dispatches from the front: the colorado clean air-clean jobs act platts 5 th annual rockies gas and...
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Dispatches from the Front:
The Colorado Clean Air-Clean Jobs Act
Platts 5th Annual Rockies Gas and Oil Conference
Ron BinzPublic Policy Consulting
April 14, 2011
Summarized History for Bill Number HB10-1365
03/15/2010 Introduced In House - Assigned to Transportation & Energy + Appropriations
03/16/2010 House Committee on Transportation & Energy Refer Amended to Appropriations
03/19/2010 House Committee on Appropriations Refer Amended to House Committee of the Whole
03/19/2010 House Second Reading Special Order - Passed with Amendments
03/22/2010 House Third Reading Passed
03/23/2010 Introduced In Senate - Assigned to Agriculture and Natural Resources + Appropriations
03/25/2010 Senate Committee on Agriculture and Natural Resources Refer Amended to Appropriations
03/26/2010 Senate Committee on Appropriations Refer Unamended to Senate Committee of the Whole
03/29/2010 Senate Second Reading Special Order - Laid Over Daily
03/30/2010 Senate Second Reading Passed with Amendments
03/31/2010 House Considered Senate Amendments - Result was to Concur - Repass
03/31/2010 Senate Third Reading Passed
04/08/2010 Signed by the President of the Senate
04/08/2010 Signed by the Speaker of the House
04/09/2010 Sent to the Governor
04/19/2010 Governor Action - Signed
8
9
Structure of HB10-1365• Utility must consult with state air regulator (CDPHE) on a plan
to meet current and reasonably foreseeable EPA clean air rules.
• Utility files plan with PUC to improve air quality, addressing at least half of coal generation up to 900 MW.
• Utility required to conduct various studies:
– Plan impacts on NOx emissions (must reduce by 70%-80%)– 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.
• New law specifies some details of regulatory cost recovery
HB10-1365 PUC Timeline for Xcel
April 19 Bill signed into law
April 21 PUC opened docket
May 27 Prehearing conference
Ruling on Interventions (34 parties)
August 15 Xcel filed preferred and alternate plans
November Hearings (~90 witness testimonies)
December
15PUC Order
January 2011
CDPHE adopts SIP
April 2011 Legislature considers SIP
Peabody CMA ACCCE AGNC AnadarkoGas
Intervenors WRA10/21/2010 Thursday PSCO
Hyde 30 15 0 20 20
Magno 30 10 0 5 0
Mills 0 0 0
Boland 0 0 010/22/2010 Friday Hill 0 40 20
Prager 15 10 0 5 0
Ford 45 10 0 20 10
Brockett 15 0 30 10
Landrum 0 10 0 010/25/2010 Monday Carter 30 0 10 10 0
Green 0 10 20
Johnson 0 10 20
Peabody CMA ACCCE AGNC AnadarkoGas
Intervenors WRA CIEA SWG Thermo** GEO Interwest Boulder Denver Glustrom CSU-TriStateCF&I
Climax FEA Walmart AESCBlanca
TrincheraBCC-Weld CEC CIG-WIG COGA CoSEIA
CREA-Western Fuels DPS No. 1 Holy Cross IREA Larson OCC Staff CDPHE PSCo Total total by day
10/21/2010 Thursday PSCO
Hyde 30 15 0 20 20 20 40 10 20 0 20 10 20 45 10 10 40 330
Magno 30 10 0 5 0 0 5 0 20 70
Mills 0 0 0 5 0 5
Boland 0 0 0 0 0 40510/22/2010 Friday Hill 0 40 20 15 20 5 0 10 110
Prager 15 10 0 5 0 0 10 40
