Investor-owned utilities in Colorado await community choice energy decision
Investor-owned utilities (IOUs) in Colorado already are going above and beyond for their customers, yet state legislators are recommending a proposal to study the feasibility of adopting community choice energy (CCE), also known as community choice aggregation (CCA).
The Investor-owned Utility Review Interim Study Committee consists of six members of the Colorado General Assembly: three senators — two selected by the Senate president and one selected by the Senate minority leader — and three representatives; two selected by the House speaker and one selected by the House minority leader.
These committee members specifically examine programs and practices of electric IOUs in Colorado having a particular focus on issues involving consumer choice and affordability in electric supply.
On Oct. 3, the committee voted 4-2 to approve draft Bill 1 to require the Colorado Public Utilities Commission (PUC) to study the implementation of CCE in the state through a third-party study and an investigatory docket.
Specifically, the bill states that “a well-designed wholesale, opt-out CCE program would introduce an element of wholesale competition and community-level choice into the supply of electricity, likely driving lower rates and cleaner energy, while maintaining the viability and strength of Colorado’s existing investor-owned electric utilities and without imposing additional costs on the utility or its bundled-service customers.”
CCE also could provide communities that have ambitious renewable energy goals with a way to reach those goals more quickly and cost-effectively, according to the draft bill, which would authorize the study of CCE, not its implementation.
During two hearings on the bill — one in August, the other held this month — committee members heard presentations from a variety of stakeholders, including the state’s two IOUs, Xcel Energy and Black Hills Energy.
While CCE/CCA currently isn’t in play in Colorado, the IOU representatives wanted state legislators to understand how they’re working diligently to enhance the customer experience by offering consumers numerous energy choices and solutions to meet their needs.
Xcel Energy, for example, serves a total of 3.6 million electric customers in eight states, with 1.5 million electric customers and 1.4 million gas customers in Colorado, according to Jack Ihle, director of regulatory and strategic analysis at Xcel, who presented during the committee’s Aug. 22 meeting.
“Xcel is a nationally recognized leader in wind energy, energy efficiency and carbon emissions reduction,” Ihle said, adding that the IOU’s provision of renewables in Colorado now stands at 28 percent and growing.
“We have a really robust portfolio of renewables,” he said, including coal, natural gas, wind and solar, with more than 100,000 Xcel customers in Colorado choosing renewable alternatives.
In turn, between 2005 and 2018, Xcel has reduced its carbon dioxide emissions in Colorado by 41 percent, said Ihle, and has plans to reduce them 80 percent by 2030 and to be 100-percent carbon-free by 2050.
It’s all part of Xcel’s priorities to lead the state’s clean energy transition, enhance the customer experience, and keep consumer bills low, all of which can be realized by constructive public policy, among other carbon-related objectives, he said.
Xcel also is working on community partnerships that help set up a framework for identifying community needs and goals and establishes guidelines for how the IOU might meet those needs and goals by working together.
Meanwhile, Black Hills Energy also is committed to meeting customer needs in Colorado, according to Stephanie Dowling, senior community affairs manager at Blacks Hills Energy, who outlined the IOU’s presentation to the committee for Daily Energy Insider.
Dowling said company reps focused on Black Hills Energy’s four priorities for its southern Colorado service territory, which are called “the four Rs.” They are:
Rates: Black Hills Energy operates its southern Colorado system in an efficient, cost-effective way to keep rates as low as possible for customers; the company’s rates in southern Colorado are comparable to those of nearby rural electric cooperatives that have similar service territories.
Reliability: Black Hills Energy’s 96,600 customers depend on safe, reliable electric service, which is a huge priority for the IOU in southern Colorado where its reliability performance is in the top quartile of all U.S. utilities.
Renewables: Black Hills Energy has one of the cleanest generation portfolios in Colorado. “When we add the new Busch Ranch II wind farm to our system, we will meet Colorado’s Renewable Energy Standard, with 30 percent of our generation from renewable sources,” Dowling said.
Rural Economic Development: “We are aggressive in partnering with the City of Pueblo and community leaders to bring new companies and new jobs to southern Colorado,” she said. “We also ‘buy local’ whenever doing so offers the best, lowest-cost solution — such as purchasing wind turbines made in Pueblo for Busch Ranch II from Vestas Wind Energy Systems.”
And when it comes to rates, Black Hills Energy Colorado Electric is committed to customer-focused solutions, such as an advanced metering infrastructure customer portal, energy assistance programs and charitable contributions, as well as economic development solutions, like job growth strategies and partnerships with local economic development organizations, among others, according to the company’s committee presentation.
“We are still determining the impact of CCA and, specifically, what the impact would be to our customers,” Dowling told Daily Energy Insider in an email. “At this point, it’s too soon to tell. We’ll continue to monitor in Colorado and beyond and could have more to share down the road.”
At the same time, the Investor-owned Utility Review Interim Study Committee is moving forward.
Its approved draft bill specifically would direct the PUC to evaluate the viability of the wholesale, opt-out model of CCE in Colorado, where it is defined as a mechanism that allows cities, counties or groups of cities and counties, to combine their purchasing power and choose alternative electricity suppliers while the incumbent utility continues to own and operate the transmission and distribution system.
The PUC would be directed to oversee a study on the financial and technical feasibility of allowing CCE in Colorado and the commission would have to select a qualified agent to perform the study and collect data necessary to conduct the study from the IOUs, according to the draft bill.
The study must estimate any transition fees that communities forming a CCE authority would be required to pay their existing electric utilities and recommend legislative and regulatory modifications needed to implement CCE in Colorado, among other requirements.
Additionally, the PUC would be required to report the conclusions of the study to the energy committees of the General Assembly by Nov. 30, 2020.
At the same time, the PUC would be tasked with opening an investigatory docket by Sept. 1, 2020, to consider the regulatory and legal implications of CCE legislation and to provide recommendations to the General Assembly.
The PUC’s report summarizing its findings and recommendations to the General Assembly would be due by Jan. 1, 2021.
Now that the interim utility review committee has approved the measure, in November it heads to legislative counsel prior to the full Colorado General Assembly.
The bill would take effect once it was signed by the governor, or upon becoming law without his signature.
