by Bill Knowles
WALSENBURG- Xcel Energy has finally replied to a letter the Huerfano County Commissioners sent to them in late November.
The Commissioners’ letter asked why Xcel Energy stopped negotiations with E.ON Climate and Renewables on a Power Purchase Agreement (PPA) for 200 MW of wind energy. The energy would be produced on a wind farm sited on the Cordova Mesa in eastern Huerfano and Las Animas Counties.
Xcel cited delays in the decision making process by the Public Utilities Commission (PUC) and a drop in the market value of wind energy as reasons for halting negotiations with E.ON. The letter, dated Dec. 14, 2010, was written 12 days after the deadline the county commissioners specified in their November letter.
In the correspondence, Xcel officials stated their justification for withdrawing the 2009 Request for Purchase (RFP) bid from E.ON. They are seeking approval from the PUC to reopen those bids no later than Jan. 17, 2011. Both actions will require Xcel Energy’s resource plan to be amended.
In the letter, Xcel states “…the recommended decision by the Administrative Law Judge in November… is a decision that still must be reviewed and approved or modified by the full (Public Utilities) Commission.” And that process will probably continue well into 2011.
“As a result, we can not move forward with this project as originally designed,” David L. Eves, President and CEO of the Public Service Company of Colorado, states in the letter. Public Service argues that the cost of a megawatt of wind energy and the cost of producing solar power have been falling. According to the letter, “…the decrease in energy prices no longer allows us to justify completing the agreement for the E.ON wind project at the currently offered price.”
Also, Xcel is committed to a budgetary expenditure of no more then two percent of retail bills for the acquisition of renewable energy. “If we executed the E.ON agreement with current market conditions, the company (Public Service Company) would be agreeing to allocate a substantial percentage of the overall renewable energy funding to this one single project,” Xcel Energy states in the letter.
However Xcel Energy has not provided data to either the PUC or E.ON to support their argument that market conditions are causing a drop in wind energy prices. Mark Stutz, the senior media representative with Xcel Energy, in a previous interview with the Huerfano World Journal indicated that the sources of market information used to determine the drop in renewable energy value were proprietary.
Xcel Energy’s desire to stop negotiations with E.ON and start new RFPs in January delays the overall plan to erect high power transmission lines through Huerfano County and delays the wind energy development the county was supporting. These delays aggravate the economic downturn affecting the county.