Colorado senator yanks proposal challenging Xcel Energy’s transmission line ownership

Published on June 03, 2020 by Kim Riley

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Legislation introduced by Colorado State Democratic Sen. Chris Hansen that challenged Xcel Energy Inc.’s ownership of electric transmission lines got pulled this week from General Assembly consideration.

“I think what it came down to was that in addition to all the other priorities the GA is focusing on — passing the budget, reauthorizing necessary departments and programs set to expire, and presenting pandemic response legislation — they have now added on the additional priority of passing police accountability legislation in response to the recent events, and this just doesn’t leave much room for anything else,” Kevin Quinn, Legislative Aide to Sen. Hansen, told Daily Energy Insider last night. “That said, I am sure he will be bringing the transmission bill back in 2021.”

Sen. Hansen on March 3 introduced the original Boost Renewable Energy Transmission Investment measure, Senate Bill (SB) 20-190, in the Colorado General Assembly to develop incentives for the development of an electric grid that would fully accommodate increased production from zero-carbon generation resources.

The senator, who is serving his second term, promotes clean energy and seeks to drive substantial progress on carbon and methane emissions, a goal he thinks is achievable by increasing the renewables portfolio standard (RPS) to maintain Colorado’s leadership nationally on the growth of clean energy sources.

One of the things that the original SB20-190 would have instituted included a complicated bidding process open to out-of-state competitive transmission companies, which in other states has led to mixed results.

SB20-190 this week was under consideration by the Colorado Senate Committee on State, Veterans, and Military Affairs, with possible amendments expected prior to Hansen yanking the bill.

Xcel Energy opposed SB20-190 from the get-go. One of the nation’s fastest-growing, investor-owned electric and natural gas companies, Xcel has more than 20,000 miles of transmission lines and more than 1,200 substations across 10 states, serving 22,000 megawatts of customer load.

“We are opposed to this bill, and any other legislation, that impacts our ability to achieve our energy goals,” Xcel Energy spokeswoman Michelle Aguayo told Daily Energy Insider on Monday.

Xcel Energy — which in March received an Organizational Leadership Award from the Climate Leadership Conference for setting an industry-leading interim goal to reduce carbon emissions from its electricity — currently “is on track to achieve an historic 80 percent reduction in carbon emissions by 2030 from 2005 levels, with a vision of providing carbon-free energy to its customers by 2050,” said Aguayo.

“Colorado SB20-190, as it stands now, would impact how we reach those goals,” Aguayo said, adding that the proposal “will add unnecessary costs to our customers at a time when many of our customers are suffering financially due to the COVID-19 pandemic.”

At the same time, Aguayo said that the current generation and transmission planning progress regulated by the Colorado Public Utilities Commission (PUC) already is an open and transparent process that has resulted in the most competitive and lowest-cost energy generation marketplace in the country.

“It’s also paved the way for the most carbon emissions reductions in the country, while supporting the local workforce and maintaining low-cost energy for customers,” she said.

Nevertheless, SB20-190 would direct the Colorado PUC to approve utilities’ applications to build new transmission facilities if the PUC found that the new facilities would assist them in meeting the state’s clean energy goals, which were established in 2019.

The bill also would direct the PUC to complete a review of existing and potential additional energy resource zones for renewable resource generation development areas in Colorado with the goal being to “identify planned electric transmission lines and renewable resource generation developments that have potential to support competition among renewable energy developers for development of renewable resource generation projects,” according to the text of the bill.

The review also would determine how to interconnect to the transmission system in a manner that “shifts the state away from inefficient, radial transmission development,” according to SB20-190.

But incumbent transmission owners (TOs) like Xcel Energy already have made the majority of the transmission investments in the United States, and, more recently, a number of transmission projects have been subject to competitive solicitation processes and awarded to non-incumbent transmission developers, according to a June 2019 report from Concentric Energy Advisors Inc., entitled Building New Transmission: Experience To-Date Does Not Support Expanding Solicitations.

“Some argue that these solicitations should be expanded. Proponents of such an expansion… assert that expanding the scope of such solicitations will yield significant cost savings. However, Concentric found that incumbent TOs do not experience such cost overruns,” according to the report.

To the contrary, Concentric researchers noted that publicly available data from independent system operators and regional transmission organizations (ISOs and RTOs) with cost tracking databases “suggests that incumbent TOs experience insignificant to very modest changes, ranging from -2.9 percent to 7.0 percent, between initial cost estimates and final or updated project cost estimates.”

“Second, it is not possible to estimate potential savings from the solicitations because the final costs are not known and the cost caps in some of the winning bids are not guaranteed to contain costs,” Concentric found.

Also consistent with Xcel Energy’s stance, Concentric determined that expanding the scope of transmission projects selected through competitive solicitations could be inconsistent with the reliability and resilience goals the PUC has expressed in recent orders.

“However, if there is interest in expanding solicitations for transmission projects, we advise policymakers to wait until more of the projects selected through such solicitations have been placed in service,” the report concluded. “At such a time, more information will be available about the actual costs and operational performance of these projects and policymakers would be in a position to make better-informed decisions about whether or not to expand such solicitations.”

“The authors stand by their conclusions in the report, which remain unchanged,” Katherine Judd, marketing coordinator at Concentric Energy Advisors, told Daily Energy Insider on June 1.