Day 8 of Testimony
24A-0442E, Public Service Company - 2024 JTS - 06.23.25 - HRA (8 of 9)
The Full Day
Rather than write a separate blog post, let me make a couple of quick points here:
I think in all this effort to reduce carbon, tunnel vision has the PUC & interveners ignoring what the ratepayers in this state want. People want electricity that is inexpensive & reliable. That’s it.
What are people willing to pay to reduce carbon. $1/mo only has 57% support. Ignore the legislatures 1.5%/year off-ramp at your peril. People want climate change addressed. But only if others cover the cost.
With the subsidies about to be eliminated, wind, solar, & batteries are about to get very expensive. Everyone involved in this proceeding seems to be unaware of this.
There’s a reason everyone else is going nuclear (for baseload).1
And I’ll repeat myself - What the PUC Should Do: If they want what's best for the state's ratepayers.
NotebookLM generated (footnotes by me)
Key Areas of Discussion and Diverse Perspectives:
1. Transmission, Distribution, and Battery Capacity
May Valley Longhorn Extension (MVLE):
Public Service (Mr. Martz) confirmed their $304 million cost estimate for the MVLE project, stating it is the appropriate basis for establishing a Performance Incentive Mechanism (PIM). They anticipate costs to likely increase if the project's Conditional Certificate of Public Convenience and Necessity (CPCN) remains conditional due to ongoing supply chain turmoil.
The proposed PIM structure for MVLE would be "very similar or tracking with the pathway PIM," with modifications to the timing component as MVLE is a single segment.
MVLE is expected to provide significant benefits by accessing some of the "best wind resources in the state" in Electric Resource Zone 3, which were identified as the lowest cost in the 2021 ERP and have higher Effective Load Carrying Capability (ELCC) or accreditation values.
Large Loads and Transmission Needs:
Public Service (Mr. Martz) indicated that the nine large load customers (between 1 GW and 2 GW) in their updated base forecast do not currently necessitate major transmission upgrades. However, these loads will drive new generation and other forms of load growth.
Future large load interest, with a queue "in excess of six gigawatts," is anticipated to drive the need for "holistic system upgrades,"2 such as upgrading 230 kV systems to 345 kV or expanding capacity to address the Denver metro import/export constraint.
Public Service confirmed they have existing processes to identify, capture, and assign appropriate transmission costs to these large loads, including upfront capital payments or separate service and facilities charges.
The Company intends to bring forward a detailed analysis as part of a large load tariff filing by January 31, 2026, which will be informed by multiple "cluster studies" (e.g., data center row study) to optimize generation and transmission costs.
Transmission Adder and Credit:
Public Service seeks approval for its transmission adder and credit approach to reflect locational benefits of resources.
Staff (Ms. O'Neal) advocates for the transmission adder to be decided in Phase II, proposing that the approximately $1.9 billion new Harvest Mile double circuit line should be treated as a fixed cost, rather than a variable cost as suggested by the Company.
Staff presented data showing that while the Company's own modeling indicates transmission costs remain relatively static across a wide range of portfolio sizes (from 3.6 GW to 14 GW nameplate capacity, costs vary only from $1.9 billion to $2.2 billion), the Company's proposed variable adder could lead to a "bias in the modeling towards smaller portfolios by nameplate capacity, which ultimately means more gas, more storage, less wind and solar". Staff proposes treating most transmission costs as fixed and a small amount as variable to remove this bias.
Transmission Planning Evolution:
Public Service (Mr. Siebenaler) discussed the evolution of the Company's approach to modeling and identifying transmission needs as it transitions to more disparate and intermittent clean energy resources.
The Company committed to filing the JTS Transmission Study report with the Commission as part of any CPCN proceedings and to providing updates on stakeholder engagement in its 180-day report. The Independent Transmission Analyst (ITA) will have full access to Public Service's analysis and data sets and will participate in stakeholder processes where Commission staff is involved.
2. Opinions on Power Sources
Wind and Solar: These are consistently identified as key components of the clean energy transition. Wind resources, particularly those accessible by MVLE, are highlighted for their low cost and high ELCC values. Solar is extensively discussed in the context of portfolio modeling and cost allocation.3
Natural Gas (Combustion Turbine Systems - CTS): CTS are acknowledged as necessary for capacity needs and dispatchable resources, though their operational hours are expected to decrease with higher renewable penetration. There are concerns from intervenors, such as Mr. Lucas (WA Sweep), that over-reliance on gas in reliability planning can lead to inefficient outcomes, citing the high cost of building a CT for marginal load needs. The Town of Hayden (Mr. Mendiscoco) specifically advocated for geothermal over natural gas.
