Colorado’s biggest power company this week signed onto an unprecedented settlement agreement on renewable power and customer billing that environmental advocates say could be a turning point in ushering cleaner energy onto the grid.
Xcel Energy Inc., which provides power to two-thirds of the state’s residential customers, will no longer pursue a proposal to add a fixed grid-use charge to customers’ bills, which solar advocates feared would slow renewable power development. Instead, it will look into two other types of billing based on power use.
The deal is meant to avoid the kind of heated net-metering fights underway in other Western states that are reconsidering how much to compensate growing rooftop solar power and how much to allow utilities to charge to keep up the grid with fewer customers using it continuously.
A statement from Xcel called the agreement "the largest proposed agreement of its kind in Colorado history," and power experts noted that it is historic from the national perspective, too, and may serve as a model in other states.
"The agreement … will allow us to meet our customers’ expectations by giving them more control over their energy choices. It will bring more renewable and carbon-free energy to Colorado through the use of new technologies," said Alice Jackson, regional vice president for rates and regulatory affairs for Xcel.
2 pilot programs
If the agreement is approved by state regulators, the company would institute two pilot programs based on when and how customers use power.
The first would use "time-of-use" rates to charge customers more for the power they use during hours of peak demand, between 2 p.m. and 6 p.m. in Colorado. When customers receive smart meters, they would be automatically enrolled in that program but could opt out, explained Erin Overturf, a staff attorney for Western Resource Advocates, a party to the agreement.
"Such rates generally lead to a more efficient use of energy and will be more beneficial to electric vehicles users," Xcel’s statement said.
The second would use demand charges to base bills on a customer’s single highest use of power, the time when the customer uses the most appliances and lights at once. Customers could opt into that pilot program.
Overturf’s group and other environmental advocates are opposed to that type of billing because they think it would result in higher bills for customers who typically use less power but have one high-demand day. They say it would lower bills for customers who use more power but at a consistent level.
Demand charges, Overturf said, would remove incentives for customers to be energy-efficient.
As part of the agreement, Xcel would also bulk up a slate of voluntary clean energy programs, including allowing customers to subscribe to pay for solar power and expanding community solar projects and demand response work, Overturf said.
The agreement is the result of two months of negotiations between Xcel and nearly two dozen advocacy and business groups that are party to three cases under review by state regulators. That includes staff of the Public Utilities Commission, the Office of Consumer Counsel, the Solar Energy Industries Association, and the cities of Boulder and Denver.
Overturf said there were plenty of areas of controversy to hammer out, and lawyers worked many 11-hour days over the last two months. She noted that this work sets a foundation for future collaboration among energy stakeholders in the state.
First steps ahead
Xcel and the other negotiators have asked state regulators to hear two rounds of testimony, hold a hearing in October and make a decision by the end of the year.
Parts of the settlement agreement, if approved, would not get started until several other regulatory cases are resolved, Overturf explained.
Public Service Co. of Colorado and Xcel have made an application to state regulators to deploy smart meters around the state, which the companies would need in order to change customer bills to reflect when and how they use power.
If that goes through, Xcel customers who receive smart meters will automatically enroll in time-of-use rates, unless they opt out.
Regulators will review the results of both billing strategies in 2019, Overturf said.
This story also appears in ClimateWire.