Resource plan called ‘transformational,’ but cost ‘jarring’
State regulators weighing Xcel’s blueprint for delivering electricity through 2030
While calling Xcel Energy’s proposed blueprint for the next several years transformational, the Colorado Public Utilities Commission is balking at nearly $3 billion in additional transmission costs — “jarring” one member called it — in the proposal.
The PUC weighed in during a meeting Wednesday on the second phase of Xcel’s energy resource plan, which will help chart the utility’s spending and mix of resources to generate electricity through the rest of the decade. The company’s preference out of the different scenarios proposed would add roughly 6,500 megawatts of wind and solar power and storage on Xcel’s system while cutting greenhouse gas emissions by an estimated 87% from 2005 levels by 2030.
“This is likely to be the most impactful decision I’ll make during my term,” Eric Blank, commission chairman, said in what he called the beginning of regulators’ conversation on the proposal.
PUC members will discuss the proposal in a meeting next week. The commission originally planned to make a decision before the end of the year, but it’s unclear if it will extend the time.
Blank and other PUC members called Xcel Energy’s plan to significantly increase renewable sources on the grid and reduce carbon emissions by closing coal plants “transformational,” and leading to “a profound transition” from fossil fuels.
However, commission members seemed almost as struck by the utility’s plan to spend $15 billion, nearly double from the first phase of the proposal. About $2.8 billion of that increase would pay for transmission upgrades in the Denver area.
“We’re seeing a nearly nine times multiplication of what was anticipated in phase 1 to be the cost of Denver-metro upgrades, a jarring almost $3 billion new transmission upgrades in total,” PUC member Megan Gilman said.
Transmission costs in the plan would be on top of the $1.7 billion for the Colorado Power Pathway, which will consist of loops of up to 650 miles of high-voltage transmission lines stretching from the northern Front Range to the southeastern plains. The PUC approved most of the project in 2022.
Spokesman Tyler Bryant said in an email that the company
appreciates the commissioners’ discussion of its “transformative Clean Energy Plan.”
“Like many stakeholders, we support the full amount of renewable energy in our proposed plan which is intended to meet and exceed the state’s greenhouse gas policy goals.” Bryant said.
The Office of the Utility Consumer Advocate said in written comments to the PUC that Xcel Energy gave the impression that the Power Pathway was the solution to its transmission needs. The office said while some Denver-area upgrades would be required, Xcel didn’t indicate that “the additional transmission costs would be in the billions of dollars.”
Gilman and the other commissioners expressed frustration with “latebreaking issues” in the plan and questioned some of the modeling and assumptions related to the economics of proposed projects and financial impacts on customers.
In written comments, the PUC staff and the consumer advocate’s office said the higher transmission costs could potentially result in large rate increases. Xcel, which provides electricity to 1.6 million customers in Colorado, has said its proposal would amount to an average annual rate increase of 2.3% for customers, or below inflation.
But Blank pointed out that PUC staff and others say the forecast doesn’t include all the projected costs, such as wildfire mitigation, the electrification of transportation, distributed solar projects and development of hydrogen technology.
The consumer advocate’s office said Xcel Energy’s preferred plan would cost customers an average of 6.1% per year.
The PUC questioned whether Xcel’s proposed power projects would be in place a few years ahead of the required transmission. Blank suggested some of the projects could be delayed to better understand the cost, need and the best timing of new transmission.
The utility intends to take advantage of $10 billion in renewable energy tax credits through the federal Inflation Reduction Act.
Parties to the proceedings have challenged the fact that under the plan, Xcel would own roughly 66% of the new facilities. Critics note that a 2019 law requiring utilities to write clean energy plans set a target of a utility owning about half the infrastructure and the other half being privately owned. The costs of Xcel-owned facilities are added to the rate base, or the basic rate that customers pay.
“Of the overall $15 billion of proposed investment, the company would own over $10 billion representing an approximate doubling of its current rate base,” the PUC staff said.
PUC member Tom Plant said he is concerned about the impact on ratepayers of Xcel’s plans to build three new natural gas plants. He believes the technology will be phased out over the next 25 years, leaving customers on the hook to pay for plants built to last much longer.
The company’s proposal calls for closing six older gas-fired units and building three new plants totaling 600 megawatts.
The economic impacts on customers of so-called “stranded assets,” plants or equipment no longer needed, and the effects on air quality and health worry community and environmental groups. People rallied Nov. 15 at the state Capitol against building new gas plants.
“The plants would cost ratepayers $1 billion. These gas plants are just a bad deal for Colorado’s ratepayers, for Colorado’s consumers, for Colorado’s working families. We need to get off this sauce,” said Wendy Howell of the working families party.
Other speakers at the rally said the PUC should reject the new gas plants due to the effects on people’s health, air quality and the warming climate.
“We are thrilled to see a significant amount of clean renewable energy as well as energy storage in Xcel’s plan,” Jen Clanahan of Mountain Mamas said. “However, building three new gas plants is not a mom-approved plan. Frankly, we can’t figure out why anyone would build new gas plants when scientists have warned us that we need to stop burning fossil fuels yesterday.”