Small Modular Reactors (SMRs) and Advanced Nuclear:
The Environmental Justice Coalition (Mr. Valdez) expressed strong objection to new natural gas plants and the possibility of discussing advanced nuclear in Pueblo. Mr. Valdez argued that the Pueblo Innovative Energy Solutions Advisory Committee (PISAC) report, which considered these sources, primarily represented "business interests" and lacked voices from the "environmental justice community,"4 public health experts, and energy experts. He also stated that a local energy committee disbanded because of "no agreement on the agenda" when he refused to discuss these options.
Conversely, Miss Consilia (representing Pueblo County) highlighted that Pueblo County changed its 100% renewable energy resolution to an "all clean energy vision" in 2021. She noted that a poll referenced in the PISAC report indicated 65% community support for advanced nuclear after considering job and tax base impacts.
Carbon Free Future Development (CFFD):
Public Service (Mr. Tomljanovic) proposed a CFFD policy to stimulate the development of "innovative, capital intensive or long lead time clean energy resources". Public Service requests Commission approval for the CFFD approach, including its budget and Request for Information (RFI).
Staff (Dr. Dalhke) generally supports a "rolling approach" for CFFD, which was a modification to the initial proposal, but recommends retaining a $100 million budget cap, expressing concern about the advisory group's composition potentially not being solely focused on electricity consumers.
The Conservation Coalition (Miss Miller) opposes CFFD, arguing it is "inconsistent with the requirement that the JTS be an all source competitive solicitation" because it would fund "certain types of technologies and not others" that are described as "speculative, pretty risky at this point and pretty expensive," thus posing a "big risk to customers". They note that CFFD would operate "completely outside" the JTS all-source solicitations.
Geothermal: The Town of Hayden (Mr. Mendiscoco) specifically advocated for a geothermal plant as a replacement for coal generation, instead of natural gas.5
3. Issues and Suggestions on Data Centers
Significant Load Growth: New, large customer loads, primarily data centers, are identified as a "key driver of load growth". Public Service's queue for large loads is "in excess of six gigawatts".
Transmission Impact and Cost Allocation: Public Service (Mr. Martz) stated that existing large loads (950 MW - 1 GW) do not currently require major transmission upgrades, but the larger 6 GW queue would necessitate "holistic system upgrades". The Company has established processes to assign transmission costs to these loads, including upfront capital payments.
Proposed Large Load Tariff and Modeling: Public Service intends to file a large load tariff by January 31, 2026, which will be informed by "data center row cluster studies" to optimize generation and transmission costs for these loads. For this filing, Public Service proposes modeling three load scenarios: a "no large load" base forecast, a "rebuttal large load" (950 MW-1 GW), and a "high large load" scenario based on the 6 GW queue and cluster study results.
Intervenor Suggestions: WA Sweep (Mr. Iden) recommends that a "clean transition tariff" allowing large customers to procure/sponsor clean energy projects be included in the large load tariff filing. He emphasizes that while large loads often prefer "firm connections" (24/7 power), establishing "fair and consistent rules for all large load seeking to interconnect" would encourage the development of more flexible power solutions.6 Mr. Iden also raised concerns about the fairness of transmission and distribution line extension policies, suggesting that large loads should pay their "full marginal cost" or a "rigorous analysis of those actual network expansion costs" be conducted.7
Long-Term Contracts and Rate Class Implications: Staff (Ms. O'Neal) expressed concern about Public Service signing 10-15 year contracts with large new load customers before the large load tariff is resolved. She noted that this could "lock in existing customer class approaches" and potentially create risks for other customers if tariffs change, as these are "normal regulated tariff customers".
4. Issues and Suggestions on Moving the State to All Electric (Heat Pumps, Electric Vehicles, etc.)
Heat Pumps:
WA Sweep (Mr. Iden) challenged Public Service's assumption that all-electric heat pump installations require 10 kW or more of supplemental electric resistance heating strips. He cited evidence from SWEEP and other sources indicating a range of 3-8 kW supplemental heat, and that two-thirds of installations in the front range proceed without electric resistance backup.
