the ability of human beings to continue living on our little blue lifeboat at the far edge of the universe at risk. The need to act is immediate and urgent.
Two, the free market system so vigorously defended by its supporters is a lie. Fossil fuel companies pay NOTHING for the harm they do to the environment. It’s as if your neighbor built a campground next door and decided to dump all the effluent on your land for free. If that happened, you would be pretty upset and justifiably so. But because the damage done by extracting and burning fossil fuels is largely invisible, the pollution continues unabated.
Three, the fossil fuel industry gets massive subsidies from national and local governments. If the free market promoters were honest, they would demand an end to such financial and policy supports because they distort the economic parameters. In other words, they are in favor of free markets that favor them but opposed to free markets that favor others. There is a name for such cognitive dissonance — hypocrisy.
If humans have any hope of heading off the worst consequences of global heating, government action will be essential. Much to the consternation of the free market crowd, at the start of 2021 there are 31 national and local governments that have announced bans on the sale of some forms of transportation powered by internal combustion engines. Here’s the complete list as compiled by Charged Future.
If you are in favor of passing on to your heirs a planet where they can continue to thrive, these bans should be welcome news. If you are a free marketeer who believes passionately in the right to acquire wealth regardless of the consequences, it will set your teeth on edge. The one thing we can all be certain of is the free market crowd will never, ever admit there may be some deficiencies in their view point. Heaven forfend that the so-called level playing field they rhapsodize about should actually be level for all people, not just them.
The following is a contributed article by Cindy Schonhaut, director of the Colorado Office of Consumer Counsel.
In an Aug. 24 opinion piece titled Utilities response to the pandemic- heads- shareholders win; tails- consumers lose, a former Colorado Public Utilities Commissioner pointed out that the nation’s utility customers are under great stress, no less so in Colorado. But as we continue what is now a national conversation regarding how we continue to weather this economic environment, it’s necessary that we set the record straight on some of the piece’s other assertions.
Let’s start with where we agree: It is true that many customers across the country are experiencing great pain in paying their bills due to the pandemic, compounded by the economic downturn, job losses, political instability and the effects of a warming climate. It is also true that utilities are positioning themselves to mitigate the impacts of COVID-19 on their business and their shareholders. And yes, they will likely seek to benefit from changes to their business model, customer load shifts and regulators’ need to expediently address the consequences of the pandemic for utility consumers.
Concurrent with these efforts by utilities, consumer advocates — in Colorado and across the nation — have been leading the charge to protect utility consumers during this exceptional time, providing the necessary regulatory expertise and indispensable perspective to navigate unprecedented circumstances for customers, utilities and regulators. In Colorado, this is the Office of Consumer Counsel (OCC).
Consumer advocate impacts
Since the state of emergency was declared, the OCC worked hard to drive efforts to stop disconnections, helped write language framing shut-off moratoriums, supported the effort to set conditions for reconnection, pushed for a moratorium on late fees, reconnection fee, and deposit requirements, helped ensure that utilities extend repayment plans, and aided in defining what will be treated as utility bad debt in these circumstances.
Without the efforts of consumer advocates across the country, there is no doubt that hundreds of thousands — if not millions of customers — would have had their electricity or natural gas shut off. This has been the frontline for consumer protection in Colorado and, as a result, consumers in every part of the state are able to rest easy knowing that if they are unable to pay their utility bills due to COVID, they will not face financial ruin.
The former commissioner claims that consumer advocates “treat as a foregone conclusion” the idea that consumers will be on the hook for the consequences of the pandemic, however, this is not the case.
In Colorado, the investor-owned utilities (electric and natural gas) jointly filed a petition in early April seeking Commission approval for special treatment of costs they incurred due to the pandemic, including past due bills that have not been paid in recent months. Through negotiations with the OCC and others, this request was narrowed significantly and resulted in a settlement by all parties that is the subject of the Aug. 24 opinion piece. The OCC stands behind this settlement and the protections it provides for consumers in light of all the circumstances.
Get electric utility news like this in your inbox daily. Subscribe to Utility Dive:Email: Sign up
The editorial mischaracterizes both the intent and the impact of efforts by consumer advocates, and mistakenly infers that we are kowtowing to the wants of utilities and their shareholders. Nothing could be further from the truth. The OCC takes pride in our work representing residential, small business and agricultural consumers, and we have never been, and will never be, beholden to the utilities.
An aggressive approach
The OCC took an extremely aggressive approach to reviewing and analyzing the utilities’ requests for accounting orders and other assurances. As a direct result of this work, the following provisions of the settlement serve to protect consumers during this extraordinary time.
- Limit the range and scope of what can be considered “bad debt” in this context. The OCC insisted that the utilities’ original requests be greatly scaled back and narrowed down to covering just incremental bad debt from March 2020 through June 2021. As a result, only bad debt related to unpaid customer bills as a result of COVID can be included. All other costs and savings will be addressed in future cost recovery proceedings and will not be considered “extraordinary,” but instead will be reviewed on their merits similarly to all other utility costs and savings. Only costs related to incremental unpaid customer bills due to COVID will receive special treatment. In addition, the OCC required the utilities to agree that no carrying cost, interest or other return will be applied to this incremental bad debt.
- Ensure that all other utility costs and savings during the pandemic will be considered in future cost recovery proceedings. As rate cases are the bread and butter of utility regulation, addressing these costs and savings in those proceedings is the right way to deal with this issue. As is always the case in Colorado, when costs are deemed prudent by the Commission, they will be recoverable; when deemed not prudent by the Commission, they will be disallowed. Further, the OCC will continue to work to ensure that any cost savings due to the pandemic will pass to ratepayers and not to utility shareholders.
- Set data collection requirements and limit the time periods for which incremental bad debt expenses can be tracked. The OCC and other parties required that the settlement include strict timelines for when bad debt incurred will be considered for appropriate special treatment.
The OCC and other parties demanded that the settlement include a benchmarking process under which only the incremental bad debt of unpaid bills, measured in comparison to historical levels of unpaid bills, will be considered for special treatment. The utilities will report the accrual of these bad debt expenses to the settling parties and, should these expenses grow beyond specified levels, the settlement agreement provides protections.
These steps, while significant, are not the end of this process. Costs and savings related to COVID broadly will be considered in future cost recovery proceedings. Advocates will continue to do the necessary work to ensure that utilities do not garner windfalls during these unprecedented times. We are far from finished.
Even more importantly, it is time to begin a conversation about shared sacrifice. These bad debt costs, and any other costs due to COVID that the Commission deems prudent, must be shared by utility shareholders, not placed solely on the backs of ratepayers. This pandemic has impacted all areas of society and the economy, and ratepayers, regulators, utilities and advocates are all working to navigate an extraordinary situation as best we can. We assure the public that the OCC will continue to advocate for solutions that place consumers first and ensure that the public interest is served.