Ritter’s Gamble in War Against Oil

Democratic Governor Bill Ritter of Colorado signed two major renewable energy bills yesterday.

You would think I would be happy. Worried is more like it.

The problem is that the bills he signed amount to a subsidy for Xcel Energy with no requirement of fundamental change. The idea of the first bill is that Xcel will tap more wind and geothermal energy, maybe build some big solar projects, and pump that electricity  into its existing systems. The second bill subsidizes Xcel’s replacement of high power lines, allowing them to be written off quickly.

This is an enormous win for Xcel. But is it sound policy in the War Against Oil?

I’m not certain it is.

If you are going to write the utility a huge check, you should be able
to make some demands in return. Demand that Xcel buy back power
consumers and businesses create for themselves, at market prices.
Demand that Xcel’s local networks be engineered to handle this. Demand
that Xcel build-in a hydrogen cycle, taking excess power off the grid
in the form of hydrogen, and at least having that available for use by
fuel cells in time of need.

You also need guarantees when you subsidize a big utility. All the
customer subsidies given to Verizon, AT&T, and other phone
companies over the last 10 years, predicated on the idea of building-in
faster broadband for everyone, were in fact pocketed, used for
acquisitions. The networks are no better than they were, and the money
— $200 billion — is all gone.

Finally, there is nothing in either of these bills which creates a
competitive energy market. It’s all monopoly subsidy. If someone other
than Xcel can produce renewable power, or distribute it, for less than
Xcel’s bureaucracy, they still can’t get into the market under this
legislation.

The electricity component of the War Against Oil requires that we completely re-think how electricity works:

• It doesn’t have to be produced in huge plants.
• It doesn’t have to be a monopoly product.
• It doesn’t have to be a one-way street.

Ritter may have missed an opportunity to do some really big things in
his rush to grab a quick headline, and fulfill a campaign promise. Time, of course, will tell. How will
Colorado regulators hold Xcel to its promises? How will Xcel deliver?
What happens in the case of failure? All these questions are unanswered.

The War Against Oil can’t just be a rush to subsidize war profiteers, or it will end no better than our adventure in Iraq.