By - Jim Vess

Xcel Energy gets the OK from Colorado PUC to develop a clean power plan

Energize Weekly, March 21, 2018

The Colorado Public Utilities Commission (PUC) voted on March 14 to give Xcel Energy the go-ahead to develop a plan to close two coal-fired power plants and replace them with renewable or low-cost alternatives.

Xcel calls its proposal the Clean Energy Plan (CEP). It would more than double the utility’s amount of electricity from renewable sources by 2025 to 55 percent.

The PUC gave the go-ahead on a series of 3-0 votes from commissioners Wendy Moser, Frances Koncilja and Jeff Ackermann, the commission chairman. Final approval will depend upon the plan Xcel submits.

The CEP was challenged by the Coalition of Ratepayers, a group of businesses and citizens led by the Denver-based, Libertarian Independence Institute, which contended that keeping the existing two coal-fired plants in Pueblo, Colo., would be cheaper and that Xcel has weighted the figures in favor of the plan.

Xcel, Colorado’s largest electricity supplier with 3.1 million customers, said that it would not go ahead with the plan if it raised rates.

Some of the coalition’s critique and recommendations, however, were included in the PUC’s ruling.

The coalition contended some of Xcel’s accounting techniques—such as accelerated depreciation and the annuity method of depreciation—overstated the value of the renewable energy plan. The PUC ordered Xcel to provide figures with and without the accelerated depreciation.

The commission agreed with a PUC staff recommendation that the annuity method could “skew” the numbers and should be “given little weight.”

The coalition also called for an annual cost-impact report, which the commission adopted. “I think the coalition raised a good point,” Moser said.

As an alternative to a renewable portfolio, the company proposed offering a “least-cost” portfolio if it exceeded $50 million in savings, but the utility commissioners said they wanted to see a least-cost portfolio regardless of the savings.

“We are happy to hear that the commission did consider our arguments, especially on the annuity method and accelerated depreciation,” said Amy Cooke, executive vice president of the Independence Institute. “Those have potential to tip the financial scales against ratepayers, who will be burdened with the costs.”

The commissioners also required an economic impact study on closing the two power plants in Pueblo. This had been requested by Pueblo’s Energy Future, a local energy advocacy group.

Those changes left Xcel sounding a note of caution. “The Colorado Energy Plan was developed with an incredibly diverse group of customers, independent power producers, state agencies, environmental organizations, labor, renewable energy organizations, and other stakeholders,” David Eves, Xcel executive vice president and group president for utilities, said in a statement.

“The modifications discussed today by the Commissioners could impact the plan and will have to be considered by the many parties to the agreement once we see a written decision,” Eves said.

The key elements in the CEP are:

  • Retiring of 660 megawatts (MW) of coal-fired generation at its Comanche Generating Station, in Pueblo, about 10 years early and seeking accelerated depreciation on the units
  • Issuing bids for 1,000 MW of wind, up to 700 MW of solar and 700 MW of natural gas or storage
  • Reducing a rider used to finance renewable energy projects to 1 percent from 2 percent on a customer’s monthly bill
  • Construction of a new switching station for a southern Colorado transmission “energy resource zone” to help foster the further development of renewable generating resources in rural Colorado

Xcel has already issued a call for projects and received 430 proposals with some of the lowest quotes for renewable power in the country. More than 350 proposals were for renewable energy projects with an average price for 96 wind projects at 1.8 cents a kilowatt-hour (kWh) and the 152 solar photovoltaic projects at 2.95 cents per kWh.

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