An administrative law judge’s decree that Xcel Energy must “put its money where its mouth is” has cast an ominous cloud over a 140-mile power line proposed in Colorado’s sun-drenched San Luis Valley.

In a 300-page written decision (pdf), Administrative Law Judge Mana Jennings-Fader recommended the new transmission line be approved, but only under the condition that it generate 700 megawatts of electricity within 10 years that the line over the Sangre de Cristo Mountains is constructed and operational. If not, Xcel must refund ratepayers 50 percent of the money it collected from them to build the infrastructure.

If the judge’s condition is adopted by the Public Utility Commission when it rules on the power line next month, Xcel Energy spokesman Mark Stutz said the utility will pull the plug (pdf) on the project. Xcel and Tri-State Generation and Transmission are seeking a Certification of Public Convenience and Necessity as the power line is designed to reinforce the reliability of the existing power grid in the region as well as transport solar energy from the San Luis Valley over to the bustling Front Range.

“There is no such thing of putting your money where your mouth is in this industry,” Stutz said in a telephone interview Wednesday. “A utility company makes judgments of where it needs its additional facilities based on the best-case scenario and the best information that it has about where new generation is going to go in, about where power is going to flow on the grid. The biggest single problem with her decision is she’s putting the burden on us for things that we can’t control.”

At issue is the $180 million cost of the line Xcel and its partner in the project, Tri-State, have planned from Alamosa east over La Veta Pass to Walsenburg before heading north to Pueblo.

The line would cross the biologically diverse, 171,000-acre Trinchera Ranch that Steve Forbes sold to billionaire hedge funder Louis Bacon for $175 million in 2007. In a sit-down interview in Aspen over the weekend, Bacon said questions about Xcel’s true motives can be found by “following the money.”

Xcel’s customers will have to pay for the transmission line, plus interest amounting to more than 10 percent a year. So the more Xcel spends on the project, Bacon said, the more its shareholders will earn. A new state law will further allow the utility to start recouping its costs from ratepayers as they’re incurred.

“They want to railroad through an expensive, deeply flawed plan that causes unnecessary environmental damage to one of Colorado’s last remaining undeveloped wildlife and scenic corridors,” Bacon said. “There are better alternatives out there that they’re unwilling to seriously study.”

To wit, the utility companies aren’t keen on the alternative routes that Bacon has funded. His proposals, which also would carry solar energy out of the San Luis Valley, have come in at a fraction of the cost.

Xcel’s Stutz says Bacon’s proposals aren’t feasible and are simply ploys to divert the line from his land.

There are currently about 30 megawatts of solar power coming out of the San Luis Valley on projects that are already built or will be completed by the end of this month, according to Stutz. More projects on line will raise it to 60 megawatts by 2012, he said, but 125 megawatts is its total existing capacity.

“We are pushing back our estimates on how much solar power can be built because no one is going to build a solar project if they can’t move the power out of the region,” Stutz said. “Their efforts to delay this transmission line have for the short term killed the solar power industry in the San Luis Valley. A very wealthy gentleman doesn’t want a transmission line on his property and he is trying to do everything he can to stop it. And you know what? He may get it done to the detriment of Colorado.”

Bacon, who has championed environmental causes around the world, contends Xcel is merely scapegoating him when in reality hundreds of residents in southern Colorado oppose the transmission line (pdf). He supports renewable energy development and bolstering its reliability in the San Luis Valley, but not to the detriment of the environment when more affordable, less intrusive alternatives exist.

Bacon points out Xcel is willing to risk the public’s money but not its own for the project.

“We build the cost of doing business into what we charge our customers just like grocery stores, the airline industry, telecommunications, you name it,” responded Stutz. “The difference is we are so open to regulation that you see every cost that we put into it.”

Opponents of the transmission line say they are undeterred and will continue to fight it. Bacon has filed an open records request to explore potential cronyism between the utilities and the PUC. Earlier this year, one of the three PUC commissioners, Jim Tarpey, recused himself from the proceedings, citing “an abundance of caution” after acknowledging he had questionable discussions with the utilities.

The Public Utilities Commission responded to the open records request, which was filed Nov. 24, not with the documents requested but instead with a hearing on Monday that Bacon called unprecedented.

“It was a strange hearing,” said Cody Wertz, a Denver-based spokesman for Trinchera Ranch. “It was not a hearing we expected. We don’t know what its purpose was. The PUC commissioners seemed to be asking us questions like we were the ones on the stand. But they are the ones who are not in compliance with our open records request, which is a really straightforward and simple request.”

A PUC spokesman said the commission will honor its obligations under Colorado’s sunshine laws.