The Colorado Public Utilities Commission on Wednesday scaled back Xcel Energy’s ambitious and expensive plan to build $15 billion in new generation and transmission, postponing some projects and trimming about $3 billion.
“Delaying some of the new generation would allow us to better understand the cost, value, timing and need for the new transmission before we’re committed to building it,” PUC Chairman Eric Blank said.
Xcel Energy, the state’s largest electricity provider with 1.6 million electric customers, had proposed a plan to build 7,100 megawatts of new generation, mainly wind, solar and storage, plus nearly $3 billion in new transmission lines.
The alternative portfolio of projects approved by the PUC includes a little more than 5,800 MW of new generation and much less transmission.
Under Xcel Energy’s plan, two-thirds of the generation capacity would have been owned by Xcel Energy and paid for by customers. In the alternative plan, the ownership is closer to a 50-50 split between the company and independent power producers, or IPPs.
Independent power producers build their own power plants, wind farms and solar arrays and sell electricity to Xcel Energy under contract.
“We’re still approving in this case almost 6,000 megawatts of new generation,” Blank said, “… representing over $12 billion in invested capital with more likely to quickly follow up.”
Xcel Energy is scheduled to offer another solicitation for projects next summer.
The PUC also adopted a performance incentive mechanism, which will hold Xcel Energy to the estimated cost for its projects.
“We appreciate the commissioners’ measured approach,” said Cindy Schonhaut, director of the Colorado Office of Utility Consumer Advocate. “They tilted in favor of completion and treating the company more like it was an IPP.”
“This is favorable to consumers,” Schonhaut said.
The company’s electric resource plan must demonstrate how the utility will meet demand over the next four years.
In addition this year part of the proposal was a clean energy plan showing how it cut greenhouse gas emission 80% over 2005 levels. Both the company’s plan and the PUC plan meet that goal largely relying on the closure of three coal-fired plants.
“We appreciate the discussion at the commission and its verbal approval of elements of our proposed clean energy plan,” Xcel Energy said in a statement.
“While the approved plan increases renewable energy to 77% of our energy portfolio by 2030, our updated preferred plan offers greater benefits for customers by adding more renewables (83% of our energy portfolio by 2030), capturing more federal tax dollars, reducing more carbon emissions over time and is better for our union coworkers,” Xcel Energy said.
One of the big concerns was the cost and time of the proposed $3 billion in new transmission lines, which was necessitated by Xcel Energy expanding its plan in the last year to allow it to capture $10 billion in federal tax credits.
The price tag was six times higher than the company’s original estimate for transmission. “We were all taken aback,” Commissioner Tom Plant said.
“We have a lot of transmission where we are freeing up capacity through closures, and I would like to see how we can best take advantage of that capacity before we start building new capacity,” Plant said.
The other issue the commission had with transmission was the timing of building lines relative to the construction of wind and solar facilities. If the lines are delayed, generation could be stranded or curtailed.
In Xcel Energy’s preferred plan, modeling projected a 15% curtailment rate. In the PUC plan, it is 5%.
“The updated preferred plan had high levels of curtailment,” Commissioner Megan Gilman said. “Ratepayers pay for that, you know, and so I think it’s important to us and it’s our priority to ensure that the money that we’re seeing invested on behalf of the ratepayers is spent as wisely as possible.”
“Some of our neighbors are already struggling to pay their utility bills,” Gilman said. “I can’t say that’s a good use of their money.”
Blank said that all the generation proposed by Xcel Energy will eventually be needed, and he said that the resource plan is only one element that will be driving rates.
“I’d like to ask the company to provide us with a comprehensive long-term rate analysis that fully includes all of the investments that the company is claiming to the financial community that it will make in Colorado,” Blank said.
Among the potential expenses that could impact rates, Blank said, are new distribution lines, wildfire mitigation, upgrades to transmission lines and demands created as transportation goes electric, more buildings convert heating to electricity and more distributed renewable generation, such as rooftop solar and solar gardens, is built.