State regulators give preliminary OK to Xcel Energy for $1.7 billion in transmission as it pivots to low-carbon electricity
by Allen Best
Transmission that will be critical to delivering wind energy from farms and ranches in eastern Colorado to electrical consumers along the Front Range was tentatively approved by the Public Utilities Commission on Feb. 11.
The PUC commissioners will again take up the proposal by Xcel Energy on Feb. 23 to work through more details of what will likely produce $1.7 billion of transmission in a gigantic, 560-mile loop around eastern Colorado called the Pathway Project. Slightly less certain is approval of a 90-mile extension to wind-rich Baca County in the state’s southeastern corner. The cost tag of that extension is $250 million.
Some testimony had been filed with the PUC arguing that the massive investment as prposed was unneeded for Xcel to achieve its mandated carbon-reduction goals of 80% by 2030 as compared to 2005. PUC commissioners were not persuaded. They quickly concluded that Xcel had indeed delivered the evidence that the proposed 345-kV double-circuit transmission line will be needed—and soon.
“Time is of the essence. We don’t know what impediments might creep up as the project proceeds,” said John Gavan, one of the three commissioners.
“I also think it’s important to realize that this project will support generation beyond our planning with the current electric resource plan,” he added, referring to Xcel’s separate but concurrent proposal for new wind and solar projects, as well as natural gas plants and storage.
The PUC’s two other commissioners shared similar thoughts about urgency.
“They’ve met their burden (of proof) here,” said Megan Gilman. “I don’t want perfect to be the enemy of the good,” said Eric Blank, the commission chairman.
Xcel’s plans for transmission coupled with a concurrent proposal for new wind, solar, and other resources could deliver investments approaching $9 billion in coming years. This will allow Colorado’s largest electrical utility to close coal plants and likely will slow rate increases or possibly halt them altogether. Some utilities have actually been able to lower rates as they have pivoted to renewables.
“A really big moment in my career,” says Mark Detsky, an attorney who represents the Colorado Independent Energy Association, an organization of wind and other energy developers.
Many states have struggled to build the transmission infrastructure necessary to more fully develop renewable resources. Texas and California have been exceptions, and Colorado will join them, says Detsky.
“There have been many, many studies that have shown that this is what the United States needs to do to meaningfully decarbonize,” he says.
“It has to have massive transmission infrastructure that maximizes the wind and solar resources across a wide geographic range.”
If Xcel’s plans get approved as proposed, the company’s renewable generation portfolio will double by 2030 as compared to the growth in renewables in the previous 17 years.
To pull the trigger on that generation, though, the company needs transmission. In the past, both in Colorado and elsewhere, the two have gone forward on almost entirely separate paths. In this case, they’re separate but concurrent.
“It is one of the first times in Colorado, if not nationally, that this chicken-and-egg transmission problem has hopefully been addressed,” said Ellen Howard Kutzer, a senior staff attorney with Western Resource Advocates, an advocacy organization that participates in most utility cases before the PUC.
“We are being thoughtful about the needs of the next 5 to 10 years but also building transmission for future needs as well,” she said. “That’s something that I heard in the deliberations.”
The proposal for Colorado’s Pathway Project was submitted to the PUC in March 2021. Xcel was bolstered by a non-unanimous but comprehensive settlement agreement filed in November by a variety of environmental, labor, and state agencies, including the staff of the PUC. That agreement indicated broad support for Xcel’s plans.
Tri-State Generation and Transmission, Colorado’s second largest utility, which is also proposing a sharp pivot in its generation, filed testimony with the PUC that showed that in every case its own plans for more renewable generation will benefit from the new transmission in eastern Colorado.
Consumer groups had different advice: Go slower. The Colorado Office of the Utility Consumer Advocate and others argued that only one of the five segments proposed by Xcel, the 160-mile leg from near Brush-Fort Morgan to the Burlington area, could be justified at this time, as it would deliver nearly the same benefits but at a fraction of the costs.
The PUC commissioners agreed only to the extent that they want to see that segment and another shorter segment to a substation north of Lamar, a total of 225 miles, get done first. This will allow the wind projects to get federal tax credits that are scheduled to end, although such tax credits have been extended many times in the past. The three other segments closer to the Front Range have slightly less pressing need.
Uncertainty about the future of federal tax credits, both production and investment, also has the PUC commissioners fretting about what to do about the 90-mile extension to Baca County.
