Empower Our Future

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Julie Zahniser: How about a worst-case from Xcel?

Letter to the Editor:

Dan Powers, in his recent guest commentary (“Time to abandon muni plan?”, Feb. 1), asked the City to provide an update on “worst-case scenario financials.”

I would appreciate Xcel providing an update on its worst-case financials, especially considering the financial disasters being reported by its major Colorado coal suppliers, Peabody, Arch, and Alpha Natural.  It isn’t likely that Xcel will provide its worst-case scenario, but we can project one from known data.

Xcel relies on coal for about 56% of its electricity and hopes to continue relying on coal for another half century. Yet the supply of profitably recoverable coal is rapidly being exhausted. The number-one US company, Peabody (BTU), reported over $700 million in losses in 2014. Number two, Arch Coal Inc (ACI), lost over $500 Million, and in recent years, Alpha Natural Resources (ANR) has reported many hundreds of millions in losses.

If companies lose money on every ton of coal they dig, they’ll stop digging coal. If the companies stop mining coal, where is Xcel going to get its supply?  Would Xcel take over the mining? If Xcel’s coal plants can’t be run profitably, they become stranded. Will Xcel’s customers be expected to pay for them?

Utilities are facing these issues across the country. It’s been called the “utility death spiral”:  Utilities that don’t change with the times may face loss of revenue as customers opt for cheaper solar and soon-to-be cheaper batteries.  As this happens, the utility’s fixed costs will be spread over fewer customers, forcing rates up and increasing customers’ incentives to leave the utility.  We don’t see signs of Xcel changing with the times.

Of course, the biggest worst-case is climate collapse which is being fueled by burning fossil fuels.  But the previous two points should be enough to keep us moving toward municipalization.   

Julie Zahniser
Boulder

This letter to the editor was originally published by Boulder Daily Camera