BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF COLORADO

\* \* \* \* \*

**[\_\_\_\_\_\_]{.underline}**

IN THE MATTER OF XCEL )

ENERGY'S PROPOSED )

INTEGRATED GASIFICATION ) Docket No. 07F-088E

COMBINED CYCLE (IGCC) )

PLANT IN BRUSH CO )

COLORADO )

**[\_\_\_\_\_\_]{.underline}**

**COMPLAINANTS' MOTION REQUESTING LEAVE TO REPLY; AND**

**REPLY TO PUBLIC SERVICE COMPANY OF COLORADO'S REPLY TO COMPLAINTS'
RESPONSE TO XCEL'S MOTION TO DISMISS**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

This Docket before the Colorado Public Utilities Commission ("PUC")
involves plans by Public Service Company of Colorado ("PSCo" or "Xcel")
to hire a vendor for an Integrated Gasification and Combined Cycle coal
plant ("IGCC" or "gasified coal plant.") in Colorado. The following
summarizes what has occurred to date:

-   March 21, 2007---Complaint filed by Nancy LaPlaca and Leslie
    Glustrom

-   March 28, 2007---The PUC considers the complaint, sets a hearing
    date of May 31, 2007

-   April 12, 2007---Xcel files a Motion to Dismiss the Complaint

-   May 3, 2007---Complainants file a Response to the Motion to Dismiss

-   May 10, 2007---Xcel files a Reply to the Complainants' Response.

Complainants hereby request leave to file a reply to Xcel's May 10^th^
Reply, and incorporate this reply and our initial Response to Xcel's
Motion to Dismiss.

**COMPLAINANTS ARE NOT "POISONING THE WELL" BUT MERELY REQUESTING THAT
ALL CURRENTLY AVAILABLE INFORMATION BE CAREFULLY CONSIDERED BY XCEL AND
THE COMMISSION**

Xcel states in its Reply that Complainants are attempting to "poison the
well" against IGCC. Complainants only wish to bring to the attention of
the Commission the serious issues concerning the cost and technical
feasibility of IGCC and Carbon Capture and Storage (CCS). Xcel also
states that this docket is not the place for a "quasi-legislative
investigation into the relative merits of one or more technologies."[^1]
Complainants disagree. Colorado Revised Statute 40-2-123 states
repeatedly that the gasified coal technology "may" have significant
benefits. *See* C.R.S. 40-2-123 Section 1. Complainants urge Xcel to
look carefully at existing information and adjudicated proceedings for
gasified coal plants that have already occurred in other states.

On May 2, 2007, Delaware Public Service Commission staff recommended a
wind/natural gas combination for electrical generation rather than an
IGCC plant.[^2] The wind/gas combo was chosen after careful evaluation
using Delaware's Integrated Resource Plan. (*See* Attachment A.)

Also, just this week, Standard & Poor's (S&P) issued a warning to
investors in a report on the financial risk that climate change poses to
financial markets, investors and industries. S&P utility analyst Swami
Venkatraman stated that "\[t\]he risk is immediate and clear, in the
sense that the \[coal-to-gas\] technology is unproven and it's not clear
how well they would run three years from today." He also stated that
gasification developers are likely to have trouble even getting firm
construction prices from builders.[^3]

Complainants believe that Carbon Capture and Storage (CCS) is not
presently---and may never---be available at the level needed to manage
carbon dioxide ("CO2") emissions from coal plants---gasified or
pulverized. To pursue coal gasification before all the technical,
economic, legal, regulatory and public acceptance issues related to CCS
have been addressed is not prudent.

**XCEL'S ASSERTION THAT THE MESABA DECISION DOES NOT APPLY TO THIS CASE
IS CONTRARY TO ITS OWN STATEMENTS SINCE XCEL'S MESABA BRIEFS ARE
RELEVANT TO THE INSTANT CASE; AND XCEL CLEARLY INTENDS TO BUILD AN IGCC
PLANT IN COLORADO**

**Xcel's Assertion That Mesaba Does Not Apply is Contrary to its Own
Statements**

Xcel briefed many IGCC issues thoroughly in the course of the Mesaba
docket, and its submissions are extremely relevant here. Xcel argues
that although it *opposed the Purchase Power Agreement (PPA) in the
Mesaba case, it did not question the IGCC technology*. Complainants
disagree, and note that many of the issues that have been raised in the
analysis of the proposed IGCC plant and the PPA in Minnesota will also
apply in Colorado.

