Press Release

For Immediate Release
23 August 2006
Contact: Craig Cox, 303-679-9331

New Study: Wind Energy Saves Gas, Cuts Consumer Electric Costs

“Backcasting” Report Shows Additional 263 Megawatts of Wind could be Added

Conifer, Colo. — A trailblazing new study released by the Interwest Energy Alliance reports that consumers will save more than $251 million because of Xcel Energy’s current fleet of wind plants over the coming two decades. The study further concludes that consumers could have saved another $186 million had Xcel invested in more wind during three recent bidding cycles for new electric generators.

By comparing existing wind projects and wind projects that were proposed (but not built) to the cost of natural gas generation (which wind energy most often displaces), the authors of this study, Jane Pater and Ron Binz, quantify savings that wind energy generation has already provided Xcel Energy’s consumers. The authors then project what consumers would have saved if additional amounts of wind energy generation that Xcel sought but did not buy had been added to Xcel’s power generation portfolio during generation resource acquisition bids in 1999, 2004 and 2005. Pater is experienced in energy and environmental affairs, and Binz was Colorado Consumer Counsel for eleven years.

The study’s findings —that more wind means more consumer savings— are also significant because Xcel’s own research shows that it can cost-effectively and reliably accommodate wind energy up to about 15% of its electric generation totals, about twice as much as it currently has on its system or has recently agreed to purchase. Last year Xcel announced it would enter into agreements to buy the output from 775 additional megawatts of new wind energy. The Pater-Binz study reports that Xcel could add another 263 MW of wind next year to reach a penetration level of 15%. “A 15% wind level would deliver even more cost savings to its consumers, along with significant environmental and economic benefits to the whole state,” said Fred Hefley, manager of Baca Green Energy in Walsh, Colorado.

Xcel’s failure to add the wind energy that could be benefiting its electric customers now has been attributed to lack of transmission lines to bring the wind from Colorado’s windy Eastern Plains to Front Range electric loads. Xcel’s plans for new transmission, just announced to transmission planners and a legislative transmission study committee, do not address large amounts of new wind energy. Since transmission takes five to seven years to build, while wind plants can be built in a year or two, Xcel customers will have to wait for the transmission to be planned and built to get new wind plants to provide relief from high natural gas and electric prices.

The Interwest Energy Alliance emphasized that in order for Colorado to harness the tremendous potential for wind power —and reap its multifaceted benefits— much-needed electric transmission infrastructure must be developed to bring wind-generated electricity to load centers. “More transmission from Colorado’s eastern plains wind resources would help struggling rural communities reap economic benefits from investment and jobs in wind plants, while Front Range consumers would have access to cleaner, more secure and lower cost electricity,” said Ron Lehr, attorney and former Colorado PUC Chairman who now represents the wind industry. “It’s time to ‘connect the dots,’ get transmission planned and built, and bring wind power benefits to the whole state.”

Significant findings from this study include:

The cost savings for wind generation that Xcel Energy has already acquired will produce more than $251 million in fuel and emissions cost savings for PSCo ratepayers over the next 20 years.
Had Xcel acquired additional wind generation that it sought and was offered, at about the prices for the wind it did buy, Colorado ratepayers would have saved a total of $438 million over the lives of these contracts (15 to 20 years) —that is, an additional $186 million over the savings that will be achieved by the wind farms now on the Xcel system.
Current levels of wind generation will prevent 19.2 million tons of carbon dioxide that would otherwise result from burning fossil fuels; adding wind generation that could have been purchased, as suggested in this study, would have further reduced carbon dioxide emissions by 14.7 million tons.

To read the entire study, entitled “Wind on the Public Service Company of Colorado System: Cost Comparison to Natural Gas,” visit the Interwest Energy Alliance’s website at www.interwest.org.

The Interwest Energy Alliance is a trade association that represents the nation’s leading companies in the wind energy industry, bringing them together with some of the West’s leading non-governmental organizations to facilitate consensus-based approaches to new project development and transmission issues throughout the region.