Archive for Denver Metro

Greenwashing at KB Home

Poor attic insulation melts snow
I took this picture on February 7, 2010, in Denver’s Stapleton New Urbanist development in Denver.  Most of the houses in Stapleton are EnergyStar qualified, but this picture tells a story about some that aren’t.  The blue house in the background was built in 2009 by Wonderland Homes.  The tan house in the foreground is a KB Home built in 2008. 

Note how the still-falling snow is melting on the north-facing roof of the tan KB Home, but not on the similarly oriented roof of the blue Wonderland home.  Also note that clear lines of unmelted snow where the roof trusses add an extra layer of insulation between the attic and the roof.  This is a clear sign that the KB Home (NYSE:KBH) lacks sufficient attic insulation, and enough heat is escaping from inside the house to the attic to melt the snow on the roof as quickly as it is falling.  Nor was it just this one house… all the houses I saw that were built by KB showed signs of snow melting on the roof, while all the houses I saw built by other builders (New Town Builders, Wonderland, and McStain) showed no signs of melting.  Many were built in 2007, before either of the homes in the photo.

I was shocked.  The Stapleton website proudly proclaims “Since 2006, every Stapleton builder had been an EnergyStar partner.” I’d taken this to mean that every home built in Stapleton since 2006 was an EnergyStar home… an assumption I’m sure Forest City (NYSE:FCE-A) and KB Home would love us to assume.  Instead, I have to assume it means that KB builds some EnergyStar homes, somewhere.

KB’s web page for their Coach Series homes in Stapleton displays the EnergyStar logo in two locations.  One logo appears with the text “An EnergyStar qualified neighborhood” (emphasis mine) and the other is in a box that says “Save 30-45% on your utility bills with a new KB home compared to a home built as recently as the 1990s.”  The implication is clearly that the Coach series homes are EnergyStar homes, but my photo shows clear evidence that they are not.  (Ironically, the New Town and Wonderland websites display the EnergyStar logo much less prominently.)

From page 19 of KB Home’s2009 Sustainability Report [pdf]: We have a long history of building ENERGY STAR qualified homes. The percentage of our homes that are built to this exacting standard has grown from 1% of our home deliveries in 2001, the year we began working with ENERGY STAR for Homes, to 37% in 2008. One-third of our divisions built every one of their new homes to this standard in 2008, and only one of our divisions did not build at least some ENERGY STAR qualified homes.

I’m underwhelmed.  First, EnergyStar is not an “exacting standard.”  An EnergyStar home must save at least 15% of the energy used by a standard code-built home.  According to a 2008 National Renewable Energy Laboratory study [pdf p.14], “for a 2,000-gsf house built to achieve 30% energy savings relative to standard practice, a homeowner can save $512 a year more on his or her energy bills than the extra cost of the slightly larger mortgage.”  In other words, this “exacting standard” leaves a lot of money on the table, even when the additional cost (and mortgage) is accounted for.

Further, 37% EnergyStar qualified is better than your average homebuilder… but your average homebuilder does not plaster their website with the EnergyStar logo. 

I wonder if the owner of the tan house (or any of the many other KB Homes I saw with melting snow on the roofs) think they are living in EnergyStar homes?

Comments (6)

Coloradans Can now recycle CFLs

This from Geenprint Denver:

Coloradans can now drop off used compact fluorescent light bulbs (CFLs) and mercury-containing thermostats for free recycling at any Ace Hardware store in the state. The spiral shaped bulbs contain a small amount of mercury and should not be thrown away in the trash. CFLs are also accepted in Denver’s Household Hazardous Waste collection program.

Comments off

Wealthtrack showtime moved

A heads-up for my Denver area readers… KDBI 12, the local PBS station has moved the Wealthtrack Episode on which I will appear to 2:30 AM Monday morning. If you have set your VCR, re-set it.

Sorry for the late notice!

Comments off

Five Free (or nearly free) Ways to Learn about Alternative Energy near Denver

I’m often aghast at the price conference organizers ask for people looking to
learn about alternative energy, when there are so may great inexpensive
opportunities available, sponsored by nonprofits a and other organizations
whose mission is to get the word out about our energy options.  Here are
three monthly events that Denver area residents can go to… I go to most of
these regularly.

  1. The National Renewable Energy Laboratory’s Brown Bag Analysis seminar … Free, but make sure to bring photo-ID.
  2. The Colorado Renewable Energy Society’s Monthly Meetings. ($5 or $40 annual membership – snacks usually served afterwards.)
  3. The Colorado Cleantech Initiative monthly meeting. ($10 with RSVP – you get dinner & free beer.)
  4. Smart Energy Living Workshops (Usually about $10-15, lower with membership)
  5. Clean Energy Action monthly meetings (Boulder)

Please leave comments if I forgot (or don’t know about) your regular free
or almost-free event.

Comments (1)

Denver’s Plan for Tiered Electric and Gas Rates

Once again, I’m proud to live in Denver. The new plan for electric and gas rates (if approved by voters) is one of the least expensive ways to imporve conservation measures. Link to and excerpt from Denver post article below. It will also improve the economice of net metered distributed generation.

Mayor backs ‘green’ plan for Denver

By: Howard Pankratz
The Denver Post
October 24, 2007

Mayor John Hickenlooper today formally adopted Denver’s Climate Action Plan, a series of steps intended to reduce the city’s per capita greenhouse emissions 10 percent by 2012.

The plan is the result of more than a year’s work by a 33-member Greenprint Advisory Council, which studied best practices from across the country to determine the top 10 opportunities to cut greenhouse gas emissions.