Mr. Iden referred to a PNNL study showing auxiliary heat being used only 25% of the time in the coldest hours (-10°F) for cold climate heat pumps, and Public Service's own metered data showing no more than 7 kW at a whole-home meter during a cold snap. He advocated for better integration of field-validated data with energy modeling.
Electric Vehicles (EVs) and Plug-in Hybrid Electric Vehicles (PHEVs):
Public Service committed to providing a full refresh of their load forecast for the Base Request for Proposal (RFP), including segmented and separated forecasts for EVs and PHEVs. Historical data for 2024 registrations indicated a 70% EV to 30% PHEV split. The forecast will incorporate new load shapes and the new time-of-use structure.
While Public Service (Mr. Alley) acknowledged PHEVs' redundant fuel source, he was unsure if sufficient data existed to model their flexibility.
WA Sweep (Mr. Iden) critiqued Public Service's current 10% managed charging level, suggesting strategies to accelerate adoption. These include offering multiple time-of-use (TOU) options, "super off-peak" rates, financial incentives for smart chargers at the point of sale, and bundling marketing with solar installations. He also highlighted the potential for "locational management" at the distribution level to reduce costs.8
5. Keeping Rates Affordable
Projected Rate Increases and Disparities:
Public Service (Mr. Alley) confirmed that average residential rates are projected to increase by over 47% from 2024 ($0.1382/kWh) to 2031 ($0.2033/kWh),9 based on their 10K filing. This projection assumes significant cost increases for wind (74%), solar (84%), and CTS (40%).10
In contrast, Commercial and Industrial (C&I) transmission rates are expected to remain virtually flat during the same period ($0.0787/kWh in 2024 vs. $0.0789/kWh in 2031).
Public Service attributed this disparity to the application of existing cost allocation policies, noting that increased investment in the distribution system (driven partly by residential EVs and beneficial electrification) disproportionately impacts the residential class.
Commissioners expressed significant concern about this trend, particularly that residential rates could exceed $0.20/kWh, which might discourage efficiency, distributed generation, or beneficial electrification. Public Service acknowledged this as "more than optical" but pointed to current programs (time-of-use rates, assistance programs, income-qualified programs) as tools to manage affordability.
Impact of Large Loads on Affordability:
Public Service (Mr. Ihle) argued that adding large loads "provides a value to customers," translating to a 1-2 cents/kWh or $7-8/bill reduction for residential customers under current cost allocation.
However, WA Sweep (Mr. Iden) cautioned about a "7 to 24% rate increase" risk if large loads do not materialize as planned, emphasizing the importance of proper risk mitigation.11
Just Transition Bonus Credits:
The Conservation Coalition (Miss Miller) strongly opposes the proposed "just transition bonus credits," arguing that they are an "entirely different mechanism" from what was agreed upon in the 2021 settlement (property tax offsets and community assistance payments).
Their opposition is based on three key reasons: (1) "no evidence that they're needed to achieve the stated outcomes," arguing the existing settlement mechanism is sufficient; (2) they are "completely arbitrary numbers" with no quantitative study to support their amounts; and (3) "no analysis done on the impact of them," meaning the costs to customers are unknown and could push the model to select more expensive resources.
6. Keeping the Grid Reliable
Loss of Load Expectation (LOLE) and Reliability Rubric:
WA Sweep (Mr. Lucas) voiced significant concern that Public Service's approach to reliability, particularly the "reliability rubric," could lead to over-procurement of capacity at substantial cost for a "vanishingly small amount of unserved energy," potentially exceeding the 0.1 LOLE planning standard. He analogized it to an "insurance policy" and questioned the economic justification for chasing every marginal megawatt-hour.
Mr. Lucas criticized the reliability rubric's reliance on "extreme load and extreme weather conditions," arguing that this leads to decisions like building an entire combustion turbine to serve "55 megawatt for half an hour," which he deemed a "very poor outcome".12 He suggested the Commission needs more information and analysis on these trade-offs.
Primary Drivers of Outages: Mr. Lucas highlighted that the "vast vast majority of customer outages" are due to issues on the distribution system (e.g., trees, poles, animals), not bulk power system reliability.13 He emphasized that a 100% reliable bulk power system does not eliminate customer outages caused by distribution issues.
