A Golden homeowner’s plan to add solar panels was thwarted when the transformer in his neighborhood couldn’t handle another solar installation. Xcel Energy told him he’d have to pay $7,000 for a new transformer.
In Westminster, a builder was told that it would cost $10 million in upgrades to hook his housing project to the grid and a plan for an electrical vehicle fast charger in Denver’s Cherry Creek neighborhood using a state grant, was scrapped for the same reason.
Meanwhile, nearly 300 megawatts of community solar gardens are sitting and waiting to be connected to the grid, according to the Colorado Solar and Storage Association, or COSSA, an industry trade group.
Across the Xcel Energy grid, stories of new demands for electricity taxing the distribution system — the wires that bring power to homes and businesses and take away solar-generated electricity — are being told.
“It has been a growing problem,” said Mike Kruger, CEO and president of COSSA.
For years there has been little growth in the electric load and while Xcel Energy made major investments in renewable generation and high-voltage transmission, there was less focus in Colorado and across the county on the distribution systems.
“The infrastructure is already under-maintained and more vulnerable,” said Emilie Olson, a principal at Advanced Energy United, a lobbying group for major grid users and renewable energy companies. “It’s been neglected.”
A bill now speeding through the state legislature is aiming to change that. The legislation, Senate Bill 218, will task Xcel Energy with developing immediate and long-term plans to address the backlog of projects and stresses on the grid.
It will also give the utility the financial resources to do the work, allowing it to temporarily raise funds above its current rates and in the long-term add a fee, or rider, onto customer bills to pay for projects.
“We need to account for the fact that increased load does have a cost,” Senate President Steve Fenberg, a Boulder Democrat and cosponsor of the bill, told a Senate Finance Committee hearing. “There are investments that need to be made.”
Upgrading the grid is crucial to greening power generation
Upgrading the distribution grid plays into the state’s goal of cutting greenhouse gas emissions by adding more rooftop solar, shifting to renewable generation to power EVs, electrify homes and businesses, and fill storage batteries.
In addition to the concerns about new load, the safety of the distribution system also drew fresh scrutiny after a power line, downed during high winds in 2021, was found to be one of the sources of the Marshall Fire, which killed two people and destroyed more than 1,000 homes, according to Boulder County officials. The utility disputes the finding.
Still, the legislation would expand Xcel Energy’s program to put distribution lines underground — reducing fire risk.
The bill is supported by Xcel Energy, labor unions and electrical contractors, energy industry trade groups and a host of environmental groups, including Conservation Colorado and Green Latinos.
The bill was introduced April 24, had a hearing in the Senate Finance Committee the evening of April 29, a hearing in the Senate Appropriations Committee the following morning, and was passed by the Senate and sent to the House that afternoon.
“Some significant changes are happening in electric use,” Will Toor, executive director of the Colorado Energy Office, said in an interview. “The interconnection of solar has been an issue for several years. Now we are seeing new beneficial electric loads — EVs, heat pumps, housing developments going all-electric.”
The build-out of an EV charging network, with fast chargers, and rules such as the state’s new clean truck rule, will increase electricity demand even more, Toor said.
“As the world changes, we want to make sure the utilities are catching up with that,” Toor said.
Jack Ihle, an Xcel Energy regional vice president, told the Senate Finance Committee hearing, “the ways that customers use the local grid, or the distribution grid, is getting more complex.”
There are now 105,000 individual solar systems, 70,000 EVs, and about 6,000 heat pumps on the Xcel Energy’s Colorado grid — with the heat pumps added in just the last two or three years, Ihle said.
“If you look at a house that typically would have used 7,000 kilowatt-hours or so normally, you add to that two EVs … and a heat pump that’s on electricity and you can be at 15,000 to 20,000 kilowatt-hours per year,” Ihle said.
The bill would create two tracks for dealing with distribution system upgrades and projects. Within 30 days of passage Xcel Energy would have to file a list of projects to be done in the next 18 months and their costs.
There is a cap on cost recovery of no more than 1.25% impact on retail rates.
Xcel Energy will then file a more comprehensive plan and the legislation directs the Colorado Public Utilities Commission to set rules for the work, including cost caps. The utility will be able to add a charge to customer bills.
How expensive the distribution grid upgrades will be and what impact they will have on customer bills remain to be determined.
“This kind of cost recovery has to happen,” Cindy Schonhaut, director of the Colorado Office of the Utility Consumer Advocate, which represents residential and small commercial customers, said in an interview. “The distribution system needs help.”
“But we realize a lot of stuff is going to end up on consumer bills,” Schonhaut said.
Testifying on behalf of AARP, which represents retirees and older citizens, Bill Levis, the former state director of consumer advocacy, noted that the legislature has already passed 13 bills enabling Xcel Energy to charge consumers for initiatives such as the cost of retiring coal plants, EV charging stations and renewable energy.“The current bill continues this piling on consumers with surcharges and the possibility of an increase in base rates,” Levis said. “Instead of putting all of the cost on its customers, AARP asks that Xcel’s shareholders, who are ultimate beneficiaries of the company’s actions, assume at least some of the cost.”