“With adoption of the Climate Action Plan, our real work as a community begins,” Hickenlooper said. “If there is only a 3 percent chance that 95 percent of the world’s top scientists are right about the consequences of climate change, we all have a responsibility to act now. Denver remains committed to leading by example.”

Included among the 10 recommendations are:

Incentive Energy Conservation. Subject to voter approval, it would apply a tiered rate structure to electrical and gas usage. Similar to water rate charges, tiered rates would impose a premium charge for excessive electrical and gas usage. Funds generated would support energy conservation and greenhouse gas reduction programs, especially for lower-income neighborhoods.

Comments off

Investing In Cleantech 101: October 23, Denver CO

I am helping to organize a workshop on investing in Cleantech companies targeted at private equity investors, in conjunction with the Denver Chapter of the Keiretsu Forum.

Click here for information and registration information.

Comments off

Waste Oil Recycling Facility Blocked by NIMBYS in Industrial Area

UPDATE: Thanks for all your help! The zoning comission upheld Co Bioenergy’s recycling permit, allowing them to get back to the business of taking used oil and trap grease and turing it into something useful again.

—-

A local biodiesel company is in danger of losing its permit to recycle used vegetable oil in an industrial area of north Denver. Please send the following requests to anyone you know who might be willing to help out with an email of by showing up to the meeting tomorrow morning.

Doing any of the following will help!

  • Send an email to Janice Tilden, janice.tilden@ci.denver.co.us, stating your support for BioEnergy of Colorado’s oil recycling efforts in the Elyria nighborhood. Here is a draft letter (make sure to include your address and contact information.)
  • Call Ms. Tilden at (720) 913-3050 and express your support for Bioenergy of Colorado
  • Show up to the hearing to support Bioenergy.
  • When: Tuesday, October 2nd at 11AM.
    Where: Web Municipal Office Building
    201 West Colfax Ave. Room 2.H.14
    2nd Floor ­ ask for the Board of Adjustment Hearing Room
    Who: BioEnergy of Colorado, LLC 4875 National Western Dr. (303) 887-6997
    Opponent: Elyria Neighborhood Assoc., Tom Anthony, President

  • Pass on the word to others you know who can do any of the above.
  • More information from BioEnergy of Colorado:

    In February of this year, the neighborhood assoc prevailed at the 1st BOA hearing where the board ruled that the Zoning Administrator erred when, in October 2006, he issued BioEnergy a conditional-use-permit to make biodiesel. Of particular interest though, they also ruled that we could continue to operate until our permit expires on October 20th, 2007 (about 3 weeks from now).
    As a back-up plan to achieve some utilization of the assets already in place, we decided to shift our business model. We applied for a use-permit to recycle used vegetable oil at this facility. In anticipation of this new application, we sought the help of the Denver Fire Department and they signed a letter of support on our behalf. We submitted the permit documentation for a ‘Recycling Facility’ about 2 months ago and we were awarded an ‘unconditional-use-permit’ which means that this activity is allowed in this zone district. No need for public hearings or special meetings with the Board of Adjustment.
    Much to our amazement, the neighborhood association, once again, appealed this decision, saying that the zoning administrator erred. Their reason will astound you. In the technical paper work that we provided the Denver Fire Department, the term ‘esterification’ (not transesterferication) was included. Esterification is the chemical reaction that occurs in the recycling process.
    Here’s the Neighborhood Association Statement;
    The Zoning Code forbids a use not specifically authorized. The applicant’s filing documents stating “the waste oil recycling process is technically known as an ‘esterification process’.” “Esterification Facility” is not authorized as a use in the Zoning Code and therefore the administrator erred.
    Denver’s Board of Adjustment decided to take this appeal and we need your support by attending this hearing in big numbers. The neighborhood association’s tact has been to attack us, our business practices, and even us personally. This is not a hearing about BioEnergy of Colorado; it is a hearing whether a recycling facility can be located in an I-2 Zone district. The next hearing could and probably will be about your expansion plans in the area.
    What’s at risk: The most valuable resource, time, that we all have spent to pave the way toward a greater use of biofuels. The many million$ invested in technology, capital equipment, infrastructure and marketing trying to get the word out about our great businesses. The local market is at stake. The Denver Biodiesel Coop can buy fuel from out of state from someone who bought it, from someone else who made it, and pay all the foreign markups and transportation costs. Or, they can buy it directly from a local supplier….a neighbor …and, much more.

    Contact:
    Tom Foley
    BioEnergy of Colorado, LLC
    Cell (303) 887-6997
    TommyFoley AT Comcast DOT net

    Comments off

    Denver Tour of Solar Homes Sneak Peak; links to National Tour

    Preview the Denver Tour of Solar Homes Online


    The Denver area Tour of Solar Homes takes place in less than a month, and this year you can preview some of the buildings involved online. 
    Check out the Sneak Preview on the right-hand side of the
    Tour of Solar Homes page on the CRES Web site

    .

     

    The 2007 Tour of Solar Homes will take place on Saturday, October 6 in Denver and most locations around the state.  However, some of the activities are slightly different. 
    The Boulder tour will take place on Saturday, September 30. 
    And the tour in Pueblo will span two days: October 6 – 7. 
    See a complete listing of solar home tours in Colorado on the American Solar Energy Society Web site.

     

    National Solar Tour

     

    Outside of Colorado, people you can find tour in your own community by visiting the National Solar Home Tour website.

     

    Volunteers Needed for the Tour of Solar Homes October 6

    CRES needs volunteers to help with the Denver Metro-Area Tour of Solar Homes on Saturday, October 6.  If you step forward, you will assist homeowner with visitors.   

