Xcel Energy has proposed joining a smaller market with less clean energy, which means higher costs for ratepayers
DENVER, CO — A new report from Aurora Energy Research assesses the potential for Public Service Company of Colorado (Xcel Energy) to join a regional electricity market in the West.
The report evaluates the economic benefits of different day-ahead market participation scenarios and found that Xcel Energy’s proposal to join the relatively small and disjointed Markets+, run by the Arkansas-based Southwest Power Pool (SPP), would increase both costs and greenhouse gas emissions compared with other options. Compared to Markets+, participating in the Extended Day-Ahead Market (EDAM) would yield between $4.2 and $13.2 million per year greater savings through 2060.
Through 2040, the report estimates that cumulative savings could be $145 million greater from participating in EDAM than from participating in Markets+. Xcel’s own analysis, submitted to the Colorado Public Utilities Commission, admits that ratepayers would see negligible cumulative savings from Markets+ until at least 2040.
“The study confirms the benefits available to Colorado from participating in a larger and more diverse regional market,” said Brian Turner, Regulatory Director at national business association Advanced Energy United. “A larger and more diverse market would allow Colorado to tap into a wider range of cheaper, cleaner energy resources across the West and improve grid reliability during extreme weather events. Choosing the right day-ahead market will open the door for Colorado to achieve affordable, reliable, and accessible power for communities across the state.”
The analysis also shows both environmental and economic benefits from trading renewable energy with the rest of the West. When Xcel is modeled as participating in the larger, cleaner EDAM market, more wind power and less gas and coal power is used, compared to the Markets+ scenarios.
“Xcel could be making a big mistake. Markets+ is a small and fragmented market that offers fewer benefits, less clean energy, and less reliability,” added Turner. “Xcel should go back to the drawing board, and make sure Colorado is a leader and not a laggard in crafting a clean, affordable, and reliable Western grid."
Additional Resources:
- Read the report from Aurora Energy Research
- Read Advanced Energy United's blog post about the market options available, Colorado Must Choose the Right Path to A Regional Energy Market