Part of the Series
Gas Rush: Fracking in Depth
Last week we wrote about the inevitable transformation in the US to a clean-energy economy, based on the findings of Arjun Makhijani, author of Carbon-Free and Nuclear-Free: A Roadmap for US Energy Policy. Makhijani proposes that with significant planning and financial incentives, the US can achieve independence from fossil and nuclear fuels by 2030.
We described how the transition is underway in spite of big energy interests and government mis-leadership. At the same time this transition is beginning, big energy interests are trying to squeeze every drop of profit out of carbon and nuclear energy sources. They are depleting fossil fuel deposits and taking greater risks to obtain what resources are left. In addition to environmental catastrophes such as oil pipeline spills, gas pipeline explosions and contamination of aquifers, the extraction of oil and gas from shale through fracking is contributing to critical water shortages in communities throughout the Southwest.
Another driver of the transformation to clean energy is climate change. The most recent Intergovernmental Panel on Climate Change report, from 2007, calls for peak CO2 levels in 2015 followed by a 50 percent to 85 percent decline by 2050 to have the least impact from global warming. Sixty percent to 80 percent of the CO2 reduction must come from changes in energy supplies and industrial practices, which include greater efficiency as well as renewable resources.
Michael Klare looks at the current trends in energy investment and sees a grim future. The US is on the path to an era of unconventional fossil fuel production with projected spending on oil sands, fracking and deep-water drilling that is three times greater than spending on renewables. Klare predicts “an increasingly entrenched institutional bias among energy firms, banks, lending agencies and governments toward next-generation fossil-fuel production, only increasing the difficulty of establishing national and international curbs on carbon emissions.” Long-time carbon energy profiteer Warren Buffett demonstrated the truth of Klare’s prediction this week when he invested half a trillion dollars in tar sands.
But the trajectory of history can change. Radical and destructive energy also is creating a backlash by environmental justice activists and people living in affected communities. Opposition to fracking, tar sands, mountaintop removal and pipelines criss-crossing the country can change the equation. The protests against nuclear energy that have reversed the growth of nuclear energy show how people can make change; and hundreds of thousands already are working for this change.
Some argue that the growth in renewable energy technology and realization by financial institutions of the reality and costs of accelerating climate change will drive the transition to a clean energy economy. But Paul Gilding of the Post Carbon Institute writes that we could leave this in the hands of the market only if we had more time. Science demands we make the transition in 20 years.
As long as the public demands fossil and nuclear energies to power our appliances, heat our homes and fuel our cars, the oil, gas and nuclear industries will continue to invest in and rake in the profits from unconventional rather than renewable sources. The power is in the hands of people motivated by the desire for a healthy future to demand policies that incentivize greenhouse gas reduction and clean energy production at the state and federal levels while transitioning to renewable energy locally.
Building the Boulder Energy Future Project
A coalition in Boulder, Colorado, is leading the way to create an energy utility that phases out the use of coal while it increases the use of wind, solar and renewable sources of gas. It has done extensive research to demonstrate that this can be accomplished while maintaining similar or cheaper rates and improved reliability. It has developed a roadmap and tools that other communities can use.
Throughout the process, the Boulder Energy Future Project engaged its current utility, Xcel Energy, but Xcel has shown no interest in negotiation and cooperation. As the Boulder project nears success, Xcel is becoming more aggressive in its efforts to undermine the project. Boulder is at a critical crossroads and is providing lessons for the rest of us.
Boulder’s Energy Future Project began with a desire by the public to have more ability to choose clean, renewable energy sources rather than coal, which dominates Colorado’s energy supply. Colorado has excellent conditions for the production of large-scale solar, wind and geothermal energy. But rather than moving toward these sources in any significant way, energy utilities were making plans to upgrade current coal-fired power plants and to build four more.
Dr. Alison Burchell, a local geologist, was one of the initial 19 people who began meeting in early 2000 to explore what could be done. In 2002, she and others created a volunteer working group to create a plan for the city. And in 2004, Boulder created an energy task force with an initial formal study of municipalizing its utility, Xcel, in 2005.
Over time, these local meetings grew into a campaign composed of a broad coalition of experts and community groups. In 2006, in its desire to comply with the Kyoto Protocol locally, the Boulder community voted to tax itself for carbon. It was the first place in the United States to create a carbon tax. Funds from the tax are used to promote energy conservation, greater energy efficiency and a move to increased renewable energy.
