DENNIS E. HEDKE Kansas House of Representatives (Ret.) Chairman of House Energy & Environment Committee 2012-2016 Hedke-Saenger Geoscience, LTD Consulting Geophysicist 8100 B. 22nd Street North, Bldg 2200, Ste 3 Wichita, KS 316-295-4675 October 30, 2017 Colorado Public Utilities Commission Chairman Jeffrey Ackermann ‘Commissioner Wendy Moser Commissioner Francis Koncilja 1560 Broadway, Suite 250 Denver, CO 80202 RE: Docket 16A-0398E, Xcel Energy’s proposed Colorado Energy Plan Dear C 1an Ackermann and Fellow Commissioners: Greetings from the State of Kansas, the self-named 'Air Capital of the World’, home to Boeing, Spirit, Lear Jet, Hawker Beecheraft-Cessna, and many others related to our industrial base. As a matter of ongoing research related to energy & environmental issues, I recently came across an article appearing in the September 19, 2017 Greeley Tribune, entitled "The math behind Xcel’s ‘Colorado Energy Plan’ defies reality and history". [1] It immediately caught my attention due to the fact that the State of Kansas, as you are probably well aware, has made the very costly and inefficient decision to embrace renewable power as a substantial contributor to its electricity grid. As a result of mandated public policy dating back to the 2009 Kansas legislature, we can now relate directly to the pain of residential rates of electricity skyrocketing more than 50% in less than 8 years. It is unconscionable to me that Xcel Energy would make the claim that it will save ratepayers money by retiring two very highly reliable and expensively retrofitted coal-fired power plants at Comanche 1 and Comanche 2 (660 MW generating capacity) and replace them with 49 MW of wind capacity and 400 MW of natural gas combined cycle power, at a staggering cost of $1.4 billion, not to mention the stranded cost of $297 million still owed on the Comanche installations. This whole debacle in Kansas was sold on the deal-making between then Governor Mark Parkinson and Sunflower Electric Power, that was supposed to allow for the expansion (near doubling of capacity) at their Holeomb, KS plant, in exchange for renewable mandates that would ultimately yield 20% nameplate capacity of renewable energy capacity by 2020. Guess what? We got the capacity by 2017, helped almost single-handedly by the federal production tax credit - which is exactly what is driving Xcel to get a free pass to materially increase electricity rates in the State of Colorado — unless prudent reviews of available facts negate the proposed Colorado Energy Plan. The Holcomb expansion is still on hold, in seemingly endless litigation. Here is calculated evidence, recently released by IHS Markit (September 2017) [2], which succinctly describes the forward-looking risks America already faces due to mandated policies that have unnecessarily retired thousands of megawatts of reliable and resilient coal-fired and nuclear powered plants, o the detriment of the grid and certainly to ratepayers-a path that Colorado is now embracing: [I] William Yeatman, Amy Oliver Cooke, The math behind Xce's Colorado Energy Plan’ defies reality and history, Greeley Tribune [2] Lawrence Makovich, James Richards, Ensuring Resilient and Eificient Electricity Generation, IHS Markt, September 2017Integration costs. Policy initiatives that drive more intermittent generation than is cost-effective typically involve intermittent generation variability that is not highly correlated with aggregate consumer consumption temporal patterns and causes the power system net-load factor to decline. This integration of intermittent resource output causes the unit cost of the remaining dispatchable power supply to increase compared with the outcome in an undistorted wholesale marketplace. Risk exposure. Whenever policy initiatives drive intermittent generation shares and natural gas~ fired ‘generation shares to exceed the level associated with a reliable, resilient, and efficient supply portfolio, the exposure to risk factors capable of generating potential significant excursions from normal operating conditions increases, compared with the undistorted wholesale market outcome. This elevates the cost of adjustments to the economic dispatch to satisfy security of supply constraints and ensure resiliency to the wider scope of potential disruptions. This market distortion ageravates an existing market flaw in some existing wholesale markets in which price formation rules do not fully compensate resources