Colorado to Test Time of Use Rates as Part of Xcel Energy Settlement Agreement

by | Nov 14, 2016

The Colorado Public Utilities Commission (PUC) approved a sweeping settlement between Xcel Energy and two dozen parties (Docket No. 16AL-0048E) on November 9 – sanctioning a trial of time of use (TOU) rates , as well as a bigger role for solar generation statewide, according to a report in The Denver Post.

The PUC, a division of the Department of Regulatory Agencies (DORA), approved without modification an agreement that resolves Xcel’s phase II electric rate case, a solar subscription program, and the company’s 2017 Renewable Energy compliance plan.

The settlement was supported or unopposed by 24 of 26 intervenors in the various proceedings. While the settlement expands the development of solar energy in Colorado, the PUC  said it had added protections that limit the cost impact to ratepayers, and preserve the ability of the PUC to determine in the future the fairness of proposed changes.

The final agreement

Specifically, the settlement:

  • Authorizes the company to offer subscriptions to a new 50-megawatt (MW) solar facility through its Renewable*Connect program;
  • Eliminates the company’s proposed fixed monthly grid charge, and develops a pilot program to precede the potential full-scale rollout of residential time-of-use (TOU) rates;
  • Resolves phase II cost allocations between rate classes; and
  • Allows for the acquisition of more than 300 MW of on-site solar and community solar gardens through the suite of Solar*Rewards programs for residential and  business customers.

“The agreement will benefit Xcel Energy’s Colorado customers by allowing us to move forward with the ‘Our Energy Future’ initiative. It 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, and it will provide affordable and reliable energy to further power the state’s economy,” said Alice Jackson, regional vice president for Rates and Regulatory Affairs, Xcel Energy – Colorado.

The settlement provides a pathway for the PUC to consider time-of-use rates for all customers in the future. It preserves customers’ ability to manage their bills without a grid-use charge,” said Gwen Farnsworth, a

Originally, Xcel Energy had proposed shifting more costs into a new grid-use charge, while reducing the price of each kilowatt (kW) consumed, according to  The Denver Post.

However, solar advocates argued that model would penalize customer-generators and discourage residential solar installations. Large commercial users protested that the proposal would shift more fees in their direction.

Two TOU Pricing Models

Instead, Xcel Energy will test two pricing models for residential customers starting next year. The PUC will make the final call in 2020 on whether the programs should be adopted for all 1.2 million of the utility’s residential customers, the Post said.

The time-of-use pilot has two seasons — summer and winter —- and three rate periods during each day, peak, shoulder and off-peak. Residential rates during the peak period, which runs from 2 to 6 p.m. on weekdays, would reach as high as 13.8 cents per kilowatt hour (kWh) in the summer months and 8.9 cents in winter, the local news outlet said.

Electric use during the shoulder periods – from 9 a.m. to 2 p.m. and from 6 to 9 p.m. – would run 8.4 cents/kWh in summer and 5.4 cents in winter. During the off-shoulder period, from 9 p.m. to 9 a.m., they would run 4.4 cents/kWh during winter and summer.

The second program charges higher rates when large amounts of power are consumed in a short period, the Denver Post added. In other words, turn on all the lights in the house, and run all the appliances at the same time and the price of electricity increases, even if it is at 2 a.m.

The settlement targets getting 10,000 residential customers to volunteer for each of the programs in 2017, with a goal of 18,000 by 2019. Each program requires meter upgrades for participants.

Going forward

The Commission also emphasized that future acquisitions of renewable energy should be proposed through the Electric Resource Plan (ERP) process, where resources have to be bid competitively and evaluated against other potential resources.

This decision continues the trend that Colorado is a national leader in thoughtful development of renewable energy,” PUC Chairman Joshua Epel commented in an official statement.

Parties to the settlement included the cities of Denver and Boulder, major environmental advocacy groups, state and national solar power trade groups, large industrial customers, PUC staff, and the Office of Consumer Counsel, among others.

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