Regulators back cutting Xcel Energy-Colorado’s electric plan by $3B

State regulators have rejected Xcel Energy-Colorado’s proposed electric resource plan in favor of a less costly one, cutting about $3 billion from the overall price tag.

But environmental groups are criticizing the decision because it would reduce the level of renewable energy sources planned by the utility and add more new natural gas generation.

The Colorado Public Utilities Commission endorsed the alternative proposal during a meeting last week. The PUC will continue deliberations this week on the rest of Xcel’s plan, a map of the company’s fuel sources, investments and efforts to cut emissions through the rest of the decade.

The commission will issue a written final decision later.

Environmental and community groups had praised Xcel’s proposal for the amount of wind and solar power and battery storage it would add to the system: 6,540 megawatts. They denounced plans to build three new natural gas plants for a total of 628 megawatts.

But the alternative backed by the PUC would reduce the amount of new renewables in Xcel Energy’s preferred plan by approximately 1,350 megawatts while boosting the megawatts of new natural gas by 41, the Natural Resources Defense Council noted.

“The PUC’s shortsighted decision is bad for customers, the environment, and workers because it will ultimately drive up costs and delay Colorado’s green energy transition,” Alana Miller, NRDC’s policy director for Colorado, said in a statement.

The PUC has called Xcel’s plan, which included different options, transformational due to the “unprecedented” amount of renewable energy the company would add to its system. Xcel, Colorado’s largest electric utility, said under its preferred scenario, it expected to cut emissions on its system by an estimated 87% from 2005 levels by 2030.

However, PUC members described the proposed cost of new transmission infrastructure as “jarring.” The overall cost of the proposal would be roughly $15 billion, nearly double the price tag of Xcel’s plan presented in the first phase of the process. About $2.8 billion of the increase would pay for transmission upgrades in the Denver area.

The surge in transmission costs was assailed in filings by the PUC staff and Office of the Utility Consumer Advocate. Xcel has said customers would see an average annual rate increase of 2.3% under its proposal, but the consumer advocate’s office countered that the increases would average 6.1% per year to 2030 when all the costs were factored in.

Eric Blank, PUC chairman, agreed with the staff’s recommendation to delay some of the new generation facilities although he believes Colorado will ultimately need all the renewables and transmission proposed by Xcel.

However, Blank said, delaying approval of some of the new generation facilities will give the commission time to better understand “the cost, value, timing and need for the new transmission before we’re committed to building it.”

Even with a more cautious approach, the PUC is still approving almost 6,000 megawatts of new generation overall as part of a plan representing over $12 billion in capital investments with more likely to quickly follow, Blank said.

One megawatt of solar or wind energy can supply electricity to several hundred homes.

PUC staffer Mark Eden said the option supported by the commissioners is expected to reduce greenhouse gas emissions by 86% by 2030.

But Ren Smith with the Colorado Sierra Club said spending more on renewable energy upfront would save money. “We’re better off investing in renewable energy now, especially with available federal incentives.”

Xcel intends to take advantage of $10 billion in tax credits through the federal Inflation Reduction Act.

State regulators have rejected Xcel Energy-Colorado’s proposed electric resource plan in favor of a less costly one, cutting about $3 billion from the overall price tag.

But environmental groups are criticizing the decision because it would reduce the level of renewable energy sources planned by the utility and add more new natural gas generation.

The Colorado Public Utilities Commission endorsed the alternative proposal during a meeting last week. The PUC will continue deliberations this week on the rest of Xcel’s plan, a map of the company’s fuel sources, investments and efforts to cut emissions through the rest of the decade.

The commission will issue a written final decision later.

Environmental and community groups had praised Xcel’s proposal for the amount of wind and solar power and battery storage it would add to the system: 6,540 megawatts. They denounced plans to build three new natural gas plants for a total of 628 megawatts.

But the alternative backed by the PUC would reduce the amount of new renewables in Xcel Energy’s preferred plan by approximately 1,350 megawatts while boosting the megawatts of new natural gas by 41, the Natural Resources Defense Council noted.

“The PUC’s shortsighted decision is bad for customers, the environment, and workers because it will ultimately drive up costs and delay Colorado’s green energy transition,” Alana Miller, NRDC’s policy director for Colorado, said in a statement.

The PUC has called Xcel’s plan, which included different options, transformational due to the “unprecedented” amount of renewable energy the company would add to its system. Xcel, Colorado’s largest electric utility, said under its preferred scenario, it expected to cut emissions on its system by an estimated 87% from 2005 levels by 2030.

However, PUC members described the proposed cost of new transmission infrastructure as “jarring.” The overall cost of the proposal would be roughly $15 billion, nearly double the price tag of Xcel’s plan presented in the first phase of the process. About $2.8 billion of the increase would pay for transmission upgrades in the Denver area.

The surge in transmission costs was assailed in filings by the PUC staff and Office of the Utility Consumer Advocate. Xcel has said customers would see an average annual rate increase of 2.3% under its proposal, but the consumer advocate’s office countered that the increases would average 6.1% per year to 2030 when all the costs were factored in.

Eric Blank, PUC chairman, agreed with the staff’s recommendation to delay some of the new generation facilities although he believes Colorado will ultimately need all the renewables and transmission proposed by Xcel.

However, Blank said, delaying approval of some of the new generation facilities will give the commission time to better understand “the cost, value, timing and need for the new transmission before we’re committed to building it.”

Even with a more cautious approach, the PUC is still approving almost 6,000 megawatts of new generation overall as part of a plan representing over $12 billion in capital investments with more likely to quickly follow, Blank said.

One megawatt of solar or wind energy can supply electricity to several hundred homes.

PUC staffer Mark Eden said the option supported by the commissioners is expected to reduce greenhouse gas emissions by 86% by 2030.

But Ren Smith with the Colorado Sierra Club said spending more on renewable energy upfront would save money. “We’re better off investing in renewable energy now, especially with available federal incentives.”

Xcel intends to take advantage of $10 billion in tax credits through the federal Inflation Reduction Act.