By Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, an advocate for residential and small business utility consumers.
Ben Fowke, the president and CEO of Xcel Energy, recently announced an ambitious plan to cut the utility's carbon emissions 80 percent by 2030. To reach that goal, Xcel Energy will double down on clean energy. It plans to generate 60 percent renewable energy by 2030.
That's fantastic news for consumers. It means not only lower emissions but also savings on electric bills.
Xcel's new vision is a big acceleration over its latest 15-year plan, which called for 35 percent renewable energy by 2030 and was finalized earlier this year. Xcel is on track to achieve that goal just five years from now, so it was already time to raise the bar.
Why is Xcel Energy making this leap? First and foremost, because it makes economic sense.
Wind power is the cheapest source of electricity available today. Increasing clean energy, Fowke said, will allow Xcel to keep electric bill increases at, or below the consumer price index.
In September, an Xcel representative testified to the Minnesota Legislative Energy Commission that the company was purchasing wind energy for a cost of $15 to $20 per megawatt-hour. Energy from natural gas generation—the main energy source competing with renewables today—cost Xcel between $25 and $35 per megawatt-hour. In fact, in a recent interview with MPR, Fowke said it's cheaper for Xcel Energy to build new wind turbines than to simply operate even the lowest-cost of Xcel's existing coal plants. Wind power is that cheap.
Investing too heavily in natural gas generation leaves consumers open to higher monthly electric bills. Natural gas prices are low today, but gas markets are notoriously hard to predict.
When gas prices spike, customers see the impact directly on their bills. When a utility builds a natural gas power plant, consumers bear that risk over the next three or four decades that the plant is expected to operate. Wind, sun and water, on the other hand, are free fuel sources, so the price of renewable power is set from the day the mechanism used to harvest these sources is built.
Bottom line: With its renewable energy vision, Xcel is making a good business decision while also giving their customers what they want — clean, reliable energy and lower electric bills.
So here's my question: Could other Minnesota power companies do the same thing?
Minnesota Power, the electric provider to much of northern Minnesota, plans to generate 44 percent of its electricity from wind, solar, and hydropower by 2025. Great River Energy, which supplies electricity to many of Minnesota's rural cooperative utilities, plans to reach 33 percent renewable energy in 2032. That's a good start, but Xcel Energy has shown that more ambitious clean energy goals are in customers' best interest.
According to Minnesota Power's calculations, getting the wind and solar power needed to meet the state's Renewable Energy Standard has actually saved customers 0.34 cents per kilowatt-hour—that's more than $2.50 off an average residential bill each month. Great River Energy, too, has seen savings for its customers.
It's worth noting that Xcel Energy will share the details of its carbon-cutting plan when it files a new Integrated Resource Plan in 2019. That's a chance for Xcel Energy customers to hold the power company accountable to these goals and ensure that they continue to prioritize clean, affordable energy.
With these kinds of numbers, it may be possible for Xcel to reduce carbon emissions even further, and to do so with even greater savings for customers—and other utilities can do the same.
It's clear that increasing clean energy is the best option for power companies and their customers.
Xcel Energy is showing that clean energy can be a win-win for utilities, consumers, and the environment. I look forward to working with Xcel and all of Minnesota's utilities towards cleaner, more affordable energy for their customers.