Colorado’s Renewable Energy

Standard and the Public

Utilities Commission

Richard P. Mignogna, Ph.D., P.E.

Colorado Public Utilities Commission
1560 Broadway
Denver, Colorado 80202 USA
Tel: 303.894.2871 ~ Fax: 303.894.2813
Richard.Mignogna@dora.state.co.us

04 October 2010
University of Colorado
Boulder, CO

Public Utilities Commission

Ø Three commissioners, appointed by the Governor

ð Four year terms
ð No more than two from the same party

Ø Present commission make-up

ð Ron Binz, D, Chairman
ð Jim Tarpey, R
ð Matt Baker, D

Ø Jurisdiction
ð Energy
l Electric utilities (investor owned, 2)
l Gas utilities (investor owned, 6)
ð Transportation
l Common carriers – in-state
l Taxis
ð Telecommunications
l Telephone service providers – essential services, noncompetitive
ð Rail & water
ð Gas pipeline safety

R. Mignogna, 2010 1
 Public Utilities Commission
Title 40 C.R.S. – Utilities Law

Ø PUC authorization: §40-2-101(1) C.R.S. A public utilities commission is hereby

created, which shall be known as the public utilities commission of the state of
Colorado, to consist of three members who shall be appointed by the governor
with the consent of the senate.

Ø 40-1-103. Public utility defined.(1) (a) (I) The term "public utility", when used in
articles 1 to 7 of this title, includes every common carrier, pipeline corporation, gas
corporation, electrical corporation, telephone corporation, water corporation,
person, or municipality operating for the purpose of supplying the public for
domestic, mechanical, or public uses and every corporation, or person declared
by law to be affected with a public interest, and each of the preceding is hereby
declared to be a public utility and to be subject to the jurisdiction, control, and
regulation of the commission and to the provisions of articles 1 to 7 of this title.

Ø PUC regulates
ð 570 natural gas, electric, telecommunications, steam, and water utilities
ð 189 transportation carriers

Ø Safety jurisdiction over

ð 69 natural gas and propane pipeline operators
ð 11,678 transportation carriers

Public Utilities Commission

Ø 40-3-101. Reasonable charges - adequate service.(1) All charges made,

demanded, or received by any public utility for any rate, fare, product, or
commodity furnished or to be furnished or any service rendered or to be rendered
shall be just and reasonable. Every unjust or unreasonable charge made,
demanded, or received for such rate, fare, product or commodity, or service is
prohibited and declared unlawful. Rates and charges demanded or received by
any public utility for gas transportation service furnished or to be furnished shall
not be deemed to be unjust or unreasonable so long as said rate or charge is no
greater than a maximum rate and no lower than a minimum rate determined by
the commission (or, in the case of a municipal utility, by the governing body of the
municipal utility in accordance with sections 40-3-102 and 40-3.5-102) to be just
and reasonable,… Nothing in this subsection (1) shall limit or restrict the
commission's authority to regulate rates and charges, correct abuses, or prevent
unjust discrimination.(2) Every public utility shall furnish, provide, and maintain
such service, instrumentalities, equipment, and facilities as shall promote the
safety, health, comfort, and convenience of its patrons, employees, and the
public, and as shall in all respects be adequate, efficient, just, and reasonable.

R. Mignogna, 2010 2
 PUC and its Staff

Ø PUC is a Type 1 agency which exercises its prescribed statutory powers,

duties, and functions, including rulemaking, regulation, licensing, and
registration, the promulgation of rules, rates, regulations, and standards,
and the rendering of findings, orders, and adjudications, independently of
the head of the principal department (Dept of Regulatory Agencies).
ð Policy autonomous: operates outside the direct control of the executive
director or governor (in theory)

ð However, budgeting, purchasing, planning and related management functions

do come under the parent department

ð The Staff of the commission does not come under the jurisdiction of the
Commission itself.

R. Mignogna, 2010 3
 PUC Roles and Responsibilities

Ø Quasi legislative → rulemaking

ð Electric rules 4-CCR-723-3000 et.seq.
ð Renewable Energy Standard, 4-CCR-723-3650… 3665

Ø Quasi judicial → adjudicate applications and complaints

ð PSCo Electric Resource Plan, docket 07A-447E
ð PSCo 2009 RES Compliance Plan, docket 08A-532E
ð Black Hills 2009 RES Compliance Plan, docket 08A-470E
ð PSCo Smart Grid City CPCN, docket 10A-124E
ð PSCo HB10-1365 Plan (CACJA), docket 10M-245E

Ø Miscellaneous dockets
ð Investigatory dockets
l Regulatory Rate Incentives, docket 08I-113EG
l Consumer Rate Incentives, docket 08I-420EG
l Smart Grid Privacy, docket 09I-593EG
ð Transmission, docket 08M-521E

PUC and its Staff

Ø PUC Staff
ð Separated from the Commission itself

ð Appointed by Director of PUC who is appointed by Executive Director of DORA

ð Staff is bifurcated into Advisory and Trial… and now R&EI which is???

