SmartGridCity: $45 million bill for ratepayers?
On Friday, Public Service Company of Colorado, a subsidiary of Xcel Energy, asked the Colorado Public Utility Commission to approve a settlement relating to costs for its SmartGridCity pilot project in Boulder, Colo.
Today, various parties that declined to bless such a request will have an opportunity to dissent before the commission.
Xcel, an investor-owned utility, is asking 1.4 million ratepayers in Colorado to pay $44.5 million, a cost that mushroomed from $15 million to $27.9 million to $42.1 million to its current level, according to Colorado's Office of Consumer Counsel. Joining Xcel in its request is the CPUC's staff and the Governor's Energy Office.
The background is extensive and cannot be reiterated here today. See my previous column and go to the docket on the CPUC website for all related documents. (Search for docket 10A-124E.)
The CPUC ruled in December that Xcel (aka PSC) could recover costs from ratepayers, but should retroactively file a certificate of public convenience and necessity, or CPCN. Meanwhile, it could begin to recover costs right away, before the CPUC ruled on its CPCN. If the CPCN is denied, Xcel would refund what it had collected.
Hearings on the CPCN were slated to begin Monday, but the filing of the settlement request was accompanied by a delay in the hearings until this afternoon.
Let's review what various parties—"interveners," in regulatory language—have to say on the issue.
Matt Futch, utilities program manager, Governor's Energy Office (GEO), noted in July that "while there are lessons learned and details to consider," GEO favored granting the CPCN.
The GEO is developing a long-term policy on smart grids and Futch wrote that "many of the overarching smart grid goals under consideration for state policy are tied to the ability to justify investments in future smart grid deployment at both the utility and customer side of the meter."
The GEO said it agreed with Xcel that SmartGridCity is "experimental" and should be interpreted as an "R&D project," a point that, as we'll see, is the very reason the Office of Consumer Counsel argues against excessive cost recovery.
"Due to delays in construction and pending installation of customer-facing devices, [however], the project has yet to produce quantifiable data of the benefits to customers from access to near real-time pricing, new tariffs and in-home devices such as smart thermostats ... Providing energy usage data and automated solutions from the meter to customers is a critical value proposition of the SmartGridCity project."
The city of Boulder, the project's host, withdrew as a party to the proceedings on Aug. 20, and said that city council could not reach a "clear consensus ... with regard to the value of SmartGridCity in its present state or the prudence of this investment." Despite the city's early support, the project has fallen short of its promise and, now, cost recovery from ratepayers looms, according to Boulder's filing. By withdrawing, Boulder "neither harms its relationship with the company nor prejudices itself with regard to its future choices."
There could be fireworks to come: Boulder said that it and Xcel could not reach an agreement on future options prior to Xcel's franchise expiring Aug. 3. The utility is now operating on a revocable permit that expires Dec. 31.
"Over the course of the next year, Boulder will be studying how best to move towards increasing its supply of clean energy ... and demand side management," Boulder said.
In response, Xcel said it does not oppose Boulder's withdrawal, but that it merits a response, as it contained "erroneous and unsubstantiated" even "pernicious" assertions. In short, Xcel disagrees with Boulder that it promised no cost recovery effort or that the project is underperforming.
Finally, Bill Levis, director, Colorado's Office of Consumer Counsel:
"We are not part of the settlement agreement," Levis told me yesterday. "We will testify that ratepayers should pay no more than $27.9 million. We don't oppose the project. We applaud Xcel for doing this. It's just that, at some point, they need to be accountable."
Research-and-development, as opposed to proven operational improvements with tangible consumer benefits, should not be subject to cost recovery, Levis said.
"At least to date—since a pricing pilot begins in October and runs three years—consumers haven't had direct benefits," Levis said. "'Prudence' review requires benefits to consumers. We're putting the cart before the horse here. If there are cost overruns, Xcel shareholders should be responsible for some of it. Unfortunately, the costs have been a moving target."
Stay tuned. More to come on this issue.
Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757