Key issues related to IGCC and CCS are summarized on page 2 from Xcel
Energy's Initial Brief in the Mesaba docket, dated January 5, 2007,
which is Attachment 2 to Complainant's May 3, 2007 response:

-   Fuel costs for the IGCC plant are unknown and unknowable due to lack
    of fuel supply arrangements, and so do not provide a hedged,
    predictable price;

-   The Mesaba PPA on the IGCC technology is not a least cost resource
    and its cost is not reasonable for ratepayers;

-   The Mesaba PPA for the IGCC plant shifts significant financial and
    operational risks to customers;

-   The Mesaba PPA for the IGCC plant does not include the \$1 billion
    plus equipment costs associated with carbon capture and storage.

For these reasons and several others, Xcel can predict that IGCC/CCS is
not likely to be seen as a prudent investment in Colorado, and
complainants feel that Xcel already knows or should know that its
investment in this technology is neither prudent nor in the public's
interest. .

**Xcel Clearly Intends to Build an IGCC Plant in Colorado**

Dozens of newspaper articles have been posted in Minnesota, Colorado and
national news outlets touting Xcel's proposed IGCC plant. Complainants
find Xcel's argument that it is merely *considering* building an IGCC
plant disingenuous at best. If Xcel was truly in the fact-gathering
stage of determining whether or not to build the IGCC plant, it would
welcome, rather than discourage, the type of scrutiny Complainants wish
to encourage.

Arguing semantics, rather than taking a serious look at this costly and
unproven technology, is not prudent, not in the public's interest, and
violates the spirit of C.R.S. 40-2-123. C.R.S. 40-2-123 does not
unequivocally state the benefits of IGCC, but merely posits that the
technology *may* have certain benefits. It is in all our best interests
-- Xcel's, ratepayers, Complainants, shareholders, and the Commission,
to determine whether these alleged benefits exist, at the earliest
possible time.

In short, Xcel wants to play both sides of the argument -- promoting
IGCC in Colorado where it can pass through the costs of the plant, fuel,
carbon capture, transportation and storage, increased coal and coal
transportation costs; and railing against IGCC in Minnesota, where it
cannot make a profit on building the IGCC plant.

**COMPLAINANTS ASSERTIONS THAT CONGRESS MAY IMPOSE A CARBON TAX;
SUBMISSION OF THE EPA STUDY ON IGCC; AND MR. STEPHEN JENKINS'
TESTIMONY**

**ARE RELEVANT TO THE INSTANT CASE SINCE THEY ADDRESS**

**THE MERITS OF THE IGCC TECHNOLOGY**

As Xcel knows well, financing IGCC technology is a critical hurdle, and
without federal loan guarantees, grants and other benefits, the IGCC
technology risk would not be likely to be borne by private investors.
Carbon taxes will also add to the cost of the plant, and in its 2003
Least Cost Plan (LCP), Xcel acknowledged the possible future imposition
of a carbon tax. Just how large that carbon penalty will be, however,
will seriously affect the financial viability of the plant.[^4] Although
carbon taxes are not included in Colorado's IGCC statute, C.R.S.
40-2-123 (2), the reality of carbon taxes is closer since the U.S.
Supreme Court's ruling in *Massachusetts v. EPA*, decided April 2007.
(*Slip Opinion, No. 05-1120, argued November 29, 2006, decided April 2,
2007.*) Similarly, the July 2006 EPA study on IGCC that Complainants
included as Attachment 3 in Complainants May 3, 2007 Response; as well
as Mr. Jenkins' testimony on the value and drawbacks of IGCC are
relevant and serve to increase the Commission and Xcel's information
about IGCC, resulting in a more prudent decision.

In short, Complainants believe that the seriousness of climate change
and the public interest concerns inherent in funding a new technology
warrant moving forward with this complaint. Attached please find
documents that detail the seriousness of climate change and CO2 levels
in Colorado.

