PUC talks Xcel cost recovery
Plan for complying with coal bill not final
December 8, 2010
Moffat County Commissioner Audrey Danner is concerned by the speed at which the Colorado Public Utilities Commission is moving toward approving emission reduction plans for Xcel Energy to comply with Colorado House Bill 10-1365.
Such a "complex issue," that could greatly affect the Northwest Colorado coal industry, Danner said, shouldn't be forced to meet an "artificial deadline of Dec. 15."
"With the wealth of information that they were receiving, I do not see how they can make a thoughtful decision and I am very, very concerned for our community," Danner said.
However, after hours of deliberation Wednesday, the PUC failed to make a comprehensive ruling on Xcel's plans to comply with the bill, also known as the Clean Air, Clean Jobs Act.
PUC spokesman Terry Bote said the PUC spent most of the day discussing how Xcel would recover costs from their plans to retire, retrofit or re-power several coal-fired Front Range power plants.
Bote said Xcel had proposed a rate "rider" to start in 2011 to recoup the costs of the projects. A rate rider is a regulatory tool that allows the PUC to add or subtract cost on consumers' energy bills without hearing a rate adjustment case, an Xcel spokesman said.
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However, the PUC declined that proposal and agreed to a cost recovery mechanism that would allow them to review each of Xcel's rate increase proposals to pay for the cost of the projects, Bote said.
"Essentially they will track these construction work-in-progress costs and accumulate them, and then come in (with) a rate case … and ask to put them in rate bases and then rates will change," Bote said. "Instead of giving an automatic rider that would adjust annually or whatever, the commission has said you need to come in the context of a rate case for these costs."
The last item the PUC must rule on is the fate of the Cherokee Station's Unit 4.
The PUC faces several options for dealing with the unit, including converting the unit to burn natural gas, installing emission control technologies and continue burning coal, or retiring the unit completely, Bote said.
An Xcel spokesman said the company's recommended plan includes installing emission control technologies on Cherokee Unit 4 and continuing to burn coal in the unit.
Danner said she hopes the PUC will rule to keep the unit burning coal and retrofit it with emission control technologies.
"We do want clean air and we do want appropriate action by the company, but we still need to consider coal as a base resource for us," Danner said.
Bote said the commission will resume deliberations over 352-megawatt Cherokee Unit 4 today and a complete oral ruling on a plan for Xcel should be issued after that.
"They are still looking for two votes," Bote said of the PUC on Cherokee Unit 4. "We have three commissioners and each one kind of has a different idea at the moment."
On Monday, the PUC reached general agreement on several parts of Xcel's plan for complying with the bill, which included shutting down six units of coal-fired generation at three Front Range power plants.
The PUC agreed to have Xcel retire Unit 1 and 2 at the Cherokee Station by 2011, and Unit 3 by 2017, Bote said.
The PUC also agreed to have the Arapahoe Station's Unit 3 shut down by 2013 and to have Unit 4 stop burning coal and switched to natural gas by 2014.
The PUC will also recommend shutting down Valmont Station's Unit 5 by 2017, Bote said.
The PUC agreed to allow Xcel to build a gas-fired power plant near the Cherokee Station to replace some of the coal-fired generation lost.
The plant would be a new 569-megawatt plant and would cost about $530 million, an Xcel spokesman said.
The PUC also approved modern emission control technologies to be installed at the Pawnee and Hayden Stations totaling $340 million.
Danner said "none of these scenarios are cheap" for energy consumers.
"The PUC staff says electricity rates are going to rise, and we know that," she said. "That in itself is not a surprise, but when you couple it with all this other information, why would we rush to make a decision that either favors one industry over the other or is an all-or-none situation?"