Xcel Energy’s (NYSE:XEL) Public Service Company of Colorado (PSCo) should do a better job of providing updates and cost information on transmission projects, including revised load forecasts, and the Colorado Public Utilities Commission (PUC) should improve the transmission planning process to allow grid developers more flexibility to alter projects, two parties recently told the PUC.
The comments were filed with the PUC after PSCo notified parties that it will seek to move up the in-service date for its 345-kV Pawnee to Daniels Park project by nearly three years so that renewable power project developers could gain tax credit benefits that would reduce the cost of wind generation. The $178m project was approved by the PUC last year based on construction starting in 2020 and an in-service date of May 2022.
In a March 10 update on the project, PSCo said it will seek PUC approval to modify that decision to accelerate the in-service date to Oct. 31, 2019, based on Congress deciding to extend the production tax credit for wind power projects with reduced benefits for wind projects that start construction after 2016.
“Advancing [the] in-service date of the Pawnee-Daniels Park project will help ensure that customers reap the tax credit benefits which significantly reduce the cost of wind generation,” PSCo said in the update.
The utility has not yet made the filing with the PUC seeking to change the in-service date, a PSCo spokesperson told TransmissionHub April 11.
“We hope to make that filing in early May,” at which time other aspects about the project, such as whether the estimated cost would change, could be answered, she said.
The Pawnee to Daniels Park project is a 125-mile, 345-kV line that would consist of a new double-circuit line between PSCo’s Pawnee substation near Brush, Colo., and the Daniels Park substation near Castle Pines, Colo., south of the Denver metropolitan area, PSCo noted in its update. The project would include construction of a new Harvest Mile substation and pass through Arapahoe and Douglas counties and the city of Aurora and the town of Parker. The project is designed to improve reliability, meet new load growth and allow for the interconnection of new renewable energy projects.
When the PUC approved the project in 2015, it denied PSCo’s request to begin construction prior to May 2020.
The planned change in an in-service date was highlighted by both the Colorado Office of Consumers Council (OCC) and the Interwest Energy Alliance (Interwest), in separate comments filed on the 10-year transmission plan of PSCo. The OCC and Interwest suggested ways to improve transmission planning and approval so that projects are properly sized, proven to be needed, and approved in time to connect new generation resources being developed.
The OCC filed its comments April 1, and Interwest, a trade group representing renewable energy interests in several states in the West, filed its comments March 30.
In February, the PUC consolidated several cases involving transmission plans of utilities in the state, directing parties to file initial comments on transmission plans (Docket No. 16M-0063E) by April 1, with reply comments due April 29.
The OCC recommended that the PUC require PSCo to update its 10-year transmission plan to include valid cost estimates for all facilities and an updated load forecast that takes into consideration a decline in load since 2012.
Regarding the load forecast, the OCC said PUC rules require utilities to include load forecast changes as part of the transmission planning process, such as reductions in load due to net metered distributed generation project and energy efficiency gains. Yet PSCo refers to a 2011 resource plan that is out of date and does not account for gains in net metered solar projects. An updated load forecast is an important element that needs to be included an PSCo’s transmission plan, the OCC said.
The proposal to change the in-service date on the Pawnee to Daniels Park line also was not mentioned by PSCo, illustrating how few details are provided on various transmission projects to prove that they are providing the most efficient utilization of the transmission system on a best-cost basis, the OCC said.
PSCo “may substantially understate the cost of a project,” the OCC claimed, listing the Moon Gulch substation as an example, where a report from the utility listed the estimated cost at $2m, but when the substation project application was filed with the PUC in November 2015 it listed a cost of $13.5m.
Transmission enhancement planned for the Greeley, Colo., area also have scant details on costs, with blanks or “TBD” for several projects in PSCo’s Rule 3627 report, the OCC said, asserting that the utility likely will spend between $100m and $150m on transmission projects in the area.
Another example of the problem with the estimated costs in the Rule 3627 Report is that PSCo does not report costs for some projects, the OCC said. The OCC has been working with PSCo on transmission lines in the Greeley area, yet the PSCo Rule 3627 Report only shows a cost of $8 million for the Ault–Monfort line.
“The transmission planning process is supposed to enable the efficient consideration of alternatives,” but that is hard to do when critical information is left out by PSCo, the OCC claimed.
In its comments, Interwest said “transmission planning and development still proceeds at too slow a pace for optimizing cost-effective generation development around the state, and will potentially make transmission investments more costly over time.”
The group suggested improvements in the certificate application and approval process to provide utilities with flexibility in “right-sizing” transmission projects and acquiring rights of way (ROW) to accommodate double-circuit lines even if a single-circuit line is installed initially. ROW acquisitions and planning steps taken early for future needs will often save money over the long run, Interwest told the PUC.
Generation development is much quicker than transmission development and policy and market changes can alter transmission plans that have been years in the making, Interwest noted.
“Delaying planning steps until the need is critical will effectively make it more expensive than necessary,” Interwest said. “Therefore, the utilities will save money over time with joint planning and investment and preparation for larger capacity lines.”
Renewable resources in southeast Colorado have been delayed for a number of years, with developers awaiting transmission capacity to carry wind energy to serve the Front Range area, Interwest said.
The group asserted that flexibility in certificate of public convenience and necessity (CPCN) cases at the PUC would help resolve some of the timing issues associated with transmission planning in the face of changing market and load conditions. The Pawnee–Daniels Park line was listed as an example, with the PUC approving the CPCN but delaying construction, followed by discussion among PSCo and PUC staff that the need for the project might be more advanced due to environmental requirements and changing resource needs.
Fortunately for generation developers, the CPCN was approved and moving up the in-service date is much simpler than altering the CPCN application and approval process to match the market changes, Interwest said.
“This provides an example of where the planning and approval process can have some flexibility, balancing competing interests and providing better correlation between load growth, transmission planning, and development of generation resources,” Interwest said.
The PUC “can support transmission development by approving CPCNs with timing to be somewhat flexible, and by acknowledging the need for utilities to rely on long-term load forecasts and public policy initiatives being sufficient demonstration of need, even while the details of the public policy regulations remain somewhat uncertain,” the group said.