Xcel Energy to test new rate structure in Colorado, expand solar under major settlement

Published on August 19, 2016 by Tracy Rozens


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Xcel Energy announced the largest proposed agreement of its kind in Colorado history this week with a landmark settlement agreement with major stakeholders that could change how electricity is priced in Colorado and expand solar energy initiatives.

The proposed settlement agreement between Xcel and 22 parties was filed with the Colorado Public Utilities Commission (PUC) this week, calling for the testing of new rate designs for residential customers but with no new grid use fees for solar customers.

The voluntary plan would offer homeowners energy-based time of use and time differentiated rate programs over three years. The plan would offer lower energy rates when the cost of providing electric service is down due to decreased demand for electricity, and higher rates during times when demand surges. If expansion of the plan is approved, the time of use billing would begin in 2020.

“We fashioned a settlement agreement that takes Colorado forward, I believe, for the next three to five years on how we are going to manage distributed energy and how we are going to make sure customers have options to participate in the evolution and utilize the technology that has been developed,” Alice Jackson, regional vice president for rates and regulatory affairs at Xcel Energy, Colorado, recently told Daily Energy Insider.

Parties to the settlement include the Colorado Energy Office, solar advocacy groups, and the state’s largest cities and major electricity customers, among others. Hearings on the settlement are expected to be held in October, with a decision by the end of the year.

The agreement addresses three cases that the Minneapolis-based Xcel filed earlier this year with the Colorado Public Utilities Commission – Phase 2 of its electric rate case, the Solar Connect program and the 2017 Renewable Energy Plan.

The Solar Connect program, to be renamed Renewable Connect, calls for a new 50-megawatt solar-dedicated resource. Xcel would also increase its solar rewards programs, including rooftop solar and community solar gardens, allowing for up to 342 megawatts of new solar between 2017 and 2019. The plan would also reserve a portion of its solar garden offerings for low-income customers.

“When you look at the statistics here in Colorado, only about 25 percent of our customers have the ability to put rooftop solar on. Community solar isn’t prevalent across our system where customers have that option wherever they are,” Jackson said. “And from a financial aspect, there are low-income customers who can’t qualify for the financing associated with those other programs.

“So this was another alternative for residential customers, and for our large customers as well, for them to have a one-stop shop.”

Closely linked to the settlement is Xcel’s Advanced Grid Intelligence and Security initiative, an approximately $500 million proposal filed with the Colorado PUC to allow for better integration of distributed generation on to the grid.

Jackson said that a decision from the commission on the Advanced Grid plan is expected in the second quarter of 2017.

The proposal calls for the rollout of an advance metering infrastructure that would allow customers’ electric meters to be read more frequently than the current once per month, while new technology called Integrated Volt Var Optimization would be implemented to allow customers’ appliances to be run more efficiently, thereby reducing their energy consumption.

In order to support the new technology, Jackson said, implementing a communications network known as a Field Area Network would also be required

Jackson said the Advanced Grid plan offers numerous benefits, including allowing customers to have more detailed information on their energy usage.

“It also allows us to increase the reliability part of the system because we have much more transparency and we can roll our trucks more efficiently and be able to restore those outages and reduce the outage time that our customers might see,” Jackson said. “And it also expands the capability of the grid to establish the control that we need to have even higher levels of distributed energy resources installed on the system.”

Xcel also has an Electric Resource Plan in front of the Colorado PUC, which shows that in 2023 there will be a 600 megawatt need for capacity to fulfill demand on the system. As a result, Xcel expects to solicit bids from renewable energy companies in the middle of 2017.

“We anticipate we will be adding probably more wind and solar from that request for proposals,” Jackson said.

Xcel also filed a plan with the commission in May for a 600 megawatt wind resource that it proposed to be built on the eastern plains of Colorado. The project is expected to provide approximately $443 million in cost savings to Xcel’s customers on a net present value basis, with those benefits starting in the third year.

“This is one of those no regrets investments because it helps our customers take advantage of the federal production tax credit,” Jackson said.