    There are two shifts: morning from 8:30 a.m. to 12:30 p.m., and afternoon from noon to 4 p.m.  

    Volunteers are welcome to spend the half-day they are not working touring homes themselves. Volunteers are also invited to attend a workshop free of charge from 6 – 8 p.m. Thursday, Oct. 4 titled "Solar Photovoltaics and Xcel Energy’s Solar Rewards Program" and presented by Jeff Scott of SolSource and Juliea Gauthier of Xcel Energy.  The
    workshops take place at the National Renewable Energy Laboratory (NREL) Visitor’s Center at 15013 Denver West Parkway in Golden, which is two blocks west of the Denver West Marriott at I-70 and Denver West.

    Following the workshop, veteran volunteer John Avenson will give a brief orientation for volunteers about the duties the day of the
    Tour of Solar Homes
    . To volunteer, contact Patty Roberts via email at: patty at pacificmillimeter dot com

    Comments off

    Desperation, but Good Desperation in Local Housing Market

    Want to roll a Prius into your mortgage?

    The fallout from the subprime mess has come to my neighborhood. This ad appeared in the community paper put out by the developer:

    desperation.jpg

    Now, you can get a free Prius with the standard solar you get on Harvard Communities’ (massively overpriced) Architect Collection homes. From an economic perspective, it makes a lot of sense for the builder to install solar; it costs them a lot less to do it than people who have to retrofit. But what’s the logic in having the builder fill your garage?

    See the solar panels

    These developers (especially the high end ones- these’ll set you back $800K) will do anything to avoid having to lower their price. Personally, I think they’re smart, people are more interested in buying things for status than practicality.

    The world is crazy, but I shouldn’t complain. It may just get some people out of SUVs and into Hybrids.

    But it does bother me that the most important energy efficiency things Harvard Communities is doing are quite cheap (good insulation, sealing the house well, using efficienct appliances) but it’s the splashy expensive stuff like a free car and PV that gets all the press. It makes people think that you have to spend a lot of money to be energy efficient. You don’t, but it’s a belief that is liable to keep coming back to haunt us for a long time.

    Comments off

    Western Governor’s Association Energy Efficient Buildings Workshop

    This week, I’ll be covering the WGA’s Energy Efficient Buildings Workshop, which took place in Denver on July 17 and 18. I have drafts of 4 articles, the first two of which are an overview of the workshop, and a Western States Energy Efficiency Political update, which I just published on AltEnergyStocks. I’ll be publishing articles on Homebuilding and Performance Contracting later this week.

    Comments (1)

    July 20th–Denver–The Science of Climate Change

    Please Join Us on July 20th-9-4 at the Adams Mark Hotel, Denver—Colorful Poster
    Attached—Please Post—Thanks!

    Take Advantage of Colorado’s Amazing Experts
    on Climate Change Science!

     

    If we
    are going to address the problem of climate change we have to be clear on what
    the scientists are telling us—and there is much more to the story than the
    media have told us. Please join us on July 20th for a day long
    workshop of essential information delivered by some of the world’s top
    climate change scientists. Poster and Agenda attached and Agenda copied below.
    Please join us—and pass the word!  

     

     

     

     

     

     

     

     

    Citizens Working to Bring Clean Energy Solutions
    to
    Colorado

    www.cleanenergyaction.org

     

    The Science of Climate Change and
    Leadership in

    the Greenhouse Century

     

    Friday July 20, 2007,
    9am-4pmAdams
    Mark Hotel,
    Denver, Colorado

    How Urgent is the Problem? How Long Do We
    Have to Make the Needed Changes?

    These World Class Scientists Will Bring Us
    the Latest Information

    Confirmed Speakers in Bold

     

     8:15- 8:45   
              Registration

     9:00 -9:15   
              Welcome and
    Introductions

     9:15-10:00  
              “Leadership in the Greenhouse
    Century: A Citizen’s Perspective”

                                
                      
    Leslie
    Glustrom, Clean Energy Action

    10:00-10:15 
              Break

    10:15-11:00 
              “CO2—Where Does it Go
    and How Long Does It Stay There?”

                                
                      
    Dr.
    Pieter Tans, NOAA

    11:00-11:45           
    “Coming Climate:
    Thresholds, Feedbacks and Predictable Surprises”

                                
                      
    Dr.
    James White, CU-Boulder
     

    11:45-1:00            
    Lunch (On Your Own)

    1:00 – 1:45            
    “Leadership in the Greenhouse Century”

                                
             
            
    Governor Bill Ritter or
    His Representative—Invited

    1:45  -2:30            
    “Leadership in the Greenhouse Century—A Republican Perspective

                                
             
            
    Mike Bowman  25 x25

    2:30-2:45              
    Break

    2:45-3:30              
    Climate
    Impacts and
    Colorado: Bringing it All Home”

                                
                      
    Dr.
    Martin Hoerling, NOAA

    3:30:4:00               
    Wrap-Up Discussion

                                
                      
    Members of Clean Energy
    Action

                                

    Registration–$30/person–before July 17t;
    $50 after July 17th

    Call 303-245-8637 or send an e-mail to lglustrom@gmail.com to reserve a seat

    Organizational Pass for NonProfits, State Agencies and
    Companies with Fewer than 15 Employees–$150

    Organizational Pass for Companies with More Than 15 Employees–$300

    Organizational Passes Provide Unlimited Attendance for the
    Organization; Must be Reserved by
    July
    17, 2007

     

    If you live on this planet you should be
    there!

     

    Comments (1)

    Climate Action Days at Colorado School of Mines Apr 19-20

    The Colorado School of Mines is hosting a free series of talks open to the public. Since Climate Action Days is in large part the work of a friend, I thought I’d help with publicity. Go if you can, they have a great lineup of speakers.

