Xcel Energy cites concerns about higher costs for customers under proposed Colorado RTO
The Colorado Senate on Tuesday is scheduled to work on a bipartisan bill that the state’s largest investor-owned electric company says doesn’t bode well for its customers.
Xcel Energy, which serves more than 3.3 million electric customers and 1.8 million natural gas customers across eight Western and Midwestern states, including Colorado, last week expressed concerns with Colorado Senate Bill (SB) 21-072 introduced on Feb. 16 by State Sens. Chris Hansen (D) and Don Coram (R).
If enacted, SB 72 would establish a transmission authority, separate from the existing regulatory oversight of the Colorado Public Utilities Commission (PUC), that would require all state utility providers to join a Regional Transmission Organization (RTO) by 2030.
“We have significant concerns about the bill as it’s currently written and we’re working with Senator Hansen and other stakeholders to find a resolution,” Xcel Energy Spokeswoman Michelle Aguayo told Daily Energy Insider on Friday in an email. “The current language duplicates the existing well-established and transparent transmission planning processes and we are concerned this would result in higher costs for our customers without oversight.”
Bill sponsor Hansen has said publicly that the recent failed grid situation in Texas that resulted in state-wide power outages highlights the fragility of an isolated grid and Colorado’s electric grid has similar vulnerabilities that make it hugely inefficient.
SB 72, Hansen said, would create the Colorado Electric Transmission Authority (CETA) as an independent special purpose authority that would be authorized to select a qualified transmission operator to finance, plan, acquire, maintain, and operate eligible electric transmission and interconnected storage facilities. The CETA, he added, is meant to be the developer of new transmission lines as a number of areas in the state currently have inadequate transmission.
But Xcel Energy questions if its customers would benefit from the development of transmission approved by the new CETA, according to Aguayo.
“Specific to the directive for all state utility providers to join an RTO…, the Colorado legislature passed a law in 2019 directing the Public Utilities Commission to study an RTO and make a recommendation on if that is the right path for Colorado,” she added. “We anticipate that study to be available in May of this year.”
Frances Koncilja, a Denver lawyer who served on the Colorado PUC from 2016 to 2020 and who now heads up Koncilja Public Utility Law and Strategy LLC, helped lead the commission’s 2019 order to collect comments and other information toward analyzing the potential advantages and disadvantages in the state joining an RTO.
“Joining an RTO is a serious decision, but similar to checking into the Hotel California — great on check in but impossible to leave because of the exit charges,” she testified on March 16 before the State Senate Transportation and Energy Committee, which in March amended and approved SB 72 and sent it to the Appropriations Committee. The latter on April 1 amended the bill again and referred it to the full State Senate for consideration. Action on SB 72 is scheduled for April 6 on the Senate floor.
The forthcoming $500,000 study authorized under the Colorado Transmission Coordination Act (CTCA) of 2019 directs the PUC to investigate the costs and benefits to electric utilities, other generators, and Colorado electric utility customers resulting from electric utility participation in RTOs, energy imbalance markets, power pools, or joint tariffs, according to the order Koncilja helped coauthor. The study is slated for a May 1 completion, followed by time for stakeholders to comment, with a final decision by the PUC set for Dec. 1.
“The CTCA directs the Commission to consider the impact of these four different market constructs on retail and wholesale electricity rates for both participating and non-participating entities, transmission rates, the commitment and dispatch of generation, operating costs, reserve requirements, renewable integration, and regional infrastructure investment,” the order says. “The interaction of these market options with system reliability must necessarily be included in this investigation.”
“It is reckless to make the decision to join an RTO without the benefit of that study,” Koncilja told Daily Energy Insider. “Raiding the fixed utility fund which pays for the staff at the Colorado Public Utilities Commission to take $500,000 to fund this new transmission agency is unconscionable — regardless of the good intentions of the sponsors of SB 72.”
Koncilja also pointed out that “chasing after every bright shiny object without a rigorous and thoughtful analysis will delay real world solutions and waste millions of dollars.”
“I know that the sponsors of Senate Bill 72 have good intentions, but SB 72 is one of the bright shiny objects that will delay and distract from developing a real plan to decarbonize and keep electric rates affordable,” she said.
Additionally, SB 72 would direct the Colorado PUC to approve utilities’ applications to build new transmission facilities if the PUC, in its discretion, finds that the new facilities would assist the utilities in meeting the state’s clean energy goals established in 2019.
Xcel Energy is already on top of that situation and recently proposed Colorado’s Power Pathway Project, a $1.7 billion plan that supports the company’s Clean Energy Plan to add 5,500 megawatts of new generation, primarily renewables, to the grid and deliver by 2030 an estimated 85 percent reduction in carbon dioxide emissions from 2005 levels.
Xcel’s roughly 560 miles of 345-kilovolt double-circuit transmission line would be built in mostly rural counties, opening new avenues for renewable energy resources to be built and delivered to customers, helping meet the state’s clean energy goals, and bringing low-cost electricity where it’s needed, the company says.
Recently, Xcel filed a Certificate of Public Convenience and Necessity with the Colorado PUC for the transmission line to be built between substations that span from the Front Range to areas of north central, eastern and southern Colorado. The transmission expansion is proposed to be completed in stages, with the first segments in service by the end of 2025 and others following in 2026 and 2027. Construction would be sequenced and is planned to start in 2023.
“As always, our priority is providing safe, reliable and affordable service for our customers and we are hopeful SB 72 can be amended,” Xcel’s Aguayo said.