Coal is the most carbon-intensive of all fossil fuels, and is
responsible for 44% of all CO2 emissions in the State of Colorado.[^5]
We are currently in the midst of a planetary warming crisis that, if
unchecked, is likely to seriously change the habitability of the planet.
The need to change course and *reduce* carbon dioxide (CO2) emissions is
urgent. The Intergovernmental Panel on Climate Change ("IPCC") has just
released a series of updated reports that indicate:

-   The planet is threatened by runaway climate change, and the main
    greenhouse gas is CO2; approximately 40% of all CO2 is from
    coal-fired electrical generation;

-   "System inertia," due to the long lived nature of CO2 in the
    atmosphere and various feedback cycles, means that in addition to
    the 1.4 degrees Fahrenheit warming so far, there is 1 degree
    Fahrenheit in warming already in the pipeline due to existing green
    house gases. Adding more carbon dioxide will increase this warming
    even further.

-   The U.S. has produced over three times more CO2 from fossil fuels
    than any other country, raising a serious moral and potentially
    legal burden for our children; and

-   In order to start stabilizing the climate, we must start stabilizing
    CO2 and other greenhouse gas levels in the atmosphere. [^6]

The attached graphic (Attachment E) from the September 2004 issue of
*National Geographic* shows that atmospheric CO2 levels are higher than
they have been in the last 400,000 years; and that CO2 levels track very
closely with planetary temperature. In short, CO2 levels are the best
"temperature gauge" we have for the planet[^7], [^8] Although no one
knows exactly how hot the planet will get, there is no question that the
planet will be warming substantially as we move through this century.
Complainants feel that time is of the essence since the consequences of
climate change are extremely serious. For example, researchers have
found the Arctic sea ice is melting 30 years faster than
anticipated.[^9]

C.R.S. 40-2-123 exempts Xcel from the Commission's competitive bidding
process for its proposed IGCC plant, but does not provide Xcel with an
unlimited checkbook to make imprudent expenditures pursuing coal
gasification. Given what Xcel knows or should know *now*[,]{.underline}
it can be projected that a coal gasification plant will *not* be found
to be a prudent investment. Thus, Xcel should not expect to recover
costs for imprudent expenditures on coal gasification from ratepayers.
There are overwhelming technical, economic, regulatory and public
acceptance hurdles to clear before Carbon Capture and "Storage" ("CCS")
will be available - if ever- on a scale that would be needed to manage
the CO2 emissions from IGCC plants.[^10] Moreover, there is strong
support for investing in truly carbon free forms of electricity. In
fact, a New York Times/CBS News poll of 1,025 adults in late April 2007
found that 87% of those polled support developing renewable resources
such as solar and wind.[^11] (*See* Attachment H).

In short, Complainants feel that the Commission's constitutional and
statutory obligation to act in the public's best interest and to ensure
ratepayer funds are spent in the most prudent manner possible, require
that Xcel's Motion to Dismiss be denied.

Respectfully submitted this 17^th^ Day of May, 2007

[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

Nancy LaPlaca

> 4801 W. Yale Ave.
>
> Denver CO 80219
>
> <nancylaplaca@yahoo.com>
>
> 303-588-3937
>
> **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**
>
> Leslie Glustrom
>
> 4492 Burr Place
>
> Boulder, CO 80303
>
> <lglustrom@gmail.com>
>
> 303-245-8637
>
> **CERTIFICATE OF SERVICE**

I hereby certify that on May 17, 2007, the original and five copies of
the foregoing **COMPLAINANTS' MOTION REQUESTING LEAVE TO REPLY AND**

**REPLY TO PUBLIC SERVICE COMPANY OF COLORADO'S REPLY REGARDING THE
MOTION TO DISMISS IN 07F-088E**

was served by hand delivery on:

Doug Dean, Director

Colorado Public Utilities Commission

1580 Logan, OL2

Denver, CO 80203

And have hand-delivered, mailed or e-mailed copies to the following:

Ms. Paula M. Connelly, Esq. Christopher M. Irby, Esq.

Xcel Energy Services. Assistant Attorney General

1225 17th St. Ste. 900 1525 Sherman St., 7^th^ Floor

Denver, CO 80202 Denver CO 80203

<paula.connelly@xcelenergy.com> <Chris.irby@state.co.us>

Mr. Dale Hutchins Chere Mitchell

Colorado Office of the Attorney General
<chere.mitchell@dora.state.co.us>

(Office of Consumer Counsel)

1525 Sherman St., Floor 5 Dudley Spiller, Esq.

Denver, CO 80203-1714 Olivia Lucas, Esq.