Through this citizen initiative, the Boulder community put in thousands of volunteer hours and raised necessary funds to study the transition to a clean-energy economy. Early in the Boulder Energy Future Project, members of the project met with Xcel to explore a partnership in which Xcel would continue to be the utility but would move toward greater renewables with community input.
In 2010, the city’s 20-year franchise agreement with Xcel ended, and Boulder had to decide whether or not to renew for another 20 years. Boulder voted with 69 percent support not to renew Xcel’s franchise and to instead put the franchise funds toward determining in 2015 whether to renew the franchise at that point or to municipalize. The general feeling was that the energy situation is changing rapidly and renewing the franchise would take away the community’s flexibility and control over the energy future.
In 2011, the city placed two propositions on the ballot. Proposition 2C would create a publicly owned utility as long as it performed as well as or better then Xcel. The vote on Proposition 2B would provide funding through a tax increase to pay the costs of the transition. In this off-year election, residents voted by 51.8 percent to pursue a municipal utility and by 50.3 percent for the tax increase to pay for it.
It was apparent that Xcel was not interested in a partnership, community input or moving to a clean-energy future, so the city needed to take the next step toward a municipal utility. The city modeled multiple options, from phasing out or partnering with Xcel to moving completely to a municipally owned energy utility. It used a software program called HOMER, which was developed by a team in Boulder, to analyze multiple scenarios and perform hundreds of stress tests. The city also paid a commercial independent consultant to review the data.
The consultant found that Boulder could reduce its carbon footprint by 50 percent immediately by ending the use of coal, keeping the renewable sources that it uses at present and switching to gas for its remaining needs. The change would cost the same or less than it currently spends. It also would provide flexibility to phase out gas as it expands its use of renewable sources, something that cannot be done with coal plants. Moving to renewable sources would not only decrease their greenhouse gas emissions and save water and money, but it would also create more jobs by a factor of ten times the jobs created by coal or gas.
Some of the savings come simply from removing profit from the equation. Xcel is a for-profit energy monopoly that siphons $35 million each year from the Boulder community. In the next 20 years, Xcel’s profits would amount to $1.6 billion, nearly eight times the cost of moving to a nonprofit municipally owned utility. The consultant found that even in the highest-cost scenario of phasing out Xcel and moving to a municipal utility, consumer rates would be lower over time under a municipal utility.
The creation of more jobs by moving to renewables and keeping millions of dollars in the local community each year are two benefits of moving to a publicly owned clean-energy utility that would improve the local economy. Other advantages of a municipal utility are greater reliability and local control and governance. There are already 29 municipally owned energy utilities in Colorado, and they have better reliability and response times during outages than Xcel. And local control means greater flexibility as new technologies and clean renewable sources of energy become available.
Currently, the Boulder Energy Future Project is entering its final phases. In April 2013, the City Council voted 8-1 to go ahead with creating a municipally owned energy utility. The next hurdle is a vote on a charter amendment created by a front group for Xcel called Voter Approval of Debt Limits. True to their principles, supporters of the municipal energy project believe in a democratic process and that the community will not be manipulated by Xcel.
Xcel fights back
The Boulder community is on the front lines of the struggle for a carbon-free and nuclear-free energy future. It built a broad community coalition that voted democratically to support the energy initiative. It developed excellent models to determine the feasibility of converting to renewables and hired the best consultants to review the work. It has a solid campaign to make clean municipal energy a reality. If Boulder succeeds, other communities will be able to use Boulder’s tools and experience to repeat the project in their locale.
Already, Minneapolis and Santa Fe, New Mexico, are following suit. It should come as no surprise, then, that Xcel is not leaving without a fight. Excel makes 40 percent to 50 percent of its earnings in Colorado and an additional 35 percent to 40 percent in Minnesota.
Leading up to the 2011 vote to create a publicly owned energy utility, Xcel spent ten times what supporters of ballot initiatives 2B and 2C spent to stop it. David Kenney, a political consultant who worked on Colorado Gov. John Hickenlooper’s campaign, was hired to lead the opposition to the initiative. Xcel also hired canvassers to knock on doors and tell people “how [the initiatives] are a risky and costly path to advance Boulder’s energy future.”
As expected, Xcel has been promoting misinformation about the Boulder Energy Future Project, which is addressed on the project website, EmpowerOurFuture.org, in the “Myths and Facts” section and “Xcel Whoppers.” Recently, Xcel increased its efforts with a multimillion-dollar campaign that includes hiring public relations consultants to give presentations that are not factual.
