Utility's Colorado plan would expand wind, solar, shut coal plants

Investor-owned utility Xcel Energy, backed by a coalition of 14 diverse consumer and energy groups, are asking the Colorado Public Utilities Commission to approve a proposal called the Colorado Energy Plan that they say could lead to $2.5 billion in clean energy investments in rural Colorado.

Xcel Energy and the other groups — including the City of Boulder — are asking the PUC to approve a process that the company said would augment its portfolio of renewable resources and would not raise rates for Colorado electricity customers.

The proposal, called a “stipulation,” would modify Xcel Energy’s current 2016 Electric Resource Plan. In addition to expanding renewable energy, it also calls for the possible early retirement of two coal-fired generating units in southern Colorado.

In an Aug. 29 news release, Xcel Energy — the Minnesota-based parent of Public Service Company of Colorado — emphasized that the proposal would be advanced only “if the resulting portfolio of resources reduces, or at least does not increase, the cost of energy to Xcel Energy’s Colorado customers.”

Xcel said it plans to issue a request for proposals soon that will target “a mix of utility and independent power producer owned facilities, with Xcel Energy having a targeted investment of 50 percent of the renewable generation, and 75 percent of the natural gas-fired, storage, or renewable with storage generation resources in the portfolio.”

Up to 1,000 MW wind, 700 MW solar, 700 MW gas

Portfolio estimates are up to 1,000 megawatts of wind, up to 700 megawatts of solar and up to 700 megawatts of natural gas and/or energy storage, Xcel Energy said.

Parties to the stipulation include Xcel Energy’s subsidiary, Public Service Company of Colorado; the Colorado Public Utilities Commission staff; the Colorado Office of Consumer Counsel; the Colorado Energy Office; the City of Boulder; Climax Molybdenum Company; the Colorado Energy Consumers Group; the Colorado Independent Energy Association; the Colorado Solar Energy Industries Association, Interwest Energy Alliance; Invenergy LLC; Southwest Generation Operating Company, LLC; Rocky Mountain Environmental Labor Coalition and Colorado Building and Construction Trades Council, AFL-CIO (jointly, RMELC/CBCTC); Vote Solar; and Western Resource Advocates.

Regulators’ approval sought by year’s end

Parties to the stipulation are seeking approval of the proposal from the PUC by the end of this year. Among the major components of the Colorado Energy Plan are:

⦁    Retirement of 660 megawatts of two coal-fired generation units at the Comanche Generating Station, located in Pueblo, Colo., including Unit 1 by the end of 2022, and Unit 2 no later than the end of 2025. Unit 3 would remain in service.

⦁    Issuance of a competitively-bid, all-source request for proposal as part of Phase II of the 2016 Electric Resource Plan. The RFP could result in additions of up to 1,000 megawatts of wind, up to 700 megawatts of solar and up to 700 megawatts of natural gas and/or storage. No coal resource would be added as part of the RFP. Carbon emissions could be reduced by up to 60 percent by 2026, when compared to 2005 levels, under the proposal, Xcel said.

⦁    Utility ownership targets of 50 percent renewable generation resources and 75 percent of natural gas-fired, storage, or renewable-with-storage generation resources in the portfolio;

⦁    Reduction of the Renewable Energy Standard Adjustment, or RESA, bill rider to 1 percent, from the maximum 2 percent allowed, and currently being funded, under state law. The reduction of the RESA would be the subject of future regulatory proceedings and would not take effect until 2021 or 2022.

⦁    Accelerated depreciation for the early retirement of the two coal-fired units at Comanche, also to be addressed in future regulatory proceedings, and

⦁    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 Energy said on Aug. 29 that it planned to issue the all-source RFP “in the next several days” and would anticipate filing a recommended portfolio with the CPUC in the first quarter of 2018. A final decision on the recommended portfolio by the CPUC is expected in the summer of 2018, Xcel said.

Boulder issues statement

The City of Boulder, one of the parties to the stipulation filed with the PUC, issued a statement about the proposal.

In the Aug. 29 statement, the city said that it “has long encouraged Xcel Energy to retire fossil-fuel based energy generating facilities as quickly as possible and transition to a clean energy system.”

In keeping with this goal, the city said it “supports the addition of the Colorado Energy Plan Portfolio as a third scenario to be evaluated in the upcoming second phase of Xcel’s 2016 Electric Resource Plan proceeding. This would allow for the consideration of an additional portfolio that includes early retirement of coal-fired generation and replacement of that generation with natural gas or renewable energy resources.”

“If chosen, the Colorado Energy Plan Portfolio has the potential to contribute to the city’s climate and energy goals,” the city continued. Boulder’s climate goals include reducing emissions 80 percent by 2050 and achieving 100 percent renewable electricity by 2030.

For the last decade, Boulder has been pursuing a plan that would let it unplug from Xcel Energy and operate its own public power utility. The city also has been engaged in court fights with Xcel over its effort to buy Xcel’s utility assets in Boulder, should the city decide to form a city-owned utility.

On Aug. 21, the Colorado Supreme Court granted a petition filed by Boulder, asking the court to review a lower court’s decision in a case involving the city’s effort to create a local electric utility. The court order stems from a challenge originally filed by Xcel Energy in 2014.

Boulder points out issues ‘that require examination’

In its statement, Boulder said that there are “some important issues that require examination relative to how Xcel Energy proposes to implement” its proposal. The city said it will monitor the proceeding and may provide testimony, should the PUC allow the Xcel Energy proposal to move forward.

Specifically, Boulder said the city is interested in the impact of the proposal on the following:

1.    “The future of distributed solar: The proposal decreases funding for rooftop solar and community solar garden incentives by reducing the amount of the Renewable Energy Standard Adjustment (RESA), and utilizing those dollars to implement the planned portfolio. In addition, the proposal focuses on developing central station resources. The city is interested in learning more about possible limitations on the development of local distributed generation, specifically, the impact to customers, which may impact Boulder’s ability to achieve 100 MW of local renewable energy by 2030.”

2.    “Emissions reduction: The proposal retires two coal plants 10 years earlier than planned, but will likely add new natural gas as well. While Boulder applauds the commitment to add new renewable energy, it is important to carefully evaluate any new investment in natural gas associated with the proposal.”

3.    “Xcel ownership of new generation: The proposal states that Xcel will own 40 to 60 percent of new renewable generation and 60 to 75 percent of new natural gas. It is important that the ownership structure ultimately approved by the PUC ensures the greatest number of renewables are developed at the lowest cost to customers, which may result in Xcel not owning the proposed percentages of new generation. The city is concerned that the concentration of ownership by Xcel will limit competition and drive competitive generators out of Colorado, affecting cost to customers as well as local economic vitality.”

4.    “Qualifying facilities: The ability to interconnect new renewable generation larger than 100 kW may be an important part of any community’s ability to achieve its climate commitment goals. It is important to develop a clear path for qualifying facilities that comply with federal standards to be able to sell power to Xcel.”

Boulder said that the city “looks forward to learning more about these issues as the proceeding continues.”