Economic Analysis and Value of Lost Load:
Mr. Lucas recommended incorporating economic analyses, such as the "value of lost load" (VoLL), into reliability planning. He noted VoLL estimates typically range from $5,000-$60,000/MWh, much lower than the implied cost of serving the most marginal load (e.g., $500,000/MWh for a CT).14
He argued for exploring more cost-effective alternatives to building new generation for marginal reliability, such as demand response programs, tariffs, or even public appeals for energy reduction. He believes Colorado is uniquely positioned to adopt more sophisticated analyses that consider the "depth and the duration of these outages" and economic trade-offs.
ELCC and Planning Reserve Margin (PRM) Study:
Public Service sought approval for its updated 2024 ELCC and PRM study results.
WA Sweep (Mr. Iden) specifically critiqued the ELCC approach, noting that 2-3 GW of solar receives a "zero ELCC in the wintertime". He suggested that the Company's approach to ELCC for Distributed Energy Resources (DERs) and other flexible loads might not accurately reflect potential combinations (e.g., solar plus storage hybrids) that could improve overall ELCC. He recommended modeling ELCC based on specific technologies or bundles rather than a generic approach, advocating for considering energy efficiency, managed charging, and other behind-the-meter resources as a bundle.
7. Reducing Carbon Emissions
Emissions Targets and Goals: A primary objective of the JTS is to implement an "80 percent emissions reduction by 2030". This aligns with efforts to meet the 2030 targets set by Senate Bill 19-236. The JTS is also a significant step in fully transitioning the Public Service system off coal. The 2021 ERP & CEP initiated this focus on emissions reduction.
Coal Fleet Transition: The 2021 ERP & CEP included a Coal Action Plan for the retirement or conversion of specific coal units (Craig 2, Hayden 1 & 2, Pawnee, Comanche 3). Public Service is seeking approval to align the retirement date of Cherokee Unit 4 with the Colorado Regional Haze State Implementation Plan, requiring its shutdown in 2028.
Portfolio Modeling for Emissions:
Staff (Ms. O'Neal) proposed 14 different portfolio scenarios for Phase II modeling. These include:
"Checkpoint cases" (1 and 2): These scenarios have no emissions constraints and are primarily used to calculate the Clean Energy Plan Rider (CEPR) by identifying incremental resources beyond what would have been needed without the clean energy plan. Staff believes the case "without social cost of carbon" is the better baseline for CEPR calculation.
"Informational LCPs" (3 and 4) and "Ownership cases" (5-8): These generally align with Public Service's proposals, with some variations like Staff's preference for a "linear decline in emissions... until 2050" assumption for some 80% by 2030 cases, assuming ongoing reduction commitments beyond 2030.
"Accelerated emissions reduction cases" (9 and 10): These target 86% reduction by 2030 (matching the 2021 ERP projection) and incorporate the social cost of carbon to put "maximum downward pressure on CO2 emissions," allowing the Commission to understand the costs of these more aggressive pathways.15
Staff's scenarios are intended to provide comprehensive insights into trade-offs without advocating for specific outcomes.16
Broad Agreements and Disagreements:
Broad Agreement:
Quad Party Framework: There is broad agreement among Public Service, Staff, the Colorado Independent Energy Association (CIA), and the Colorado Energy Office (CEO) to support the "quad party framework". This framework is seen as a significant "evolution in the resource procurement planning process" in Colorado, providing "more flexibility, more checkpoints" to adapt to a "difficult macroeconomic environment" and uncertainty in load and resources.
Load Forecast Transparency: Public Service committed to providing an updated, detailed load forecast (including EV/PHEV segmentation) 30 days prior to the issuance of the RFP. Staff (Ms. O'Neal) supported this commitment as a reasonable process to inform parties of significant changes.
Significant Disagreement (Range of Opinions):
Conforming Bid Policy and Model Contracts: This is a major point of contention:
Public Service: Seeks approval of a "conforming bid policy" to ensure clarity, customer protection, integrity, and streamlined competitive solicitation. They plan to file redlined model Power Purchase Agreements (PPAs) that reflect their positions. They emphasize the need for certainty on this policy before the RFPs.
KOSA (Competitive Energy Advocates): Opposes the conforming bid policy, arguing it is "very unusual" and unnecessary. They believe it would limit flexibility, make it harder for project developers (especially smaller ones) to secure financing, and potentially lead to fewer bids and higher prices. KOSA stated they cannot submit a single redlined contract as they represent a consortium, not individual bidders. They advocate for contracts to be "highly bespoke, highly negotiated".17
CIA: Also opposes a strict conforming bid policy, but with nuances. They would be comfortable with certain core terms being non-negotiable (e.g., price, online date, point of interconnection, tenor) but insist on allowing "specific, limited redlines" to the model PPA. They argue that Public Service should model bids based on these proposed redlines and that a "short list and best and final offer process" would speed up negotiations.
