Faced with the largest plan for new electricity generation and transmission in the state’s history, the Colorado Public Utilities Commission on Wednesday expressed concerns about the scale and timing of the Xcel Energy proposal.
PUC Chairman Eric Blank, while stressing deliberations are just beginning on the $15 billion plan, suggested the generating capacity of the proposal could be trimmed about 26% to 5,835 megawatts.
This would allow some of the nearly $3 billion in transmission projects, which commissioners called a “surprise” addition to the plan to also be delayed.
The commission is expected to make a final decision on the plan before the end of the year.
The Xcel Energy resource plan — which must meet customer needs and cut greenhouse gas emissions — includes 3,400 MW of wind, 1,100 MW of solar, 1,400 MW of solar with storage, 600 MW of standalone storage and 600 MW of natural gas capacity.
“Ultimately, I think we’re going need all that wind and solar as well as the storage and new transmission,” Blank said. “But I think delaying some of the new generation until next summer’s resource acquisition plan provides for potential benefits.”
“By delaying some of the new generation it would allow us to better understand the cost, value, timing and need for the new transmission before we’re committed to building it,” Blank said.
Another concern voiced by wind and solar industry representatives and independent power producers, is that Xcel Energy will own two-thirds of the new generating capacity. Blank said that the alternative portfolio would bring ownership closer to 50-50 between the utility and independent power companies.
Xcel Energy evaluated 137 proposed projects, some by the company, some by independent power producers. A computer-optimization of projects did give preference to the company proposals, but an independent evaluator, chosen by the commission, said the selection process had been fair and without bias.
“That’s something from our perspective, is very important to emphasize,” said Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary. “Because as you know, if the utility owns any portion of this, there’s liable to be some level of skepticism.”
All three commissioners commended Xcel Energy for developing a plan that will bring the utility to 80% clean power in 2030 and cut greenhouse gas emissions by more than 80% over 2005 levels to comply with state laws. In 2005, Xcel relied on fossil fuels for 96% of its electricity.
“Many of us remember in 2004 when we were told … 10% renewables on the system were entirely unreliable,” Commissioner Tom Plant said.
Blank said, “the company is doing an incredible thing here.”
Still, the commissioners expressed concern about balancing the transition to clean energy and the costs.
“We are on a tightrope here,” Commissioner Megan Gilman said. “These choices are highly consequential and the margin for error is relatively small.”
On the one hand we risk under-investing and miss an opportunity,” Gilman said. “At the same time if we overinvest, we risk the affordability of the system, especially considering many Coloradans are already vulnerable to not being able to pay their utility bills.”
Xcel Energy said in its plan that the impact on customer bills would be about 2.25% a year, in line with inflation.
The PUC staff and the Colorado Office of Utility Consumer Advocate, which represents retail and small commercial customers, said in filings that the increase only accounts for the clean energy plan, involving retiring coal-fired plants and adding wind and solar, and not a wide range of other investments, such as wildfire mitigation and transmission upgrades.
“I think the full rate impact of the preferred plan and other company investments is subject to real uncertainty, given all these uncertainties resulting from the fundamental reality that we’re breaking new trail,” Blank said.
One of the major concerns was the increase in transmission costs. In an earlier clean energy plan approved in 2021, Xcel Energy estimated it would need $500 million in new transmission.
The plan now before the commission is seeking nearly $3 billion in transmission investments, because of an expansion in the amount of wind and solar generation in the revised plan. This comes after the PUC approved a $1.7 billion regional transmission project called Power Pathway.
“The level of transmission investment is a surprise,” Plant said. “We have to figure out how we can reduce those costs.”
In an effort to provide some cost certainty, Xcel Energy has proposed a performance incentive mechanism to hold the company accountable for construction and operation costs.
Blank said he was “really relieved and pleased to see that the company has sharpened its pencil” and “stands behind its pricing and performance metrics.”
Addressing the plan through the “lens of affordability” will be key, Gilman said.
“We have ensured that in this transition we cannot leave our neighbors behind,” she said. “Make it too expensive and we will get backlash.”
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