<dale.hutchins@state.co.us> Ryley, Carlock & Applewhite

1999 Broadway, Suite 1800

Stephen W. Southwick, Esq. Denver CO 80202

First Assistant Attorney General <dspiller@rcalaw.com>

Office of the Attorney General <olucas@rcalaw.com>

1525 Sherman St., 7^th^ Floor

Denver CO 80203

<Stephen.southwick@state.co.us>

P.B. Schechter

Rate/Financial Analyst

Office of Consumer Counsel

1560 Broadway, Suite 200

Denver CO 80202

<Pb.schechter@dora.state.co.us>

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Nancy LaPlaca

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Leslie Glustrom

[^1]: *See* Xcel's Reply to Complainants' Response to Public Service
    Company of Colorado's Motion to Dismiss dated May 10, 2007, p. 2.

[^2]: *PSC Staff Review and Recommendations on Generation Bid Proposals,
    Docket No. 06-241, Prepared for the Delaware Public Service
    Commission,* May 2, 2007. The Delaware PSC staff, like the
    Administrative Law Judges in Minnesota, recommended no on the IGCC
    proposal, but for different reasons. In Delaware, the 3 bids --
    IGCC, natural gas and wind -- were evaluated in light of its
    Integrated Resource Plan, as well as overwhelming public support for
    the wind project. *See* Attachment A.

[^3]: *Investors Warned Against Coal-to-Gas Power Plants,* by Jeff
    Montgomery, The News Journal, May 16, 2007. The same article reports
    that Mr. John M. Byrne, who directs the University of Delaware's
    Center for Energy and Environmental Policy, said the insurance
    industry has already come to the same conclusion as the S&P report.
    Attachment B.

[^4]: A carbon tax could be as low as Xcel asserts -- around \$8/ton --
    or as high as the current price in Europe, which is closer to
    \$25/ton.

[^5]: *State's CO2 Output Jumps, Environmental Group Says*, by Todd
    Hartman, Rocky Mountain News, April 14, 2007. The article states
    that 2004 data shows that the bulk of CO2 emissions -- 44% \-- are
    linked to electricity generation, while transportation accounts for
    31%, and industry 13%. Colorado's CO2 output jumped 39% from 1990 to
    2004, increasing an average of 2% per year. Attachment C.

[^6]: *Global Warming: Connecting the Dots from Causes to Solutions*, by
    Dr. James Hansen, February 26, 2007. Presentation before the
    National Press Club and American University, Washington, D.C. Dr.
    Hansen is perhaps the most preeminent climate change scientist in
    the United States. The first page of this presentation is included
    as Attachment D.

[^7]: *National Geographic*, September 2004, p. 65; data from *Nature*
    June 3, 1999; data back 650,000 years in *Science*, November 25,
    2005, Attachment E; Intergovernmental Panel on Climate Change, Third
    Assessment Report, Synthesis Report page 34, graphic of Variations
    of the Earth's Surface Temperature: years 1000 to 2100. (Attachment
    F)

[^8]: Intergovernmental Panel on Climate Change, Third Assessment
    Report, Synthesis Report page 34, graphic of Variations of the
    Earth's Surface Temperature: years 1000 to 2100, Attachment F.

[^9]: *Study: Arctic Ice shrinking quickly,* by Eric Schmidt, Boulder
    Daily Camera, May 1, 2007. The article states that researchers at
    the National Center for Atmospheric Research and the University of
    Colorado's National Snow and Ice data center. The models simulated
    ice loss at 2.5% per decade from 1953 to 2006, but data show that
    the rate of ice melt at 7.8 percent per decade. Attachment G.

[^10]: Please see Attachments 3 and 4 from Complainants Response to
    Xcel's Motion to Dismiss, dated May 3, 2007 and Attachment B to this
    filing. The 2006 EPA report on IGCC and a more recent report, titled
    *The Future of Coal* by the Massachusetts Institute of Technology,
    dated February 2007, detail the many issues that need to be solved
    for the successful implementation of carbon capture and
    sequestration.

[^11]: *That Nagging Warming Thing: Poll Shows Most Americans See
    Environmental Threat, Want Action,* Rocky Mountain News, p. News 27,
    May 12, 2007.