regulatory priorities of the colorado public utilities commission black hills corporation...

Regulatory Priorities of the Colorado Public Utilities Commission

Black Hills CorporationAnalysts’ Meeting

Remarks of Ron Binz, Chairman

Colorado Public Utilities Commission

October 1, 2009

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Outline of this presentation

• Brief introduction to the Colorado PUC• Our energy regulatory priorities

– Stress energy efficiency– Stress renewable energy development– Employ progressive resource planning– Support advanced generation development

o CCSo CAES

– Accelerate state and regional transmission development

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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

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PUC Structure: Commissioners

• Three Commissioners• Appointed by the Governor• Confirmed by majority vote of State Senate• Serve four-year teams – may be reappointed• No more than two Commissioners from one political party• Judicial functions and legislative functions

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The Commissioners

Matt Baker Ron Binz Jim Tarpey

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What Do We Regulate?

• Investor-owned electric utilities• Investor-owned natural gas utilities• Intrastate natural gas pipelines

-----------------------------------------------• Some telecommunications carriers & services• Passenger transportation• Railroad crossings• Investor-owned water utilities • Pipeline safety• Relay Service for the hearing impaired

60%15%

1%

10%

4%

10%

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Colorado Energy Salesby Type of Utility

Cooperative28%

Investor-Owned55%

Public17%

Types of Colorado Electric Utilities

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Our State Energy Priorities• Boost Energy Efficiency

– Customer: education– Utility: engagement– Regulatory: incentive regulation; rate structure changes

• Stress renewable resources– State Renewable Portfolio Standard – Healthy renewables industry– A commitment to addressing climate change– Progressive resource planning at Commission

o PSCo ERP decisiono Inquiry into Tri-State resource planning oversight

• 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– Western Renewable Energy Zones participation

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The Challenges We Face

• Energy Supply

• Energy Efficiency

• Consumer Prices

• Climate Change

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Colorado’s Balanced Approach

• Coal producing state (#8 of 50 states)• Natural gas producing state (#7 of 50 states)• Substantial wind and solar resources• Moderate electric rates• Governor with a focus on the

“New Energy Economy”

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Electric Generation Fuels in Colorado1990-2008

Colorado Electric Generationby Fuel Source 1990-2008

Coal

Hydro

NG

Renewable

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Gig

awat

thou

rs

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How Colorado Generates Electricity (2007)

Coal 65%

Hydro 3%

NG 26%

Renewable 6%

1

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Colorado Approach to Electric Resource Planning

• “Least Cost Planning”

• Fuel Neutrality

• Utility models new portfolio

• Utility selects bid resources

• “Resource Planning”

• Clean Energy Preference

• Independent Evaluator

• Optional Post-bid Review

Old Rule New Rule

• New DSM emphasis

-- Resource Planning --

• Little energy efficiency

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PUC’s ERP Decision for XcelEnergy

Major Decision Items

• Affirmed commitment to competitive bidding for resources

• Approved closure of two coal plants

• Approved large solar projects (200 - 600 MW)

• Continued growth of wind

• Assumed future CO2 price in modeling ($20/ton + 7% growth)

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PUC’s ERP Decision for Black Hills

Major Decision Items

• Affirmed commitment to competitive bidding for resources

• Permitted Black Hills to own and construct half of new resources

• Modified competitive bidding process to eliminate “Phase II”

• Assumed future CO2 price in modeling ($20/ton + 7% growth)

• Appointed Independent Evaluator

• Result of bidding:200 MW contract to BH IPP for CTs and CCs

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The Challenges We Face

• Energy Supply

• Energy Efficiency

• Consumer Prices

• Climate Change

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Boosting Energy Efficiency

• Utility: Engagement

• Customer: Education

• Regulation: Make rate structure changes

• New Development: “Smart grid”

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Utility Engagement

• Energy Efficiency goals in legislation

• Recent Commission rules establishing: – Bonus mechanism– Expedited cost recovery

• Tie-in EE to utility resource planning

• Overall: utility should make efficiency a business

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Customer Education

Two 75-watt Compact Fluorescent Lights will reduce CO2 emissions by

One Metric Ton over their lifetime

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Energy Efficiency in Housing

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Colorado’s Energy Efficiency Ranking

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The Challenges We Face

• Energy Supply

• Energy Efficiency

• Consumer Prices

• Climate Change

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U.S. Residential Electric Rates

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Price Levels and VolatilityNG Delivered for Electric Generation

Colorado 7/05 to 12/08

0

2

4

6

8

10

12

$/M

MB

TU

4.9 to 1.0

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The Challenges We Face

• Energy Supply

• Energy Efficiency

• Consumer Prices

• Climate Change

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• Reduce Colorado’s carbon emissions by 20% below 2005 levels by 2020

• Reduce Colorado’s carbon emissions by 80% below 2005 levels by 2050

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EPRI Prism Analysis (2008)

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American Solar Energy Society

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What about China, India?

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NREL Wind Resource Map

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Concentrating solar w/storage

Other baseload (coal w CCS; nuclear)

$

Concentrating Solar in Colorado

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San Luis Valley

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Solar Thermal Electric Density

• Use: 100 MW(ac)/mile2

• Colorado Peak Integrated Demand: 11GW

• Result: 110 mile2 required land area

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San Luis Valley

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But what if 11 GW of solar were spread around the state in 100 MW installations?

It might look like this...

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Integrated GasificationCombined Cycle Coal Plant

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Compressed Air Energy Storage (CAES)

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High Plains Express

ARIZONA

NEW MEXICO

COLORADO

WYOMING

Energy Zones

Wyoming Generation

DaveJohnston

LRS

Albuquerque

Tucson

Phoenix

Tot 3Expansion

Project

SunZia

EPTPMidway

Limon

Comanche

LamarHolcomb

Pawnee/Story

Socorro

GladstoneNNMI

HIGH PLAINS EXPRESS

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Thanks for the invitation.

I look forward to your questions.