ð Trial Staff acts as an independent party in litigated dockets just as any other
intervenor, except:

l Trial Staff has access to all confidential materials

l Trial Staff has audit powers

ð Advisory Staff acts as advisors to, and an extension of, the commissioners

ð Ex-parte rules govern internal communication in litigated dockets as well as

communication between any party (including Trial Staff) and the
commissioners.

R. Mignogna, 2010 4
 RPS & Public Policy Goals
What do you hope to achieve?

Ø Energy security

Ø Conservation of scarce resources

ðFuel
ðWater

Ø Reduce environmental impacts

ðGHG is the current concern but other issues as well

Ø Economic development

Ø Accelerate technological advance & market development

ðCost reduction
ðPromote specific resources (e.g., solar)

R. Mignogna, 2010 5
 Legislative Declaration of Intent
Amendment 37 Ballot Initiative – Where it Began

Ø Therefore, in order to save consumers and

businesses money, attract new businesses and
jobs, promote development of rural economies,
minimize water use for electricity generation,
diversify Colorado’s energy resources, reduce the
impact of volatile fuel prices, and improve the
natural environment of the state, it is in the best
interests of the citizens of Colorado to develop
and utilize renewable energy resources to the
maximum practicable extent.”

R. Mignogna, 2010 6
 Legislative & Regulatory History

Ø Amendment 37 passed 02 November 2004

ð 1,066,023 (53.6%) In Favor, 922,577 (46.4%) Opposed
ð First RPS in the country approved as a citizen initiative
ð Added §40-2-124, C.R.S. to the Colorado Revised Statutes

Ø Clarifying legislation SB05-143

ð Changed rate impact limitation from 50¢ per month for residential
customers to 1% annually for all retail customers

Ø Rule making:
ð Commenced Spring 2005
ð Rules effective 02 July 2006

Ø First compliance year: 2007

Ø HB07-1281, Enhanced RES signed into law Mar2007

Ø Subsequent legislation in 2008 and 2009

Ø HB10-1001, Super-Enhanced RES, Mar2010

ð Also, HB10-1342, HB10-1349, HB-10-1418

HB07-1281 – Renewable Energy Standard

Summary

Ø Expands RES to all electric utilities except Ø Adds “recycled energy” to list of eligible
municipal utilities <40,000 customers energy resources
ð REA’s (Electric Coops) included
Ø Resource bands (only get one)
Ø IOU RES increased to ð 1.25 x for in-state generation
ð 2008 – 5% ð 1.5 x for community R/E projects
ð 2011 – 10% ð 3.0 x for solar for REAs & munis
ð 2015 – 15%
ð 2020 – 20% Ø Increases retail rate impact to 2% for
IOUs
Ø REA & Muni RES ð Leaves intact the method for determining
ð 2008 – 1% rate impact
ð 2011 – 3% ð Allows QRU to spend full amount even if
RES is met
ð 2015 – 6%
ð 2020 – 10%
Ø Rate impact for REAs set at 1%
Ø Repeals the opt-out provision
ð REAs and large munis to provide compliance Ø Allows QRUs to rate base a portion of
report to PUC but not for approval new resources acquired under PPAs
ð Small munis self certify

R. Mignogna, 2010 7
 HB10-1001 – Renewable Energy Standard
Summary

Ø Expands RES targets for IOUs and Ø Replaces the solar carve out with a DG
replaced the solar set-aside with a DG carve out:
carve out Ø 2011 – 1.00%
Ø 2013 – 1.25%
Ø IOU RES increased to Ø 2015 – 1.75%
ð 2007 – 3% Ø 2017 – 2.00%
ð 2008 – 5% Ø 2020 – 3.00%
ð 2011 – 12%
ð 2015 – 20% Ø At least half of the DG carve out must
ð 2020 – 30% come from “retail” DG

Ø REA & Muni RES remains at Ø Retains retail rate impact of 2% for IOUs
ð 2008 – 1%
Ø Rate impact for REAs remains at 1%
ð 2011 – 3%
ð 2015 – 6%
ð 2020 – 10%

Retail Rate Impact Rule

§40-2-124(1)(g)(I),C.R.S., rev.

“For each qualifying utility, the commission shall

establish a maximum retail rate impact for this
section of two percent of the total electric bill
annually for each customer. The retail rate
impact shall be determined net of new alternative
sources of electricity supply from noneligible
energy resources that are reasonably available
at the time of the determination.”

REA & Muni impact limited to one percent.

R. Mignogna, 2010 8
 Rate Impact Limitation

RES / No RES ANALYSIS

RATE IMPACT CAP

New Renew ables

2%
- Wind
TOTAL CUSTOMER BILLS (US $)

- Solar
New Non-Renew able
Equivalents

Existing Resources Existing Resources

Wind Wind
Hydro Hydro
Gas Gas
Coal Coal

No RES RES

R. Mignogna, 2007

2% ≠ 2% ≠ 2%

Ø Mechanisms to circumvent a rate cap:

ðProvide a waiver for a given resource from inclusion in the

calculation

ðMove the time fence

ðReclassify new resources as existing

lResets the base

ðFail to consider the Electric Commodity Adjustment (ECA)

ðCreate a new category

lSection 123 (§ 40-2-123, C.R.S.)