    Some highlights:
    Apr 19 Keynote by Tom Plant (director of the Governor’s office of Management and Conservation) and Tim Killeen, director of the http://www.ucar.edu/”The Future of the Planet Earth and its Inhabitants”

    Apr 20 has a full day of presentations on Climate, Technology Solutions, and Policy Solutions. See the Flyer for details.

    Comments off

    Colorado News: Doubling of Colorado’s RPS

    Colorado House Bill 1281, which doubles Colorado’s Renewable Portfolio standard (RPS) (as well as the solar set-aside) passed the state Senate on Friday, and is certain to be signed into law by state lawmakers.

    Here’s how the new requirements stack up against the old Amendment 37 requirements (passed by a popular vote in 2004.)

    rps.GIF
    Not exactly a “doubling,” but is there a better way to describe it?

    “A37″ are the old requirements for investor owned utilities (affectionately known as IOUs,) “HB 1281″ are the new requirements for IOUs, and “Co-ops” are the new requirements for Rural Electric Co-ops (which previously had an opt-out, although a few decided not to opt out.)
    The opt-out contained a provision that each Co-op’s members (i.e. customers) vote to opt out, which most of them proceeded to do (one exception is Holy Cross, which chose not to opt out, however, this has led to some contention with Xcel as to whether or not their existing power purchase agreement with Xcel included the renewable energy credits (RECs) associated with Xcel’s generation of electricity from renewables… since both utilities use these RECs to meet their requirements.)

    While the opt-out elections all seem fair and democratic, that is before you realize that all the information most members were getting was coming from their co-op’s management. This is fine with progressive co-ops like Delta-Montrose and Holy Cross, but when it comes to troglodytes such as the management of the Intermountain Rural Electric Association (IREA), it’s a little more Orwellian.

    In the recent House and Senate hearings, IREA was arguing for another opt-out from HB 1281, arguing that IREA’s members had voted against it in the first election, and that it would force IREA to raise rates (despite the fact that the bill specifically states that rural co-ops only have to meet its requirements if they can do so with less than a 1% rate increase (the more stringent requirements for IOUs can be met with an up to 2% rate increase.) In some ways IREA’s failure to get their opt-out into HB 1281 was due to their own maneuverings. In response to IREA’s funding of a global warming skeptic this summer led many of IREA’s members to wonder what else Stan Lewandowski was doing with their money that they did not know about. They founded IREA Voices to try to get a greater say in how their customer-owned utility is run. (If you know anyone who lives in IREA territory (just south of the metro Denver area, make sure they know to vote for the IREA Voices candidate in their district. (Mike Kempe, Mike Daniels, or Jake Meffley, if one appears on the ballot that came with their last IREA bill.) If you don’t live in thier districts, they are funding their campaigns out of their own pocket, plus any donations. Help out if you can!

    It’s ironic that co-ops, which supposedly exist to serve the best interests of their members (as opposed to shareholders) are often the laggards (and in IREA’s case, even deniers) of the environmental effects of our reliance on coal for electricity. I believe that Stan Lewandowski believes he is doing the right thing by trying to keep rates down, and damn everything else, but in the end, the farmers he feels he is serving will be the ones who suffer some of the worst effects of global warming.

    Anyway, it looks like momentum is finally on the side of those of us that realize the magnitude of the disaster facing us, but time is also of the essence, and the faster groups like IREA Voices can catalyze change, the better for all of us.

    So let’s cheer Colorado’s doubling of the Renewable Portfolio Standard, but let that one victory inspire us for the struggles ahead. We’re a long way from the time when we can declare victory and go home.

    Comments (1)

    Seminar: Taking a Hard Look at IGCC. Denver Feb 12

    Comments off

    Board position: Promote clean energy and get paid.

    If you know anyone who lives in or around Castle Rock and is willing to do a little paid work for clean energy, read on.

     I’ve written before about IREA Voices, (here and here.)   They are a group of dedicated volunteers who are trying to change the way their electric co-ops, Intermountain Rural Electric Association is run. 

    In Colorado, Rural Electric Co-ops (RECs) are exempt from the requirements of Amendment 37, which mandates that our public utilities get a certain percentage of their power from renewables.  Ostensibly, this is because they are owned and controlled by their members (the people served by the utility.)   In reality, very few members vote in the elections (often as little as 10%) and so the boards can often end up being very unrepresentative. 

     In the case of IREA, this manifested itself with IREA’s general manager, Stan Lewandowski, contributing $100,000 of ratepayer’s money to a prominent global warming skeptic, and soliciting other RECs to do the same.

    While the low turnout in REC board elections can be a big problem, it is also an opportunity.  While IREA is out funding global warming skeptics, perhaps the most progressive electric utility in Colorado is Delta-Montrose Electric Association (DMEA), and it’s all due to who is on the board. 

    IREA Voices is working to change the IREA board, and they have a real chance of doing so.  Due to low turnout, board elections of RECs often hinge on only a handful of votes.  IREA Voices is fielding candidates in three of the four districts up for election, but they are still looking for someone to run in district 4, around Castle Rock. 

    Being a board member is a paid position ($300 a day), so if you know anyone who might be willing to run for the IREA board in Castle Rock, please send me an email  and I’ll hook them up with the right people.

    (Or they can do it themselves on the IREA Voices website.)

