Xcel-backed bill gives company certainty of cost recovery as it seeks solutions

by Allen Best

Big Pivots

Colorado State Rep. Mike Weissman, a Democrat from Aurora, ultimately voted for the Xcel Energy-backed bill before the House Energy and Environment Committee on May 27, but repeatedly he asked the same question: Why is this needed? What is missing from the existing process?

HB 21-1324, titled “Promote Innovative and Clean Energy Technologies,” would allow an investor-owned utility—Colorado has two, Xcel and Black Hills Energy—to acquire and demonstrate use of zero-emission resources and other innovative energy technologies such as advanced renewable energy and storage.

Xcel wants to ensure it can recover the money it invests in storage technology. Those voting against it were principally worried about giving Xcel an opportunity to make more money than it really deserves, what two called a “blank check.” Environmental advocates were worried about a provision in the original iteration of the bill—later amended—that would have allowed “low emissions.”

The bill had a bipartisan cast of sponsors, but Dylan Roberts, a Democrat from Edwards who grew up in the Steamboat Springs area, gave the lead pitch. The legislation, he said, would be a “catalyst” for new partnerships, new research and development, attracting new businesses and developing workforces and creating economic growth in these communities that have been producing energy for decades.”

In the Colorado Legislature, at least in my hearing in recent months, every bill seems to be about job creation.

And he also pointed out that the projects that would be enabled by the legislation “must be in the communities impacted by the energy transition that we are going through in our state and in this country.”

A co-sponsor, Rep. Rod Pelton, a Republican from Cheyenne Wells, said the legislation could help Brush, site of one of Xcel’s coal-fired power plants. “Renewables can play a part, but it’s also important to look at new technologies, because that’s the future, too. We need to look at all the options on the table.”

Hearing that, you couldn’t blame Jacob Smith, director of the Colorado Communities for Climate Action, a coalition of 38 counties, towns and cities, for wondering what exactly Xcel had in mind. He—as did several legislators in their questions—kept wanting to know what was behind the curtain of statements about grand ambitions.

Smith warned the committee about giving Xcel a “blank check for Xcel to be able to spend a lot of ratepayer money on highly speculative technology development.” He also shared concerns about the low-emissions allowed.

In a later interview, Smith said he was worried that this could be used to authorize carbon-capture sequestration technology, such as is being pursued in New Mexico (See page 19) His worries – and those of the Sierra Club – were removed by an amendment which specifies zero-emissions technology.

This is from Big Pivots No. 39, published on June 8, 2021.

Defending the amendment, Roberts said meetings with stakeholders had revealed the low-carbon provision was a thorny problem for environmental groups and Xcel was OK with the zero-emissions language.

That, however, leaves the door open for nuclear—although, to be very clear, that is not anything Xcel has mentioned. It comes to mind, though, with the news that PacifiCorp, a minority owner in the two coal-burning units at Hayden, has plans to convert one of its Wyoming coal plants to a nuclear plant. (See page 8.)

Rep. Pico Ayer, who was on the board of directors for Colorado Springs Utilities, wanted to know exactly what the Sierra Club had in mind with its wish for zero-emissions dispatchable power. “What kind of technology are you thinking? The only one available now is nuclear, which is not an option.”

The Sierra Club’s Matt Gerhart said that he was thinking green hydrogen. Hydrogen can be created from any source, both fossil fuels and renewables, as it requires only water. Hydrogen made from renewables is called green hydrogen.

Xcel has said that it is confident it can supply 80% of electricity to its Colorado customers by 2030 with existing technology. To hit its target of 100% carbon-free generation by 2050, though, Xcel has said it needs new technology.

“This proposal will help further that effort,” Kathryn Valdez, Xcel’s energy and environmental policy manager in Colorado, told the House committee. “We will need more than the current wind and solar technology.”

One important guardrail is SB 19-236, the Colorado law that described the targeted greenhouse gas reductions from Xcel. That same law specified that costs could not increase by more than 1.5%.

“Xcel will need a framework to bring partners and funding to Colorado to support innovative generation technology,” said Valdez. “This proposal will position Colorado to attract not only private investment, but also expected federal funding opportunities for low- and zero -carbon technologies.”

And, she added, this would “keep Colorado on the leading edge of the energy transition while protecting customers and reducing project risks through careful project evaluation and also approval by the Public Utilities Commission.”

Weissman, an attorney by profession, wanted more. He waded deep into the weeds of the proposed law. It seemed redundant, he said. Wasn’t Xcel already given the authority proposed in this new bill by a prior law adopted in 2016?

In fact, said Larson, that prior had been of no utility for Xcel, he said, and had limited application elsewhere.

“Part of the purpose of this bill is to create a pathway and framework to ensure that we are creating a plan not only for 2030 but also evaluating different kinds of technologies that can take the Public Service Co. of Colorado (the Xcel subsidiary) to a carbon-free 2050 future.”

The bill passed the House committee in a 11-2 vote. The politics were kind of interesting. Boulder has two representatives on the committee, both Democrats, and they voted on opposite sides: Edie Hooton no and Tracey Bernett yes.

Also voting no was the committee chairman, Alex Valdez, a Democrat whose professional background is in the renewables sector, who remained unpersuaded that the legislation was needed. “I’m very uncomfortable with the kind of blank check nature of this policy,” he said.

The bill easily passed (55-10) the House on June 2 and was before the Senate for a second reading on Monday.

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