R. Mignogna, 2010 9
 Recent PUC Resource Acquisition Changes

Ø Change from Least Cost Planning to Electric Resource Planning with

portfolio evaluation based on PVRR

Ø Sec 123 Resources (§40-2-123(1), C.R.S.)

“The commission shall give the fullest possible consideration to the cost-
effective implementation of new clean energy and energy-efficient
technologies in its consideration of generation acquisitions for electric
utilities, bearing in mind the beneficial contributions such technologies
make to Colorado‘s energy security, economic prosperity, environmental
protection, and insulation from fuel price increases. “

Ø Rule 3602(o)):
“Section 123 resources” means new energy technology or demonstration
projects, including new clean energy or energy-efficient technologies
under § 40-2-123 (1), C.R.S., and Integrated Gasification Combined Cycle
projects under § 40-2-123(2), C.R.S.

Definition of Sec 123 resource…

Ø From Decision C08-0929 (07A-447E Phase I decision):

Ø “An eligible energy resource will be considered a new clean energy,

or energy efficient technology, or a demonstration project if it is
clean and incorporates one or more technologies, representing a
substantial portion of its overall installed cost, that have not been
regularly commercially demonstrated, up to the point in time that the
resource is formally bid, or if not bid, acquired.”

Ø Examples:
ðCSP w/thermal storage
ðCompressed air energy storage (CAES)
ðBattery storage
ðEmerging solar technologies
l Dish sterling
l Central receiver/power tower w/thermal storage
l Highly concentrating PV
l Integrated solar/combined cycle

R. Mignogna, 2010 10
 PSCo ERP, Docket 07A-447E

Ø Phase I Decision C09-0929 (19Sep2008) approved overall resource

plan including a minimum of 200MW of Sec 123 Resources (CSP)

Ø Phase II Decision C09-1257 (06Nov2009) approved “Portfolio 5” which

included:
ð 921MW Gas resources
ð 701 MW Wind resources
ð 250 MW CSP w/storage
ð 105 MW PV

Ø The CSP and PV acquisition was contingent on a CPCN for a new

transmission line out of the San Luis Valley by 2013

Ø Delay in the litigation for the SLV transmission line prompted PSCo to
file an amended resource plan (docket 10A-377E) that would limit solar
out of SLV to 185 MW
ð 125MW of CSP would be at a higher per MWh price raising the question of
whether it is still in the public interest compared to lower cost gas resources

How to drive intervenors to distraction!

Example from PSCo ERP (docket 07A-447E)

Ø Bids advanced to dynamic modeling:

Ø Levelized energy costs for bids advanced to dynamic modeling:

R. Mignogna, 2010 11
 Transparency in resource planning
Example from PSCo ERP (docket 07A-447E)

HB10-1365 – CACJA, Docket 10M-245E

Ø Adds 40-3.2-201 et. seq to CRS

Ø Requires that by 15Aug2010, IOUs must submit to PUC an emissions

reduction plan for its coal fired units that
ð Repowers, replaces or retrofits a minimum of 900MW or 50% of its coal fired
generation
ð Replacement with natural gas or other low emitting resources

Ø Goal is to reduce NOx by at least 70-80% from 2008 levels

Ø CDPHE to approve the emissions reduction plan for conformance with

anticipated federal EPA requirements

Ø Requires PUC decision by 15Dec2010

Ø If the utility disagrees with PUC modifications to its proposed plan, the
utility may withdraw its application

R. Mignogna, 2010 12
 HB10-1365 Litigants, CACJA

HB10-1365 Scenarios – Summary Results

SCR on Pawnee and Hayden

R. Mignogna, 2010 13
 HB10-1365
Average Annual Rates

PSCo ERP, Docket 07A-447E

Ø Under the most likely portfolios, PSCo’s renewable

generation could exceed 25% by 2015

ðThis is far in excess of the RES

ðBut the cost will be far beyond the 2% rate cap

ðShould ratepayers bear this cost?

ðShould the utility profit from the additional RECs created?

Ø In a regulated monopoly utility, how should the PUC

balance the interests of the IOU, ratepayers, and other
stakeholders?

R. Mignogna, 2010 14
 Current RE policy questions to ponder…

Ø Should there be a federal RPS?

ðWhat if it is less strict than an individual state RPS?
ðAre there workable alternatives?

Ø Should coops and munis be subject to the RES?

Ø How do RECs and carbon credits/offsets work together?

ðOr, do they?
ðCan REC markets and carbon offset markets coexist?

Ø Feed-in tariffs (FIT) as a RE incentive mechanism

ðHow do they “fit” in an RPS?
ðJust for solar or…?
ðDo they work with net metering?
ðHow do they compare to other incentive mechanisms?
ðOn what criteria should the decision to implement a FIT be made?

Thank you

R. Mignogna, 2010 15
 Contact:
Richard P. Mignogna, Ph.D., P.E.
Colorado Public Utilities Commission
1560 Broadway
Denver, Colorado 80202
Phone: 303.894.2871  Fax: 303.894.2813
Email: richard.mignogna@dora.state.co.us

R. Mignogna, 2010 16