     An email from the IREA Voices follows the break… Read the rest of this entry »

    Comments (2)

    Vestas coming to Northern Colorado

    It now looks likely that Vestas, the world’s largest wind turbine manufacturer will build a blade manufacturing plant in Nortern Colorado, near Windsor.  I’d guess that some of the factors that made Danish Vestas consider locating here are:

    1. The proximity to NREL’s Wind Technology Center for turbine testing.
    2. Amendment 37, which will require large investments in wind farms in Colorado.
    3. The State’s central location, making it easy to ship blades anywhere in North America.
    4. Political support for wind, especially from newly elected Bill Ritter and the Democratically controlled state legislature.
    5. Colorado’s excellent wind resource.

    The 500 high-paying jobs will be ones wind advocates can point to when talking about the benefits of renewable resources over fossil fuels.

    UPDATE:

    It’s official. According to this follow-up article in the Rocky Mountian News, transport was indeed crucial to winning the bid. In particular, they wanted a site with rail service.

    Comments (11)

    Xcel Fighting Merchant Coal Plant

    On January 18, Xcel Energy filed a motion with the Colorado Public Utilites Commission to reject a merchant coal power plant bid for 2014.   Xcel has been under intense pressure from the Colorado Commission to sign a contract with the project.   The Company also filed a motion for extraordinary protection  for critical parts of the bid report, which means we can’t see the underlying bid info or economic analysis.  While this is unfortunate but expected, the parts of the motion we can see make very interesting reading.

     This docket is a continuation of the competitive bidding process from the company’s 2003 resource plan and the settlement agreement.   

    Xcel’s main ground to reject this bid is because it is “not economic.”  Unfortunately, we do not have access to the specific numbers, so we should not use this to say that coal plants are never economic.  I simply want to highlight the fact that this coal plant, according to Xcel, is uneconomic.  If the true cost of externalities of pollution and CO2 emissions were taken into account, the case for any coal plant’s economics becomes much worse.

    Some arguments Xcel uses:

    • Electricity demand has not kept up with the demand they assumed in the 2003 LCP.  (Most likely due to increasing prices of fossil-fuel generated power, and a heightened awareness of the problems associated with global warming, both of which spur efforts for conservation.   It is also worth pointing out that our personal efforts to conserve electricity have contributed to the drop in demand, and that drop in demand makes this coal plant less likely to be built.  In this way, everyone can make a difference when it comes to fighting global warming.)
    • Xcel has successfully negotiated with bidders to provide natural gas fired power to lower their prices (p.5), while the coal bidders want to modify the terms of the contracts in a way that may shift environmental risks to Xcel (p.6) (which would then try to shift the environmental risks to ratepayers.).  
    • Coal is very capital intensive, so in order to make coal economically effective, the plant must be running as near constantly as possible.   (The inflexibility of coal and the need to keep the plants running all the time make coal as difficult to integrate into a system faced with variable demand.  In my mind, there is a certain irony in this, because the main argument against wind power is similar: the power supply is not well matched to demand.)
    • (p.27) “Far and away the most influential factor contributing to the reduced value of coal bid is the fact that the bidders increased their bid prices from what they initially offered in May 2005.”  (These increased bids are probably due to higher estimated construction costs, which coal plants are particularly vulnerable to due to the large amount of steel and concrete used in construction, as well as much higher prices for coal.  One of the best arguments for solar and wind generation is the fact that they are immune to escalating fuel costs.)
    • While Coal plants require years to construct, Demand Side Management (DSM aka Energy Efficiency), gas and wind can all be on-line in less than 16 months, making it much easier to match supply with demand.
    • (p.27) The PUC told Xcel to use their 2006 gas forecast prices in this analysis, at the same time as they were told to use their 2005 coal price forecasts.  Even though this artificial imbalance skews the results in favor of coal, it is not sufficient to make the coal bids seem economic.
    • There are substantial costs of added transmission to incorporate these coal bids.  (pp.47-50)  I point this out because wind naysayers often point to the transmission costs of new wind facilities, without taking into account the transmission costs for coal.  I infer from the text that this bid may be a mine mouth coal plant in Wyoming, which would require upgrades along transmission lines from Wyoming to Colorado.  Considering the Wyoming/Colorado border is an area with excellent wind resource, many sites for extensive wind generation would require the upgrades to the same or shorter sections of transmission lines.

    I have uploaded Xcel’s filing here.   It will eventually be avialable on the Colorado PUC’s website, under Docket No. 05A-543E.
    I’m happy that environmental advocates have this opportunity to build a more constructive relationship with Xcel by joining them in this. 

    I also believe that these same arguments that Xcel is using here might be effectively used against some of the 150-odd other coal plants currently being planned in the US by utilites which are less progressive than Xcel (and there are many… TXU in Texas and many Rural Electric Co-ops come to mind.)

    Comments (2)

    Five minutes with Xcel’s Dick Kelley

    Richard C. Kelly

    Dick Kelley, the President, CEO, and Chairman of the Board of Xcel Energy spoke to the board and invited guests of Western Resource Advocates last Friday.  I was invited as a supporter of WRA.

     

    His speech was widely reported in the press because he called for national regulation of greenhouse gas emissions.  The AP story emphasized Kelly’s shift from being an environmental skeptic to calling for national Carbon emissions regulation.  This is a big shift, and a giant step for a utility, but Kelly is not so much of an environmental advocate as he might sound.

     

    I had a short conversation with him before dinner.  After we introduced ourselves, I told him I’d been making his life harder recently at the Colorado PUC.  Like anyone who’s been successful in business, he didn’t miss a beat, and told me that it was great, and the more people’s input we had, the better.