for the full marginal power system cost of providing security and resiliency. Here is a look at results from another study, released in 2016 (3), that accurately depicts the true levelized costs of various power sources available to all markets in the United States, certainly including Colorado: LEVELIZED COST OF ELECTRICITY CONVENTIONAL COAL $39.9 CONVENTIONAL COMBINED 34.4 © LCOE OF EXISTING GENERATION CYCLE GAS (CC GAS) $55.3 1 LCOE OF NEW GENERATION $29.1 NUCLEAR $90.1 535.4 HYDRO $122.2 CONVENTIONAL COMBUSTION 506.2 TURBINE GAS (CT GAS) 3263.0 | WIND INCLUDING cost IMPOSED ON CC GAS si07.4 PV SOLAR INCLUDING COST IMPOSED ON CC AND CT GAS ee sio0 $200 $300 cost (s/n) Figure 1; True Levelized Cost comparisons between existing (nowhere near end of lifetime) conventional coal, and alternatives that may come into consideration by utilities and public commissions. [3] Thomas Stacy, George Taylor, The Levelized Cost of Electricity from Existing Generation Resource, The Institute of Energy Research, July 2016Unlike typical ELA and other studies, this effort includes the full measure of price impacts including subsidies, mandates and other factors that weigh heavily on consumers as all these factors come into play during and after construction of expensive new infrastructure. Here is another quote from the 2016 study worth noting as you contemplate the highly inefficient and expensive alternatives currently under consideration the ‘Colorado Energy Plan’, as opposed to fully utilizing existing, substantially retrofitted, clean coal burning plants at Comanche | and 2. "FERC Form | and EIA 860 show that, in the absence of mandates, subsidies and regulatory compliance costs, the cost of electricity from almost all existing generation resources will remain less than the cost of electricity from their likely replacements for atleast the next 10 to 20 years... "Forms 1 and 860 data indicate that most existing power plants could remain economically viable for years or decades beyond their current age. While existing resources remain our lowest cost option, regulatory compliance costs and artificial “wholesale price suppression” brought about by subsidizing and mandating higher cost and lower value technologies (for example, through the wind production tax credit, solar investment tax credit, and renewable energy mandates) combined with wholesale price caps, cause low-cost existing dispatchable resources to operate at a financial loss. These external influences are not consistent with cost-minimizing market design. The result is that some existing resources may be operating at a net financial loss even while their likely replacements would produce electricity at a substantially higher cost. The lowest possible electricity rates will only be achieved by keeping existing generating resources in operation until their product becomes uneconomic not relative to suppressed wholesale market clearing prices, but rather relative fo the levelized cost of electricity from new sources that would replace them, ‘The 2017 IHS Markit study also looked very substantially at the past (worst in America practices) of the State of California. They have driven mandates and regulations into such incredible and, I would submit, ridiculous extremes, that they now have the highest electricity costs in the United States. From where I sit, the State of Colorado is moving in many respects like that very poor example of how to seriously damage an economy, and drive families and businesses to much more attractive locales. plore you to look very hard and very long at the proposal on the table from the Xcel-led Stipulation ‘group's Colorado Energy Plan, and ultimately do what is right and prudent on behalf of all ratepayers in the State of Colorado. Yes, that means shelving indefinitely, if not permanently, the inherently damaging Colorado Energy Plan. Respectfully submitted, Tori Dennis E. Hedke ce: Colorado Senate Republicans President Kevin Grantham Majority Leader Chris Holbert President Pro Tem Jerry Sonnenberg Assistant Majority Leader Ray Scott Majority Whip John Cooke ‘Caucus Chair Vicki Marble . . Colorado House Republicans Minority Leader Patrick Neville ‘Assistant Minority Leader Cole Wist Caucus Chair Lori Saine Caucus Whip Perry BuckState Capitol Building 200 East Colfax Ave Denver, CO 80203 Independence Institute Amy Oliver Cooke Executive Vice President Director, Energy and Environmental Policy 727 E. 16 Avenue Denver, CO 80203