Renewable Energy: At What Cost?

Easy answers are rarely wise answers, especially when complex systems are involved. So it is with the current push to move to a “100% renewable standard” in Columbia. That move could significantly raise our costs of electric service.

In general, using renewable resources costs more (average costs reported in the 2021 Columbia Water & Light Renewable Energy Plan were $36.51.MWH for renewable and $25.86/MWH for non-renewables). In recommending a move to a “100% renewable standard”, the Integrated Electric Resource Master Plan Task Force failed to present any analysis of the cost of doing so, although it did acknowledge that cost might be an issue. And many of those who appeared at the recent public comment session – backed by the Sierra club and the Climate and Environment Commission (CEC) – pushed for an even more aggressive standard of “100% renewables by 2030.” Again there was no discussion of the cost.

In order to meet this more aggressive target, we would be buying additional resources that we do not currently need to provide electric service to customers. As is laid out in the Siemens Integrated Resource Plan that was prepared for the task force, CWL is already overbuying resources to meet renewable goals. In fact, it is showing a “long position” through 2030. The additional costs of overbuying to meet renewable targets are not fully covered by the amounts received when the existing resources that are then displaced are resold. And if market rates at the time of sale do not meet planning projections — as happened in Texas when a municipal utility followed that same strategy – our costs to meet more aggressive renewable targets will be even greater than projected.

The Sierra Club of Texas has acknowledged that the move to incorporate more renewable energy into a municipal portfolio can be costly, and that affordability of electric service must be a key criterion in determining an appropriate plan. They also emphasized that any such plan must be the result of a robust and public engagement process. Both of these factors – affordability and sincere public engagement – have been missing in Columbia’s push to renewable energy. 

In 2004, voters in Columbia approved the existing renewable energy ordinance that set targets for acquiring renewable energy. These targets were specifically subject to a cost cap. That is, the cost of acquiring the renewable resources to meet the stated targets could not cause electric rates to increase more than 3% . The Task Force’s draft report that was provided for public comment reflected the CEC position that this cap could simply be removed by Council fiat and without putting the issue again to the voters. In approving its final set of recommendations, the Task Force correctly acknowledged the importance of maintaining affordable rates, and acknowledged the cap on increases. If there is to be a move to more aggressive renewable targets, the costs of that move should be fully disclosed, and the question of how to proceed should be again put to the voters.

2 thoughts on “Renewable Energy: At What Cost?

  1. The following public comments were offered on Part 1 of the Siemens report which addressed resource acquisition, prior to the release of the draft public comment version of the Task Force Report:

    Part 1: The primary flaw of the Part 1 generation study is that it does not contain an adequate “business as usual” baseline that would reference existing assets and fill in remaining needs through market purchases (p. 59). A clear baseline is needed both for analysis of, and communication on, the available options. Instead the Siemens study uses a “reference case” that includes not only renewable goals adopted (and bounded by a price cap) in the Renewable Energy Ordinance, but also “societal goal targets” with regard to renewables and emission reductions (adopted without any electric service cost analysis in the City of Columbia Climate Action and Adaptation Plan). This obscures the costs to ratepayers involved in meeting those targets. Renewable goals and related costs were previously put before voters and boundaries were set. If we are now going to make changes, the costs of those changes should be clearly set out and citizens should again be afforded a right to vote on those new goals.

    The study also makes clear that CWL is currently overbuying resources to meet renewable goals. This means it is buying resources that are not currently needed to ensure reliable electric service, and showing a “long position” through 2030. The study downplays the associated costs by offsetting the costs with assumed sales from the displaced resources (example, $898 million reduced to $726 million, p. 72; CWL might sell up to a third of its total generation, p. 69). This is gambling with the public’s money and without its consent. It’s also a “smoke and mirrors” approach to meeting the societal goals – the coal plants will still keep running, even though our portfolio may be “clean on paper.”

    Neither of the above approaches is consistent with past practice and good planning. Nor is it consistent with the City’s stated mission of serving the public “equitably through democratic, transparent and efficient government.” The IERMP Task Force was charged with engaging the public throughout the planning process, presumably to help build public understanding and acceptance of any plan that emerged. It has failed to do so. Allowing public observation of task force meetings, with brief public comment periods, is not public engagement. Posting a technical plan that exceeds 300 pages in total and inviting public comment is not a way to get substantial public input, or to clearly outline key choices being made that will affect the cost of service. Public engagement includes providing clear and easy to understand summaries of key issues, and inviting input on those.

    I have reviewed and generally agree with the Siemens study’s recommendations on value of solar (including the “generous assumption” on p. 131), change in rates, AMI, and staying in MISO. The forecast analysis is also reasonable.

    I also agree with the recommendation in various portions for ongoing reports and updates to build public understanding and provide accountability for decisions made. That again depends on an adequate baseline. Providing a clear baseline, updates, and accountability would help prevent decisions that are more driven by politics than sound data.

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  2. Pingback: Renewables, Reliability, and Transmission – One Community One Columbia

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