     

    He said that Xcel had been opposed to Amendment 37 because of the cost of the solar set-aside, a position I’m actually sympathetic with.   After all, is it better to have 1 MW of solar photovoltaics on people’s roofs, or 20 MW of Wind?  When you look at the subsidies needed to get people to install PV (which is an Amendment 37 requirement), we could probably get 20x as much wind energy onto the grid for the same cost.   It’s not that wind cost 1/20 as much as solar, but since the price of electricity from wind is comparable to the price of coal, it does not take much to get a lot of wind, while solar needs to be heavily subsidized.

     

    What I really would have liked in A37 was an allocation for Demand Side Management (DSM) and energy efficiency.  If the same incentives could have gotten us 20 MW of wind or 1 MW of solar, it could also have gotten us 40 MW of DSM and energy efficiency.  (none of these numbers are precise… it’s hard to tell what an incentive will accomplish until it is implemented, but we do know that DSM is cheaper than wind is cheaper than solar.)  But energy efficiency was not on the table when A37 was being written… polling data said that adding “energy efficiency” to the bill dropped popular support by so much that we couldn’t have gotten it passed.

     

    Dick Kelley also told me that Comanche 3 (a new 750 MW coal plant) would be the last conventional coal plant that Xcel would build.  I told him Comanche 3 would be fine with me, if they’d just shut down Comanche 1 and 2 (a couple old, less efficient plants at the same site.)  That was an option that’s clearly off the table, but he did say Xcel needed to find a way to clean up the emissions of those plants.  I suggested wood chips, like Aquila is doing at their  Clark Generating Station in Canon City.  By co-firing wood and pine needles from necessary forest thinning, Aquila is able to reduce net CO2 emissions, as wel as NOx, SOx, and Mercury.

    I mentioned the option of hybridizing concentrating solar thermal power (CSP) with existing coal plants.  He didn’t really understand the concept, and thought I was talking about photovoltaics.  I’m not sure I was able to explain myself well.  Put simply, when heat is available from the sun, it can be used to displace heat from coal (or natural gas) in an existing generator.

    Kelly also said he’d like to raise wind to 20-25% of generation, but after that they’d have to see what the effect on reliability of the grid would be.  I brought up the idea of Pumped hydro or CAES.  He didn’t seem familiar with the fact that Colorado’s Big Thompson Project could be adapted for pumped hydro fairly easily.  As he said, new big hydro is not going to happen.  Which is all the more reason for adapting out existing reservoirs for energy storage with pumped hydro.

    I was encouraged that he has recognized that Carbon Emissions are a massive problem, and that the utilites, who are the biggest emitters of carbon, are going to have a big part in the solution, but discouraged that he knew so little about several pieces of the solution that have great potential to be quickly viable.

    Xcel likes wind, but is not looking at new ways to increase how much they can put on their system… they’ll just go to 20-25% and see what happens.  They’re pursuing IGCC (Internal Gasification Combined Cycle a.ka. “Clean Coal”) with carbon sequestration in a pilot plant, which many environmentalists feel is just a distraction from renewable energy, pointing out that no one has ever done any sort of sequestration on a large scale.  To me, that is an argument for IGCC with Carbon Sequestration, on a small scale: let’s give it a try and see if we can make it work or not.

    IGCC is a lot better than one of the other ideas that Kelly brought up in his speech: he thinks that part of the solution will be nuclear power.  Nuclear power is indeed carbon neutral, but it requires diminishing uranium supplies, or the use of breeder reactors which make plutonium, an element which is not only extrememly toxic, but also an excellent material for making nuclear bombs.  We still haven’t figured out what we’re going to do with the waste from our existing reactors… until we do that, I think it’s crazy to look into building more.  And considering the real threat of terrorism, a nuclear reactor or wastepile makes a much better target than a solar array or wind farm.

    When it comes to Kelly’s call for national regulation of carbon emissions, it’s a great step in the right direction, but it was a far cry from calling for a carbon tax (which economists think would be the most effective method of carbon regulation.)  Kelly knows global warming is real, and he knows that our politicians are going to do something about it.  By calling for national mandatory regualtion (but not a tax) he’s trying to shape the debate to come out in a way that Xcel will find easier to deal with. 

    With a little more education about alternatives such as CSP, and ways to make the grid able to accept more intermentent resources (Time of use pricing, DSM, and energy storage), he may come to realize that Xcel has lots of ways to live in a carbon taxed or carbon limited world.  And he seems willing to listen; so if you get his ear for five minutes, try to make the most of it.

    Comments (1)

    Down at the Public Utilities Commission

    I just testified on Friday in the Colorado Public Utilities Commission rate case for Xcel Energy.  The case has been going on since April, and is in its last stages.  I only recently got involved (Who pays attention to rate case hearings, anyway?)
    To be clear, a rate case is not a Least Cost Planning (LCP) process, which is when the regulators decide if the utilities plans to meet future needs of consumers are prudent.  That is, when they decide what sort of generation they need.  This is somewhat relevant because much of the opposition to this rate case is really opposition to the new coal plant being built by Xcel in
    Pueblo, Comanche 3.  

    Given the reality of global warming (which many people are just now starting to realize is a real and immanent threat), the fact that coal is our most carbon-intensive fossil fuel (not to mention all the other emissions associated with coal), and the fact that the planned life of a coal plant is 50 years, the opposition is understandable.  Unfortunately, this rate case is not the proper forum to oppose construction of new generation.

    A rate case, is about how Xcel is allowed to charge for their electricity, and how much they are allowed to charge.  When it comes to how much they are allowed to charge, this is determined by setting an allowable Return on Equity (ROE) for shareholders, as well as a Debt/Equity mix.  Because debt is cheaper for a company to raise, a higher ratio of debt to equity will be cheaper for ratepayers, but the more debt to equity there is, the less stable a company will be, and the higher return both debt holders and equity holders will demand in order to take the risk of owning the debt or stock.

