Colorado utility commission approves sweeping Xcel rate and solar plans
Energize Weekly, November 16, 2016
The Colorado Public Utilities Commission (PUC) last week approved a sweeping settlement agreement for Xcel Energy that will boost solar energy and introduce new rate structures for the state’s largest electricity provider.
“Unlike some other states in the country, we were able to break the stalemate between the utility industry and the solar industry,” said Erin Overturf, an attorney with the environmental group Western Resource Advocates, which supports the settlement. “You can see it in the successful expansion of solar programs in the state.”
Xcel negotiated with a broad array of industry, environmental and consumer groups to come up with the settlement, which encompasses three dockets that were pending before the utility commission. In the end, 24 of 26 negotiating parties supported all or part of the agreement, or did not oppose it.
“This was a Herculean effort, and I’m proud that you have set a trajectory for the state on expanding renewable energy,” PUC Chairman Joshua Epel told the parties to the settlement. “I think is a model for the nation.” The commission approved the agreement on a 3-0 vote.
The dockets are part of a comprehensive plan Xcel calls “Our Energy Future.” The plan is the utility’s response to rapid technological changes and the erosion of the industry’s business model as both energy efficiency programs and distributed generation cut into the traditional selling of kilowatt-hours.
In a docket to set the rates for a $1.6-million revenue increase that Xcel had been awarded last year, the utility dropped its plan to add a monthly charge roughly based on a customer’s peak demand.
Xcel will set up two pilot programs, one using a peak-demand charge and a second using a time-of-use charge, with variable rates based on when there is the greatest draw on the system. A total of 38,000 customers would voluntarily be enrolled in two pilots.
Under the time-of-use pilot, households would be charged two to three times as much for electricity during the 2 p.m. to 6 p.m. peak period as at midnight. A summer peak kilowatt-hour would cost 18 cents, more than double the current rate.
Xcel also had to file a plan showing how it will meet Colorado’s Renewable Energy Standard, which calls for 30 percent of electricity from investor-owned utilities to come from renewable generation by 2020.
In that docket, Xcel and solar industry representatives agreed to a robust expansion of capacity over the next three years, including 225 megawatts of rooftop solar; 117 megawatts of community solar gardens and 18 megawatts of low-income solar programs.
Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association, hailed the settlement, saying it will allow Colorado’s solar industry “to move ahead in deploying clean, affordable solar energy and planning for next-generation policies and technologies.”
Xcel also won approval for its own solar energy program, Renewable*Connect, in which it will sell shares in a 50-megawatt solar installation to residential customers. Last year, a similar Xcel proposal was opposed by the solar energy industry and rejected by the commission.
“The decision will allow us to give our customers more control over their energy choices, one of the key components of ‘Our Energy Future,’” Alice Jackson, Xcel regional vice president for rates and regulatory affairs, said in a statement. “The settlement also meets our other goals, as it will bring more renewable and carbon-free energy to Colorado through the use of new technologies, and it will provide affordable and reliable energy to further power the state’s economy.”
Xcel also agreed to launch a recycled energy program that will help industrial facilities develop electricity generation from waste heat or steam.
Among the other elements in the “Our Energy Future” pending before the PUC are a docket for a $500-million upgrade of the grid, including the installation of so-called smart meters, and a docket seeking to decouple revenue from purely selling kilowatt-hours. Decoupling has been seen as key in promoting energy efficiency while still assuring the utility meets it revenue requirements.