However, its largest and sneakiest campaign to undermine the project is a new charter amendment that will come to a vote this fall. It is spearheaded by Phil Fox, a lobbyist with ties to the oil and gas industry who moved to Boulder in spring 2013 and registered to vote two days before submitting the ballot language. Fox created the new group Voter Approval of Debt Limits (VADL) and used the exact same language for the charter amendment that Xcel used in polling earlier in the year.
The charter amendment would require that the community vote on the amount of debt that the city could incur for the municipal project and the amount of money that it could use to repay the debt, would require that county residents who live outside of the city limits be allowed to vote, would allow voting only during general elections (which would delay the vote) and would limit fees for bond sales to 1 percent (making them less competitive). These requirements are unheard of in any other municipal project. Burchell points out the irony of the charter amendment given that Xcel was not concerned when the public was not allowed any input into the decision for Xcel to take over their previous utility, PSCo.
To get the charter amendment on the ballot, VADL had to submit nearly 5,000 petition signatures. A student group called New Era that is part of the coalition for clean energy in Boulder caught a paid signature gatherer on video not only lying about the charter amendment but also filling out petitions herself. When this evidence was brought to court recently, a VADL spokesperson tried to justify the petitioner’s actions by saying, “She only wrote over signatures to make them more legible.” The signatures from this petitioner were thrown out, but VADL still had sufficient signatures to get on the ballot.
Whether or not Xcel will succeed in its attempts to prevent Boulder from moving to a renewable energy municipal utility is still undetermined. Members of the Boulder community have been learning about and participating in the development of this project for nearly ten years. Xcel’s efforts may backfire and further undermine its credibility.
No matter what happens, we can be certain that the Boulder community will persist in efforts to reduce carbon emissions. And community members have laid the groundwork and created excellent tools for other communities to use. Burchell says members of the coalition are willing to travel and assist other communities in efforts toward greater renewables.
Decarbonize, decentralize, democratize
The three goals for mitigating climate change and creating a clean and sustainable energy future are to move completely off of carbon-based sources (decarbonize) and to decentralize and democratize the production and distribution of energy. As is happening in Germany, people can be the energy producers through solar panels and wind mills on their homes. And people can municipalize their energy utilities so the public has greater control over and benefit from energy production. These three steps would fundamentally change an industry that has changed little in 100 years.
The battle in Boulder is a microcosm of this national transition. The transition is underway, and some who are profiting from the current system realize that the longtime model of utilities supplying power could go the way of Kodak before digital photography changed the photography industry.
Decentralized rooftop solar energy is now 1 percent of the market. Bloomberg Energy Finance forecasts 22 percent compound annual growth in solar, which means that by 2020 distributed solar could reach up to 10 percent of load in certain areas. Utilities make a lot of profit during times of peak load, the middle of the day, when it is hot and people need air conditioning. This is also when solar produces the most energy, meaning utilities will lose a major source of profit.
In January, the Edison Electric Institute, a trade group of US investor-owned utilities, released a report, Disruptive Challenges, which noted this threat to their industry. They essentially found that “Solar power and other distributed renewable energy technologies could lay waste to U.S. power utilities and burn the utility business model, which has remained virtually unchanged for a century, to the ground.”
They noted that “one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent.” While this transition would be good for the planet and for the people, the utility industry is understandably afraid of it. Utilities do not know what their role will be, how they will profit or how they will attract investors. It is a shame that in Boulder, Xcel has chosen to fight the people – who have voted three times for this transition – rather than to work with them. Xcerl has put itself in a position of going extinct rather than giving the people – its customers – what they want.
The change is inevitable. The energy future will be carbon-free and nuclear-free. It will be decentralized and democratized. Utilities need to rethink their business model. They may be better off returning to being public utilities that provide an important public service rather than profit centers for investors. They should consider embracing what the people want, rather than fighting against us.
Further reading:
Carbon-Free, Nuclear-Free Energy Economy Is Inevitable
US Climate Bomb is Ticking: What the Gas Industry Doesn’t Want You to Know about Hydrofracking
This Earth Week: Stop the Extraction Economy, Create a New World
You can hear Margaret Flowers and Kevin Zeese interview with Arjun Makhijani and Alison Burchell on “Making the Carbon-Free, Nuclear-Free Energy Economy Real” on Clearing the FOG.
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