PUC Decision On Xcel Resource Plan Lays Groundwork For More Clean Energy

DENVER, CO— The Colorado Public Utilities Commission (PUC) voted to move forward with an amended version of Xcel’s Phase II of their 2021 Electric Resource Plan (ERP). While the newly approved ERP invests less in new renewable energy sources than was initially proposed by the utility, and commits to new gas generation, it continues steady progress toward a zero-carbon grid and makes important reforms for the future.  

Overall, the decision approves over 3,300 MW of new renewable generation and 1,800 MW of battery storage. Significantly, the Commission orders new Performance Incentive Mechanisms that require the utility to share in the risk of cost overruns at Company-owned projects. Instead of approving $2.8 billion of “surprise” new transmission, the Commission will require a full analysis of proposals, create an Independent Transmission Monitor, and open the door for considering grid-enhancing technologies and non-wires alternatives to make better use of the grid.

“This decision represents hard work and real progress. The Colorado PUC is using one of the best planning and procurement processes in the country to shepherd through a remarkable transformation in the state’s energy system,” said Brian Turner, Director at Advanced Energy United (United), a national business association. “It’s not perfect, and we don’t agree with every part of the decision, but Coloradans can feel reassured by the careful and measured approach.”

“The decision didn’t approve building as much renewable energy as is cost-effective right now – but there will be another opportunity later this year. It approved new gas resources, but reduced ratepayers’ risk that they’ll become ‘stranded assets.’ In fact, the decision makes great progress in getting Xcel to share the risk of its projects, and create a more level playing field with independent project developers. It also recognized areas where Xcel needs to do more planning before asking ratepayers to fund new infrastructure, even if it is a much-needed investment.”

Leading up to the next ERP, United encourages the Commission and other decision-makers to prioritize three key areas: 

• Investing in a diversity of advanced energy resources: As cited in a recent report commissioned by United from Strategen Consulting, developing advanced energy resources such as wind, solar, and battery storage is far more cost-effective than building new natural gas plants. New gas infrastructure will burden ratepayers for years to come, especially as more reliable, on-demand access to affordable clean power becomes possible through strengthened coordination with neighboring states. In addition to long-term cost benefits, optimizing state, federal, and utility energy investments in renewable energy and battery storage will reduce carbon emissions consistent with the state’s economy-wide and sector-specific decarbonization targets, spare communities from local pollution and related health impacts, and provide more significant future cost savings for consumers.
• Prioritize distributed resources: This ERP exposed the need for more energy capacity to meet peak demand hours, as well as local resources that reduce the stress on the transmission system. These needs are ideally met with Distributed Energy Resources (DERs), Virtual Power Plants (VPPs), and other alternatives to large, centralized generation.
• Enhancing the state’s transmission system: New transmission infrastructure, plus better regulatory support for grid-enhancing technologies to improve existing power lines, are essential to bringing renewable energy projects online and unlocking reliable, affordable energy for consumers and the grid. Additionally, efficient siting and permitting processes must be developed to support the demand for more renewable energy and transmission growth in tandem with Colorado’s progress toward an electrified future.

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