WA Sweep: Also opposes a strict conforming bid policy, stating it is "very unusual" and risks receiving fewer, potentially higher-priced bids. They advocate for a process where bidders submit proposals with prices tied to their proposed contract terms, arguing utilities are "very skilled" at evaluating bids with different provisions. They suggest identifying which provisions can or cannot be modified.
Staff: Supports a tariff pass-through mechanism that is simple and transparent. They agree with limiting it to "major equipment" but emphasize the need for accuracy in the tariff estimate. Staff proposed a 20% cap on tariff-related price increases, with a potential "automatic pause and check-in" or project termination if exceeded. Staff (Ms. O'Neal) expressed concern that treating all projects the same on tariffs could create a "ratchet" effect, increasing costs across the board. Commissioner Blank suggested exploring general model contract language for broad price adjustments (tariffs, supply chain, change of law, tax credits) with a cap and PUC approval across all projects.
Just Transition Bonus Credits: Public Service proposes these as an additional mechanism to incentivize investment in coal communities, additive to existing property tax offsets. The Conservation Coalition strongly opposes them, arguing they are unnecessary, arbitrary in their dollar amounts, and lack analysis of their cost impact or necessity.
Carbon Free Future Development (CFFD) Budget Cap: Public Service (Mr. Tomljanovic) proposed removing the $100 million budget cap for the CFFD.18 Staff (Dr. Dalhke) opposes the removal of this cap, citing concerns about the advisory group's composition and the need for a "prudent additional guard rail" on spending.
Transmission Adder Methodology: Public Service's proposed transmission adder would bias the modeling towards smaller, gas-heavy portfolios. Staff (Ms. O'Neal) disagrees with this approach, arguing it does not accurately reflect actual transmission costs and creates a bias. Staff proposes treating most transmission costs as fixed rather than variable to remove this bias.
ELCC for ADERs/Solar: WA Sweep (Mr. Iden) criticized Public Service's ELCC values for solar and ADERs, arguing that the model gives zero ELCC to winter solar and does not adequately reflect the combined benefits of hybrid resources like solar-plus-storage or flexible demand response. He recommends modeling ELCC based on specific technologies or bundles for a more accurate reflection of their capacity contribution.
The detailed discussions reveal a complex interplay of technical, economic, and policy considerations, with various stakeholders holding distinct views on how best to achieve Colorado's clean energy goals while ensuring reliability and affordability for customers.
The potential datacenter companies are telling 10 - 30 states that they’re “interested” to see who will give them the sweetest deal. The ratepayers lose in a race to the bottom.
And as best as I can tell, no discussion of how expensive wind & solar will be once the subsidies are removed in the proposed federal legislation.
I love how an organization of 10 - 20 individuals decides that they are the only true representative of the people.
Can you point to a geothermal design that is being built in quantity that will work there?
Big Tech isn’t stupid. All they’re interested in is gas, nuclear, large hydro, and if nothing else is available, coal. Winning the A.I. race is more important than virtue signaling to them.
In a perfect world everyone pays exactly their fair share. However, bureaucracies can spend so much time figuring this out, the total cost goes up. A lot. Efficient rough estimates often lead to everyone paying less in total.
"In theory there is no difference between theory and practice. In practice there is.” The more complex you make the TOU setup, the less likely it is people will use it.
So 7%/year. That is way above the legislative ceiling of 1.5%/year. Is the PUC going to ignore that offramp? This is going to hurt people living paycheck to paycheck - a lot.
And yet they’re not looking at the AP-1000 plants because…
Yeah - no shit!
I vote we turn off Mr. Lucas’ air conditioning for a half hour when we’re over 100 degrees.
Very true. But once we lose large inertia, then it’ll be Iberian blackout time.
And let’s turn of Mr. Lucas’ heat pump for an hour when we’re under 0 degrees.
Can we call this plan the “stick it to the poor and drive energy intense businesses out of the state plan”?
The staff is clearly advocating no nuclear with that set of plans.
I understand the desire for this. But negotiating every bloody small contract? That’s painful, for everyone.
I wish people understood the impact of increased rates on families barely getting by.