Tuesday, January 7, 2014

Xcel Energy Strikes Again: Now Even Solar Companies are Opposing Xcel’s agenda

Xcel Energy Strikes Again: Now Even Solar Companies are Opposing Xcel’s agenda

One company in Colorado has perfected lobbying and the art of manipulating emotions of both Republicans and Democrats to further their corporate agenda – that being Xcel Energy.  Xcel is an ‘Investor Owned Utility’ and makes a profit on a ‘cost plus’ model.  That is, as their costs rise, their profits rise.  Let’s illustrate this with a simple example and for the sake of illustration let’s assume their profit margin is 6% above their costs.

Monthly bill
12% Profit margin on utility charges
$ 12.00
$ 14.40
$ 24.00
In the table above, we see how an increase in what they bill to us increases their profits.  The more we pay on our utility bills, the more the profits Xcel makes for their investors. 
The way they increase their profit margins is to make politicians in Colorado increase their costs.  If they can also convince voters directly that they should pay higher utility rates, that would also be beneficial.
So… this is exactly what Xcel energy has been doing for the past ten years.  It was a driving force behind the 10% alternative energy mandate passed by voters in 2003 via a state Constitutional amendment.  Xcel was also a driving force behind the increase to 20% in 2007 and increase to 30% in 2010.  Xcel was also a driving force behind the fuel switching bill in 2010 that forced power plants to convert from coal to natural gas.
Producers of alternative energy have also benefited as they have been able to produce and sell alternative energy to Xcel.  One of these producers is Solar City has been a significant beneficiary of the alternative energy mandates, riding the coattails of Xcel.  However, it seems that Xcel has turned on solar providers such as Solar City.  The CEO of Solar City sent out this email in December:

It seems that Xcel energy insatiable appetite to increase its cost base has reached a new level as it has turned on its own.  Solar City’s December rally against Xcel is a sign that Xcel believes there are no barriers too high to climb and no legislator that can’t be bought to further their profit motives.  Grab some popcorn, this battle should be interesting to watch.

Unfortunately, families, ranchers, farmers, and other small businesses are the consumers of electricity in Xcel’s service area that will be biggest losers and Xcel’s shareholders will be the winner.  Xcel has a long history of winning this war in Colorado and wouldn't be turning on its partners like Solar City if they didn’t believe they had the support from the Colorado legislature to protect their profits.

While I expect the Democrats to be in favor of alternative energy policy, it is truly disappointing to see how many Republicans have voted for legislation in favor of Xcel over the past 10 years - there are many familiar names in the list: Greg Brophy, Cory Gardner, Frank McNulty, Jerry Sonnenberg, BJ Nikkel, Kevin Priola, Glenn Vaad, Amy Stephens, Marsha Looper, and the list goes on...  It seems that both the Democrat and Republican parties has, at times, sold its soul to Xcel on the backs of consumers throughout the state.  The question is who is looking out for the little guy???

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