Those two questions became critically important to senior officials of Colorado Springs Utilities when a voter-approved initiative in 2004 required that electric utilities derive a certain percentage of their retail electricity sales from renewable sources.
Currently, municipally owned electric utilities in Colorado serving more than 40,000 customers must produce 10 percent of their power from renewable sources by 2020.
CSU already meets the 2020 standard, boasting on its website that it’s on track to generate 20 percent of its power from renewable sources by 2020, double the state standard.
How did CSU get there so quickly and painlessly? Does it own vast solar arrays in an undisclosed location, or maybe a 100-turbine wind farm in southeastern Wyoming?
“To be fair, Utilities has a real dilemma to deal with. … There hasn’t been a need for new power sources.”
— Jane Ard-Smith,
Does this mean that CSU misrepresents itself as a “green” utility when it’s anything but? That’s a matter of opinion, but CSU has been creative in both complying with state mandates and acting in the perceived best interests of its ratepayers. Its renewable inventory conforms to state requirements, but it’s not quite as renewable as one might think.
According to the 2012 electric integrated resource plan, CSU’s renewable energy portfolio consists of the 6 MW Air Force Academy solar project, 28 MW from the Tesla Hydroelectric Plant and 7 MW from smaller hydro units. In 2013, the utility agreed to buy up to 50 megawatts of wind power from Xcel Energy during the next two years, and approved purchase contracts/credits for community solar installations. A portion of CSU’s purchases from the Western Area Power Administration also qualifies as renewable under the Colorado Renewable Energy Standard.
The Tesla plant, located on the grounds of the Air Force Academy, generates power from water released from Rampart Reservoir to the city’s Pine Valley and McCullough water treatment plants. At an altitude of 9,000 feet, Rampart is more than 2,000 feet above the plants, so there’s energy to capture from the water as it rushes downhill.
Conventional hydroelectricity is derived from the sun’s energy. Water evaporates, rises to the clouds and returns to earth as rain or snow.
Carried toward the ocean by gravity, it’s stored in reservoirs and released, spinning turbines and generating energy.
But not at Tesla. Almost none of the water in Rampart Reservoir arrives there via natural runoff. It’s pumped uphill from the Homestake System in the upper Arkansas Valley, a water resource jointly owned by Colorado Springs and Aurora. Doing so requires power — lots of it.
“In 2012, 53,400 megawatt hours of power were used to pump water through the Homestake System to Rampart Reservoir,” said CSU spokesman Dave Grossman. “This is Colorado Springs’ portion of power used at the Otero pump station and at the Twin Rocks pump station.”
Tesla stands on its own merits as a useful, intelligent way to recapture some energy used in transporting water from a distant source. It was in place years before legislative mandates, and it’s a tribute to CSU’s lobbying with the Legislature that Tesla’s output qualifies as hydropower under the Colorado Renewable Energy Standard.
“It was certainly noisy, and it was certainly effective,” said Jane Ard-Smith of the Sierra Club, referring to the lobbying effort.
Colorado Springs also benefits from its long-standing power purchasing agreement with WAPA, a federal agency described on its website as “one of four power marketing administrations within the U.S. Department of Energy whose role is to market and transmit electricity from multi-use water projects.”
In 2011, the Air Force Academy completed construction of a 6 MW solar array, partially fulfilling federal goals calling for military installations to become “netzero” — i.e., to produce as much energy as they consume.
It appears that the funding, construction and eventual ownership of the array were structured to satisfy renewable mandates and goals for both Utilities and USAFA.
“The USAFA contracted with Colorado Springs Utilities for the provision of renewable energy through the payment of an $18.3 million connect charge,” according to CSU’s website. “This project is completely funded by the USAFA and does not impact Colorado Springs Utilities’ electric rates. SunPower (the firm that built the array) ensures that the plant’s performance meets or exceeds forecasted output.” CSU has an option to buy the array in 2021.
Although CSU doesn’t yet own it, it’s listed as part of the company’s renewable portfolio. USAFA is equally pleased with the project, funded by an $18.4 million American Recovery and Reinvestment Act (ARRA) grant from the federal government, noting that it will save approximately $500,000 annually in utility costs.
Thanks to a contract signed with Xcel Energy in 2013, Grossman forecasts that CSU’s wind-energy portfolio will increase from 0.03 percent of the 2012 electric portfolio to 2-3 percent for 2013.
Despite City Council’s sudden recent decision to downsize the extension of the solar garden project, CSU still trumpets its support of such initiatives.
“As a municipal utility, Colorado Springs Utilities is one of Colorado’s leaders in renewable energy,” Grossman wrote in an email. “We were one of the first cities to embrace net metering and community solar gardens. We are on track to meet our Energy Vision, which contains a goal of 20 percent renewable energy by 2020.”
That’s true, although CSU owns neither wind turbines nor solar panels. Excluding the Tesla “ponded hydro” facility, CSU’s renewables include only four historic hydro-generators along Ruxton Creek, supplemented by a recently constructed 0.5 megawatt microplant in Cascade.
By contrast, CSU owns and operates coal-fired units with a total capacity of 462 MW, supplemented by gas-fired generators with an aggregate capacity of 595 MW.
Why such disparity?
While it’s tempting to believe that the company is green only on paper, that’s not the whole story.
“We as Colorado Springs ratepayers haven’t invested in anything but renewable energy credits (from WAPA),” said the Sierra Club’s Ard-Smith, “but to be fair, Utilities has a real dilemma to deal with. Their decision-making is driven by (forecasted) base load and reserve margins, and there hasn’t been a need for new power sources.”
State mandates require that CSU introduce renewables into its generating mix, but the local economy has not produced enough demand to justify building or acquiring new facilities.
The inherent conflict between mandates has created the present anomalous situation, as CSU tries to both comply with the law and avoid spending ratepayer dollars on redundant new capacity.
That’s why the utility has structured its renewable portfolio with lease, lease-option, wholesale purchase and renewable energy credits. Such deals give the company flexibility in the future, when local demand may increase.