Studies by the National Renewable Energy Laboratory and others have shown southeastern Colorado to have the steadiest, strongest winds in all of Colorado. That should perhaps not be a surprise, as it was at the heart of the Dust Bowl during the 1930s. Xcel has proposed the $250 million extension from its Colorado’s Pathway Project loop. And consumer groups, if skeptical about other segments, are willing to see conditional approval.
The most resistant voice to approving the extension is perhaps the individual in the proceedings who knows most about the plentitude of wind in the Springfield area. As a wind developer in 2007, said Blank, he had investigated development opportunities in Baca County. He knows the potential, he said.
As an attorney, though, he worries about procedure if the PUC approves the May Valley-Longhorn extension into Baca County. Xcel, he said, had failed to document the benefits. “They didn’t even try,” he said. “There’s nothing in this record to quantify the benefit.”
Gavan pushed back. He said the extension from May Valley will be a “building block for the future.” He said he will support a conditional approval—and it needs to be understood as an approval that can save Xcel customers money in the long run. An earlier, rather than later, conditional approval helps open the door for development aided by the federal tax credits.
The federal tax credits are set to expire late this year. If Congress does not renew them, then the projects that are bid later will come in at a higher cost.
The three commissioners will be working this over hard with the aid of PUC staff members before their Feb. 23 meeting.
They’ll also be working over what are called performance-incentive mechanisms, or PIMs. Most people would call this the bag of carrots and sticks. The goal is to get the transmission built without unnecessary cost.
Transmission at a recent conference was described as difficult but doable. “Transmission is hard to build on one hand, and on the other hand it’s really not,” said Mark Gabriel, the chief executive of United Power, Colorado’s second largest electrical cooperative. It costs a “ton of money,” he explained, and “permitting is a pain in the butt.” That said, it can get done.
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In this case, the scale matters. PUC staff member Dan Greenberg told the commissioners that Xcel will have to work with 700 landowners as it puts together the transmission segments that go on-line, the first segments in 2025 and the remaining three segments by the end of 2027. There will be environmental issues, such as habitat of the lesser prairie chicken, uncertainty over price of materials—and more.
All three commissioners have backgrounds in business, with Blank and Gilman both having careers in renewable generation and Gavan in information technology prior to their appointments. They sometimes drew on personal experience in balancing bonuses and penalties so that Xcel gets the transmission built in time for Colorado to meet its decarbonization goals without wasting money along the way. There is much talk about avoiding “cliffs.” Speed bumps and flying lights weren’t discussed, but you get the idea.
Another decision, but this one without footnotes, is about undergrounding. Lots of people would like to see transmission lines go underground, but Xcel had testified that the cost would increase 20-fold. That persuaded the PUC commissioners.
Undergrounding, however, might conceivably be involved some day in exporting electricity generated by solar panels in the San Luis Valley, Colorado’s richest area for solar. The commissioners are receptive to opening a miscellaneous proceeding late this year. That means nothing will necessarily happen, although it does represent a victory for the Colorado Solar and Storage Association.
The final major issue decided at least tentatively by the PUC commissioners was how much stock to put into the testimony of Larry Miloshevich, a Lafayette resident who has been conducting a deep investigation of evolving technology for electrical transmission. In the acronym-rich discussion, it was called ATT, or advanced transmission technologies.
Gavan gushed about the promise of such technologies, particularly one called carbon-core conduits that he said could eliminate upwards of 500 transmission towers. He pointed out that North Dakota-based Basin Electric used the technology on a 27-mile, 230-kV transmission line. If Basin, a distinctly conservative generation and transmission association, could embrace the technology, he argued, then certainly it should behoove Xcel Energy with its reputation for being one of the nation’s most progressive utilities, to do the same.
Blank, the chairman and an attorney, was resistant. He wanted stronger evidence for the record before he was willing to make it a conditional requirement of approval.
This most certainly will be discussed again. “I strongly support that it could really transform this world, but we just want to be careful about creating a (legal) mess,” said Blank.
Afterward, Miloshevich said he was pleased with the interest shown in his studies about advanced transmission technology, especially the use of advanced carbon-core conductors as a superior alternative to traditional aluminum-conducted steel-reinforced conductors.
“Carbon-core conductor (technology) in general has a 20-year history and a solid performance record” aside from fragility issues during installation, which have now been addressed, he wrote in an email.
Miloshevich said he believes a more careful combing of his testimony will demonstrate to the satisfaction of PUC commissioners that there is sufficient evidence to justify making it a requirement.
Top photo: A wind farm in eastern Colorado. Photo/Allen Best