In 2007, the Spanish government of Prime Minister Jose Luis Rodriguez Zapatero passed a law that guaranteed solar power producers a price for power more than 10 times the 2007 average wholesale price paid to conventional energy suppliers. The generous subsidies sparked a rush to solar, and taxpayer costs mounted. Today, the government owes $172 billion to renewable energy investors, but it doesn’t have the means to meet its obligations in the face of rising budget deficits. As a result, more than 50,000 other Spanish solar entrepreneurs face financial disaster.

[originally published at the Independence Institute's Energy Center]

When it comes to renewable energy, Colorado politicians are trying to have their cake and eat it, too. In February, the General Assembly passed HB 1001, a law requiring that Xcel use 30% renewable energy by 2020. To be sure, renewable energy is more expensive than conventional energy, but lawmakers promised that the costs would be held in check by a 2 % rate cap codified in the legislation. You see, Colorado politicians believed they could establish a Soviet-style renewable energy production quota AND Soviet-style price controls.

In early September, the Independence Institute‘s Amy Oliver Cooke and I took this silliness to task in a Denver Post oped. Specifically, we explained the regulatory machinations employed by the Ritter Administration to get around the rate cap.

Nearly a month later, Rep. Max Tyler, the lead sponsor of HB 1001, replied to our oped with a letter in the Post. Rep. Tyler’s missive ignored our arguments, and instead boasted of the ancillary benefits of government picking which energy sources Coloradans must use. Along these lines, he noted that wind power in Colorado:

• Creates more than $2.5 million for farmers and ranchers who lease land for wind generation
• Supports 1,700 construction jobs and 300 permanent jobs in rural areas;
• Generates $4.6 million in annual property tax revenue for local schools, roads, etc.

Of course, Rep. Tyler missed the point: These “benefits” aren’t a net positive for the State. Rather, they are paid for by Xcel consumers, in the form of higher energy bills, which means that Xcel ratepayers (primarily in Denver, Grand Junction, and Boulder) are subsidizing the rural development showcased by Rep. Tyler. This is a classic case of robbing Peter to pay Paul.

In his letter, Rep. Max Tyler stated that, “Colorado currently generates 1,244 megawatts of wind power.” That sounds like a lot, but it’s not. Because the wind doesn’t always blow, Xcel can rely on only a fraction of its wind generation’s nameplate capacity. In practice, 1,244 MW of wind is only 124 MW of real power. That’s about half of the coal power capacity that Xcel agreed to shutter in its most recent electric resource plan.

The problem for Colorado is that this small amount of wind power costs a large amount of money. According to the Public Utilities Staff, Xcel “identified wind energy costs for 2009 of $147,431,000 and 2010 of $155,462,000.”[1] That’s about 5% of Xcel’s 2009 and 2010 sales-or more than double the 2 % rate cap that Rep. Tyler trumpets in his letter (he wrote, “Another important fact: When developing new energy resources, utilities have a 2 percent increase rate-cap on retail customer bills”).

By highlighting localized gains, Rep. Max Tyler missed the big picture. Forcing Xcel customers to pay more for less energy hurts the State’s economy. Period.

In the Politico today, there’s a story about how the Natural Resources Defense Council is advising the White House Correspondents’ Association on how to “go green” with their annual dinner. They seem to be taking this very seriously:

Every two weeks, the greening team — including [NRDC senior scientist Allen] Hershkowitz and representatives from the Hilton — held a conference call to make sure every procurement decision and operation at the event would be as green as possible.

The story goes on to explain that they will be offsetting all of the energy use associated with the dinner – including the private jet to fly host Jay Leno out from L.A. and back. With advice from the Portland-based nonprofit the Bonneville Environmental Foundation, they’ve purchased an undisclosed amount of carbon credits. According to Politico‘s Lisa Lerer, “Credits purchased for the dinner will help fund the Tatanka Wind Farm on the North Dakota-South Dakota border.”

So far, so good. Except that the Tatanka Wind Farm is already up and running – it went online in July of 2008. The project’s $381 million budget was financed by GE Energy Financial Services and Wachovia. And it’s operated by Acciona Energy, a multi-billion dollar Spanish conglomerate with 40,000 employees and operations in 30 countries.

So, my question is, who is getting the White House Correspondents’ Association’s money? The shareholders of Acciona? GE and Wachovia (now Wells Fargo)? It’s one thing for carbon offset money to, for example, fund a nonprofit organization in the developing world to manage a reforestation project, but how does it make any sense to pay money to a Spanish corporation for operating a wind farm that’s already been privately financed and has been producing energy for almost two years? Am I missing something here?