    I made three basic arguments. 

    1. In order to avoid perverse incentives, it is best that in any situation, the parties should share risk in proportion to their ability to take action to reduce that risk. 
    2. The return on equity allowed under the settlement agreement was higher than is necessary to induce shareholders to own the stock under current market conditions,
    3. The rate mechanism, as envisioned in the settlement, contained several perverse incentives which would lead to behavior by Xcel that will likely place costs on ratepayers which would likely be prudently avoided if Xcel has an incentive to do so.

    The first point about perverse incentives is important mainly for future planning.  If Xcel bears the risk that costs will exceed their projections, they will be much more conservative about their cost projections.  In this case, that means that cost projections will be higher, and take more of the unpredictability of fuel costs into account.  In addition, holding Xcel accountable for unexpected environmental costs will lead them to be much more conservative about their assessments of future environmental costs. This better information both of these effects will lead renewables to be seen in future least cost planning cases much more favorably, because many have zero fuel cost (and hence zero fuel cost risk), while their lower environmental impacts will lead to lower future environmental costs.

    Energy efficiency measures, demand side management, time of use pricing, and investments in large scale energy storage, all of which lower fuel costs by reducing or shifting fuel use will also be more likely to be pursued by a company that bears modeling risks, because these measures all reduce risk by reducing fuel use or shifting it to lower cost times.

    Widespread adoption of demand side management, time of use pricing, and energy storage also all favor intermittent renewables such as wind and solar by shifting usage to times when these resources are available.

    Basically, energy efficiency and renewables are excellent way of addressing both the price and environmental risks that are currently borne by ratepayers for utilities.  Shifting some of these risks to the utility will lead the utility to take more proactive action to address these risks, both through renewables and through other mechanisms we may not yet have thought of.  That is the beauty of incentives rather than mandates: they inspire creative thinking, and usually come up with cheaper and more effective solutions to the same problem.

    I’d like to be clear here that I don’t think that Xcel is the problem; I see Xcel as the solution.  What I hope to accomplish is to provide carrots and sticks will induce Xcel to be much more responsive to environmental and energy cost concerns.  With those properly designed incentives, I expect that Xcel will be able to accomplish more than many environmentalists could ever hope to win in mandates.  And Xcel shareholders should be well compensated for the risks of these investments; I want them to be able to do well by doing good. My second point, that the return on equity (ROE) allowed under the settlement agreement hinges on weaknesses on the various methods of calculating appropriate ROE.  ROE is the compensation that shareholders demand and are entitled to for taking on the risks involved in operating a public utility.  These calculations are inherently tricky: the formulae are fairly simple, but actually getting good numbers to put into the calculations can be very tricky.  The essence of the problem is that financial markets, and the formulas are all forward looking.  To really know what ROE is appropriate, we would have to know about future growth and risks of the company.  This information is unknowable, and in practice, the calculations are based on past information, and stock prices.

    There were three calculation methods used, two of which depend on estimating the risk premium (Risk premium and Capital Asset Pricing model or CAPM) that shareholders demand in order to hold the stock, and the other (Discounted Cash Flow model, or DCF) of which depends on analyst predictions of future growth rates.  The Risk premium and CAPM use historical market data to derive those risk premiums, and the results of those calculations from those methods led to almost uniformly higher estimates of ROE than the DCF method.  I believe this is because the markets are currently demanding much lower risk premiums than they have in recent years.  These lower risk premiums are partly a function of the market run-up since 2002, and partly a function of the run-up of the late 1990s, which, in my opinion and in the opinion of many other market analysts whom I respect.  I bring up Alan Greenspan, the former fed chairman in my testimony, but I also include Richard Russell, Nouriel Roubini, Pimco’s Bill Gross, and Yale’s Robert J. Shiller in that.  I chose Alan Greenspan because he has the most kudos and is most likely a recognizable name.  I note that when Xcel’s witnesses were trying to trash my testimony, they convieniently chose not to mention Greenspan.

     However, if I’d been able to travel a week into the future, I would have probably tried to include Bill Gross’ November Investment Outlook  column in my testimony as an exhibit.  As allways, Bill leaves me in awe with his depth of research and clear reasoning. 

    The DCF method is also flawed in its reliance on analyst estimates, since analysts can easily be caught up in the market mood as well, but they are often a much more sober lot, and so based my recommended ROE on the low range of the DCF calculations of other analysts.  If you look at the confidence index graphs at the International Centerfor finance at Yale, you will note that institutional and individual confidence tend to follow the same long term ternds.           

    Finally, in reference to the perverse incentives in the Electric Commodity Adjustment (ECA) primarily concern two parts of the ECA: the Baseload Energy Benefit (BLEB) and time of use (TOU) pricing.           

    With regard to the BLEB, this is an incentive for Xcel to keep their coal plants running as much as possible, under the assumption that coal is the cheapest form of electricity generation that is dispatchable (i.e. that they can turn on and off at will.)  I have serious problems with a lot of the assumptions that go into the BLEB.  I had problems with the form of the equation they used, given that it was based on annual average prices for natural gas, as opposed to real time prices, but that was a minor point compared to the things which the BLEB left out. Carbon Intensity of various fossil fuels, lb Carbon/MBtu.

