Political Factors Affecting the Renewables and Energy Efficiency Remarks of Ron Binz, Chairman Colorado Public Utilities Commission October 15, 2010 IPPAI – NRRI Conference New York City

Caveat I am one of three equal commissioners My positions are my own I am confused by many things and have not made up my mind on much at all I don’t even agree with some of the things I say Good advice: don’t believe everything you think

Outline of this presentation High-level considerations of US Climate Policy Renewable portfolio standards, energy efficiency and controlling GHG emissions One state’s experience –Planning –Renewables –GHG reduction

High level considerations on US GHG policy Congress has been unable to complete action EPA activities are driving change –CAA rules; CO 2 regulation States and regions have been moving forward –State RPS standards –State EE activity –State and Regional Climate Agreements Power industry is close to consensus Regulators have consensus on many issues Public opinion

EPRI Prism/Merge

9 Available at htly.com Electricity first Carbon cap $4/ton CO 2 research fee Allowance allocation Early action provision

What is Colorado Doing?

The Setting Two regulated electric utilities; 55% of sales State RES – 30% by 2020 for IOUs –Xcel: ~12% renewable energy level now Utility CO 2 reduction goals (-20% by 2020) Clean Air/Clean Jobs Act case underway Rates up due to new (fossil) generation facilities

Generation Fuels in Colorado

History of Colorado’s RPS Amendment 37 (2004) –Voter initiated; 10% by 2020; solar carve-out; net metering HB 1281 (2007) –20% by 2020; 10% for Munis, Coops; solar carve-out HB 1001 (2010) –30% by 2020; carve out for DG of 3% by 2020 (~650 MW PV)

14 Reduce Colorado’s carbon emissions by 20% below 2005 levels by 2020 Reduce Colorado’s carbon emissions by 80% below 2005 levels by 2050

15 Our State Energy Priorities Stress renewable resources –Aggressive State Renewable Portfolio Standard –Progressive resource planning at Commission –Healthy renewables industry –A commitment to addressing climate change Boost Energy Efficiency –Customer: education –Utility: engagement –Regulatory: incentive regulation; rate structure changes Advanced technologies development –Research and demonstration for carbon sequestration –Concentrating solar field at PSCo’s Cameo coal-fired plant –CAES and other storage strategies –Smart grid test bed in Boulder, Colorado Transmission development –SB 100 in Colorado –Western Renewable Energy Zones participation

Gas Price Increases Comanche 3 FSV Turbines

17 Xcel Energy ~ 7000 MW peak load 2004-present – 1,200 MW wind capacity – 60 MW solar capacity By 2015 –Additional 750 MW wind capacity resulting in 2000 MW –>250 MW new solar thermal –>160 MW new photovoltaic

HB

HB 1365 Triggers a Coordinated, Multi-Pollutant Strategy Ozone Regional Haze Carbon Dioxide “A coordinated plan of emission reductions from these coal-fired power plants will enable Colorado rate-regulated utilities to meet the requirements of the federal Clean Air Act and protect public health and the environment at a lower cost than a piecemeal approach.” For a copy of legislation: go to follow links to HB www.leg.state.co.us

Structure of HB Utility must consult with CDPHE on plan to meet current and projected EPA clean air rules. Utility files plan with PUC to improve air quality, addressing at least 900 MW of coal generation. Utility required to conduct various studies: –Plan impacts on NO x emissions –Cost of controlling emissions at existing coal plants –Cost of replacing 900 MW coal generation with natural gas –Impacts on system reliability CDPHE will participate in PUC process. Any PUC-approved plan must meet projected EPA rules. Air Quality Control Commission will incorporate approved plan into State Implementation Plan (SIP) for addressing regional haze.

$5.88

Long Term Natural Gas Contracts (4) THE UTILITY MAY ENTER INTO LONG-TERM GAS SUPPLY AGREEMENTS TO IMPLEMENT THE REQUIREMENTS OF THIS PART 2. A LONG-TERM GAS SUPPLY AGREEMENT IS AN AGREEMENT WITH A TERM OF NOT LESS THAN THREE YEARS OR MORE THAN TWENTY YEARS. ALL LONG-TERM GAS SUPPLY AGREEMENTS MAY BE FILED WITH THE COMMISSION FOR REVIEW AND APPROVAL. THE COMMISSION SHALL DETERMINE WHETHER THE UTILITY ACTED PRUDENTLY BY ENTERING INTO THE SPECIFIC AGREEMENT, WHETHER THE PROPOSED AGREEMENT APPEARS TO BE BENEFICIAL TO CONSUMERS, AND WHETHER THE AGREEMENT IS IN THE PUBLIC INTEREST. IF AN AGREEMENT IS APPROVED, THE UTILITY IS ENTITLED TO RECOVER THROUGH RATES THE COSTS IT INCURS UNDER THE APPROVED AGREEMENT, AND ANY APPROVED AMENDMENTS TO THE AGREEMENT, NOTWITHSTANDING ANY CHANGE IN THE MARKET PRICE OF NATURAL GAS DURING THE TERM OF THE AGREEMENT. THE COMMISSION SHALL NOT REVERSE ITS APPROVAL OF THE LONG-TERM GAS AGREEMENT EVEN IF THE AGREEMENT PRICE IS HIGHER THAN A FUTURE MARKET PRICE OF NATURAL GAS.

23 San Luis Valley

24 Solar Electric Density Use: 100 MW(ac)/mile 2 Colorado Peak Integrated Demand: 11GW Result: 110 mile 2 required land area

25 San Luis Valley

26 But what if 11 GW of solar were spread around the state in 100 MW installations? It might look like this...

27

Thanks for the invitation. I look forward to your questions.