Xcel Energy is going green, or I should say going for the green. Of course, publicly the company says that plans to be 100 percent emissions-free by 2050 are going to help save the planet and even save money for customers. Both of those claims are questionable, at best. But two things are certain, the initiative will benefit Xcel shareholders and greatly increase the energy bills for Xcel customers.
Xcel Energy is an investor-owned utility, referred to as an IOU, that operates a regulated monopoly in its service areas. During my time in the North Dakota Legislature we addressed a number of issues related to IOUs and electric cooperatives in the state. Traditionally, the IOUs served the larger cities in the state and the cooperatives served the rural areas. But as cities like Fargo and Grand Forks expanded, the growth was into areas served by the cooperatives. The service area for the IOUs was fully developed and those companies were landlocked, limiting their ability to grow. This is obviously a bad position to be in for the companies and their shareholders.
Green energy to the rescue. Xcel, and other IOUs, discovered that green energy is the surest way to grow their bottom line. You see, as a regulated monopoly, Xcel is guaranteed a profit on any investment that it makes. In North Dakota, the Public Service Commission regulates the IOUs. When the PSC approves a plan or project submitted by an IOU, the profit on that project is guaranteed.
Isaac Orr with the Center of the American Experiment in Minnesota put it this way earlier this month in an excellent article on Xcel’s plans: “Furthermore, the government guarantees Xcel Energy a guaranteed 10 percent profit on every dollar they spend on infrastructure. This means every wind turbine, solar panel, and transmission line built bolsters Xcel’s profits…”.
Earlier this month, the PSC voted 2 to 1 to approve a massive wind energy project submitted by Xcel. This project will primarily “benefit” consumers in other states, such as Minnesota, and with the PSC’s action Xcel customers in North Dakota will help pay for it. A majority of the PSC seems to have bought into the company’s claims that the plan will save money for Xcel customers. Commissioner Randy Christmann, the lone no vote was quoted by John Hageman, Forum News Service, saying, “We should always prioritize the needs of North Dakota citizens over arbitrary political preferences of regulators from outside jurisdictions. Like an out-of-control Black Friday shopper, the only justification for this massive additional spending spree is that the price is right.”
Christmann is right, North Dakota loses twice. Xcel customers will see higher and higher utility bills while our lignite industry will take a big hit. The claims of cost savings are questionable at best, perhaps I will address that in a later column.
As a supporter of federalism, I believe each state should chart its own course. If the people of Minnesota and Colorado want to move “green energy,” more power to them (pun intended). But, the people of North Dakota should be not be forced to pay for it. I guess the term IOU fits.