    Source: Treepower.org           

    The BLEB left out of the costs of coal all the environmental costs of its use, thereby giving coal a great incentive than it deserves.  Also, only natural gas an coal were had reference at al.  Xcel’s explanation of this is that only gas and coal are dipatchable, yet part of what they say the BLEB is designed to encourage is improved maintenance of their coal plants to ensure that they are always available.  All forms of generation can benefit from improved maintenance.  Using their logic that the form or generation with the cheapest fuel cost should be incentified, there should clearly be strong incentives for improved maintenance of renewable resources such as wind and solar.            Finally, while wind and solar power are not now dispatchable, with the addition of energy storage such as pumped hydro or CAES, they can be made dispachable.  Incentives for coal will only delay investments which improved the dispatchability of other forms of generation. 

    Here are links to my testimony, as well as all the testimony in the case, and the settlement agreement. 

    Xcel did me the honor of spending several hours of the hearing trying, with various degrees of success, to tear apart my arguments.  I almost didn’t get any chance at all, but Ratepayers United Colorado’s attorney Gina Hardin managed to get me about 5 minutes to respond to multiple comments from several other witnesses.  Thank you, Gina!

                 Here is my take on what they had to say (from my notes.) Frederic Stoffel – Testifying in his former capacity as VP Energy Policy development for Xcel. Stoffel totally misinterpreted my testimony, by saying that he felt that I wanted Xcel to take on all environmental risks, and the price risk of any deviation from projections.  Note that while this blog makes it clear, I’m not sure if he didn’t get it because I was unclear, or because he simply chose to misinterpret what I was saying to make it easier to defend against.  I feel I managed to counter this argument effectively in my five minutes on the stand the next day. 

    I did not fare so well at the hands of George Tyson, Xcel VP and Treasurer.  In my analysis of appropriate ROE, I glossed over a major salient point, saying Public Service of Colorado had a “high” bond rating from S&P.  I had gotten this impression reading other testimony in the case, but in fact, PSCo’s senior unsecured debt rating is BBB-, one tiny notch over junk status.  Oops!   This makes a lot of my arguments about risk premiums irrelevant, because a debt downgrade (which might indeed follow if the commission were to assign my recommended ROE of 8.9%) would seriously impinge on PSCo’s ability to operatate, even if shareholders at the moment are not worried about such an event.  (In fact, shareholders shouldn’t be worried about this case, because the realistic chances of this settlement being thrown out are nil.  The main reason we were doing what we were doing is to demonstrate that there is real ratepayer unhappiness, so, when we have a more sympathetic PUC with one or two new appointments from Bill Ritter, who we hope and expect to win the election Tuesday – If you have not voted yet, do it! – then we can go back and appeal this.)   

    But Xcel did feel that they needed to counter what I had to say, since for both Tyson and Robert B. Hervert spent much more time attacking my testimony against the settlement than they did on any aspect of the settlement itself.  Considering how little they said about the settlement agreement, I get the feeling that they probably would not have even taken the stand under other circumstances. Hervert is a CFA charterholder, and economic and financial consultant for Xcel.  He took me to task for my conclusions about risk premiums.  His points were basically that he sees no indication that investors are currently asking lower risk premiums, and that analysts are not being swept along with that sort of mood, either.  I really can’t argue with that: it’s impossible to judge if valuations are currently high now because the current outlook really is good, or because people are too exuberant.  All I can say is, “Time will tell.” 

    He also took more to task for saying that the VIX is at historically low levels.  If you will note from the graph, it has currently only been this low once before (the index did not exist prior to 1990,) and, he noted that it is currently within “one standard deviation” of its mean.  This is bad analysis, which I would not expect from a Charterholder, and it really gets me steamed because I wasn’t able to dissect his mistake fast enough to pass a good question to Gina Hardin to allow her to challenge it by crossing him. 

    (Skip this paragraph if math makes your eyes glaze.)  Hervert’s mathematical sin is that the VIX does not conform even roughly to a normal (or even symmetrical) distribution, and so talking about “standard deviation” in reference to a lopsided distribution such as the VIX really is not relevant.   

    Anyway, I wish I’d had time to bring that point up in the few minutes I actually got on the stand.  Not that anyone would have understood it, which is why I stuck to my main points about incentives and Stoffel’s misinterpretation of my testimony. 

    I really don’t care that much what ROE Xcel is authorized.  I’m much more concerned about the incentives that they are given. With the right incentives, Xcel would stop trying to build coal plants and instead invest heavily in energy efficiency, demand side management, time of use pricing, energy storage, transmission, and renewable energy generation, and make a lot of money doing it.  That’s what I would hope to come out of a rate case.  Maybe under our next governor, we’ll get something like that.

    So go vote Tuesday (even if you don’t live in Colorado.)   It really does matter who wins even the small races.  If you had the time to read through this multipage diatribe, surely you have enough time to make it to the polls.

    Comments (1)

    Tilting at Wind Turbines

    I’ll be testifying for Ratepayers United Colorado in the upcoming hearing starting Thursday on the Settlement Agreement reached between Xcel, regulators, and consumer advocates (representing large commercial purchasers of electricity.) 

    I’ve been told that hardly anyone fights settlement agreements in these cases, but environmentalists and clean energy advocates were left entirely out of this agreement, which actually contains an incentive, refered to as the BLEB, or Base Load Energy Benefit, for Xcel to burn as much coal as it possibly can, in preference to all other types of electricity generation.Coal dominates Xcel Energy’s power generating capacity - Xcel Energy is a major US electricity and natural gas energy company based in Minneapolis, Minnesota.

    Ratepayers United asked me to help out because 1) I volunteered, 2) I understand economics, and 3) there wasn’t anyone else with the first two qualifications bull-headed enough to go ahead this late in the game.

    Links:

    Denver Post Article

    Denver Business Journal article

    What I had to say afterward

    Comments off

    Older Posts »
    Follow

    Get every new post delivered to your Inbox.

    Join 150 other followers