The Colorado Public Utilities Commission (PUC) on March 14 said that it has granted a request to allow Xcel Energy (NYSE:XEL) to model and present its Clean Energy Plan (CEP) portfolio for consideration as part of its current electric resource plan.
The portfolio, which proposes early retirement of two coal units at Xcel’s Comanche generation facility in Pueblo to be replaced by new renewable and natural gas resources, will be presented along with other alternatives in the company’s Phase II 120-day report, which is due April 27, the PUC said.
The decision allows Xcel to present the CEP portfolio with additional evaluation data sufficient to determine if it is in the public interest to proceed down the coal plant retirement path, the PUC said.
Once the 120-day report is received, all parties to the case will have the opportunity to comment and respond to the report, the PUC said, adding that it will issue a final decision approving a preferred portfolio for Xcel by the end of July.
“We are encouraged by the Public Utilities Commission’s decision to move forward with their review of the Colorado Energy Plan,” Colorado Gov. John Hickenlooper said in a March 15 statement. “The plan and its goals were crafted with thoughtful input from numerous parties that have collaborated over the last 18 months. Clean air is part of Colorado’s identity. We are confident the plan can help secure a future that protects the environment while still controlling costs to ratepayers.”
The PUC noted in its statement that Colorado’s regulated electric utilities are required to file a plan every four years forecasting future electric demand and how the utility will meet that demand. The process carries out the state’s policy that new electric resources have the lowest impact on rates, factoring in all relevant costs to be encountered during the planning period, the PUC said.
An Xcel Energy spokesperson on March 22 told TransmissionHub: "Xcel Energy will need to review the commission’s order and modifications to the Colorado Energy Plan stipulation. As we have noted before, the Colorado Energy Plan was developed with a diverse group of customers, independent power producers, state agencies, environmental organizations, labor, renewable energy organizations, and other stakeholders. All parties will need to review the order and modifications, to determine the impact of these changes and the next steps in this process."
As noted in the PUC’s decision – which was adopted on March 14 and has a “mailed date” of March 22 – Xcel’s Public Service Company of Colorado in May 2016 filed an application seeking approval of its 2016 Electric Resource Plan (ERP) and the accompanying assumptions and studies.
The PUC last April issued its “Phase I” decision, which approved, with modifications, Public Service’s plan to implement a competitive bidding process for acquiring resources to meet its projected resource need during an eight-year resource acquisition period extending from 2016 through 2023. The PUC added in its decision that the Phase I decision also approved the process for evaluating bids in the competitive solicitation and established the modeling parameters, including inputs and assumptions, for the presentation and consideration of potential resource portfolios in “Phase II.”
Public Service on Aug. 29, 2017, filed a stipulation, which includes as parties Public Service, PUC staff, the Colorado Office of Consumer Counsel, and the Colorado Solar Energy Industries Association. The next day, Public Service issued requests for proposals in its all-source solicitation in accordance with the competitive bidding process approved in the Phase I decision. The PUC added that Public Service received bids to its all-source competitive bid solicitation last November.
The stipulation does not seek PUC approval of the CEP Portfolio. Rather, the PUC added, if the PUC allows the CEP Portfolio to be considered, then the company, based on bids received in the competitive bidding process, will seek to build a portfolio of generation resources that will keep customers neutral or result in savings for customers on a present value basis.
If the company can meet that high burden, the stipulation would allow Public Service to present the CEP portfolio, with the early retirement of Comanche units 1 and 2, for approval as part of the Phase II analysis in the ERP proceeding.
The PUC also said that as a proposed component of the CEP Portfolio, Public Service voluntarily proposes to retire Comanche 1 no later than the end of 2022 (325 MW) and Comanche 2 no later than the end of 2025 (335 MW).
The stipulation proposes that the CEP portfolio be presented to the PUC in Phase II, in addition to the portfolios required in the Phase I decision, which requires Public Service to present portfolios to meet a zero need case and an approximate 450 MW need case. The PUC added that the overall system need presented in the CEP Portfolio(s) will be 775 MW to replace the capacity of Comanche 1, and 1,110 MW to replace the capacity of Comanche 1 and 2. The stipulation requires Public Service to present the 775 MW need portfolio, but leaves it to the company’s discretion whether to present the 1,110 MW need portfolio.
If the PUC grants the stipulating parties’ request to include the CEP Portfolio in Phase II, Public Service will model the CEP Portfolio, based on bids received in the ERP competitive bidding process, the PUC added, noting that Public Service will compare the costs of the CEP Portfolio against a baseline portfolio, where Comanche 1 and 2 are not retired early, to determine the cost-effectiveness of the CEP Portfolio. If the CEP Portfolio keeps customers “neutral” or results in savings for customers on a present value basis, Public Service will present the CEP Portfolio(s) in its ERP Phase II 120-Day Report, the PUC said.
As part of any CEP Portfolio approved in Phase II of the ERP, the stipulation includes provisions specifying that the company will own a proportion of the new utility resources acquired to fill the resource need. For instance, the PUC added, of the resources included in the CEP, Public Service will own a target of 50% of the nameplate capacity of all eligible energy (i.e., renewable) resources.
Under the terms of the stipulation, Public Service proposes to accelerate the depreciation expense for Comanche 1 and 2 in a separate proceeding. The PUC added that under the terms of the stipulation, the stipulating parties proposes that the company will bring forward separate applications for certificates of public convenience and necessity (CPCN), including a CPCN application for authority to build a new switching station on the southern transmission system in “Energy Resource Zone-5” remote from the Comanche substation.
Among other things, the PUC addressed Public Service having discretion of whether to provide in the 120-Day Report a portfolio with capacity replacement for Comanche 1 only – a 775 MW need – or a portfolio with sufficient capacity to replace both Comanche 1 and Comanche 2 – a 1,110 MW need. The PUC said that it is “concerned that if Public Service does not choose to provide the 1,110 MW need portfolio, the commission will not have adequate information about whether the retirement of both Comanche 1 and 2 will produce savings to customers and therefore whether the early retirement of Comanche units 1 and 2 is in the public interest.”
Therefore, the PUC said, Public Service is required to include in the 120-Day Report a 775 MW need CEP Portfolio (only the Comanche 1 capacity is replaced in the ERP) and an 1,110 MW need CEP Portfolio (capacity for Comanche 1 and 2 replaced in the ERP). Public Service is further directed to include in the 120-Day Report a least-cost portfolio to meet the 775 MW need and a least-cost portfolio to meet the 1,110 MW need, the PUC said.