Ford 45 10 0 20 10 15 30 0 30 160
Brockett 15 0 30 10 0 30 10 35 10 140
Landrum 0 10 0 0 10 0 20 47010/25/2010 Monday Carter 30 0 10 10 0 5 0 10 65
Green 0 10 20 10 30 0 10 10 90
Johnson 0 10 20 10 30 5 0 75
Mogensen 0 10 20 10 30 0 70
Wobbekind 10 0 10 0 0 5 0 25
Sheesley 0 10 10 0 0 20 10 50 37510/26/2010 Tuesday Roberts 0 0 10 0 15 0 25
CDPHE
Torangeau 45 15 0 10 20 25 15 0 30 25 185
Miller 0 0 0 0 5 5
WRA
Middleton 15 0 10 0 5 30
FEA
Blank 0 0 5 0 10 15
CPUC Staff
Camp 30 0 0 10 15 10 5 0 10 30 110
Podein 0 20 10 10 0 10 20 70
Dominguez 0 0 15 15 10 0 5 45
Kunzie 0 20 0 0 10 30
Markell 0 5 0 0 15 20 53510/28/2010 Thursday Cutler 0 0 10 10 10 0 10 40
Kwan 10 0 5 15
PEABODY 0
Montgomery 0 30 5 5 0 20 60
Wendling 0 30 10 5 0 20 65
Smith 0 10 40 15 15 0 40 120
Cichanowicz 0 5 0 0 10 15
Coddington 10 5 20 5 0 15 20 75 39010/29/2010 Friday CMA
Bezdek 0 20 15 10 0 5 15 65
Hewson 0 20 20 10 0 15 65
ACCCE
Ross 0 0 0 5 0 5 15 25
AGNC
Monger 0 5 5 5 0 5 0 20 17510/30/2010 Saturday WRA
Nielsen 0 10 15 15 0 25 20 85
Palermo 0 0 10 20 0 20 50
Schlissel 0 10 0 0 25 20 55
Deck 0 0 0 5 5
Dirmeier 0 5 0 10 20 35
Keohane 15 0 0 0 5 20
Schaeffer 0 0 0 5 5
Tellinguisen 0 0 0 10 5 15 27011/1/2010 Monday CSU/TRISTATE
McLennan 0 10 5 0 5 15 35
GAS INTERVENORS
Van Nostrand 30 0 0 15 15 0 15 75
Cavicchi 30 0 0 15 0 30 75
Arunchalam 0 0 0 0 15 15
Malmedal 15 0 0 10 0 30 55
Fishman 30 0 10 0 10 0 15 65
Gilliss 0 0 0 0 0
Norsworthy 15 0 0 10 0 10 35 35511/2/2010 Tuesday ANADARKO
Moore 30 0 5 0 10 10 55
CIEA
Muller 0 0 5 0 15 20
Malmedal 0 0 15 0 30 45
SWG
Kushner 0 5 0 0 30 35
Rhodes 0 5 0 0 20 25
THERMO
Whittles 0 0 0 0 10 10
GEO
Futch 0 20 0 0 15 35
INTERWEST
Cox 0 0 0 0 5 5
Hunt 0 0 0 0 10 10
BOULDER
Koehn 0 5 0 0 0 10 15
Milmoe 0 0 0 0 0 0 0 25511/3/2010 Wednesday 1/2 day DENVER
Williams 0 0 5 0 0 5
GLUSTROM 0 0 0 5 5
OCC
Levis 0 5 10 10 5 0 0 30
Senger 0 5 20 10 10 5 0 15 65
CF&I/CLIMAX
Baron 0 5 0 0 10 15
WALMART
Chriss 0 0 0 0 10 10
AESC 0 0 0
BLANCA-TRINCHERA 0 0 0BOARD OF CNTY COMMISSIONERS WELD 0 0 0
CEC 0 0 0
CIG-WIG 0 0
COGA 0 0
COSEIA 0 0
CREA-Western Fuels 0 0
DPS No. 1 0 0
HOLY CROSS 0 0
IREA 0 0
LARSON 0 0 130
Total minutes 420 70 0 30 95 480 315 25 235 275 0 40 0 0 120 0 50 0 20 0 40 0 180 0 0 0 0 0 0 0 20 40 140 45 720 3360 3360
Highlights of the Proceeding• Utility plan addressed 1801 MW
• Utility filed analysis of ~20 plans (7 basic plans with variations)
• Interventions by large gas and coal interests
• Two very large public hearings
• Prefiled testimony of 61 expert witnesses; 30 more rebuttal
• Utility rejected “controls-only” plan
• Utility’s preferred plan was ruled not in compliance with new statute; utility filed new plans and identified new preferred plan
• CDPHE rejected some plans as insufficient to meet EPA rules
• Long-term natural gas contract approved
• Motions filed to disqualify two commissioners
• Hearings in evenings and on Saturdays
8
NOx (2018) -85%
CO2 (2020) -24%
PSCo Electric 10M-245EScenario AnalysisPSCo Electric 10M-245E
Scenario Analysis 8
2011 2012 2013 2014 2015 2016 2017
Existing Coal Plant
Cherokee 1 Retire
Cherokee 2 Retire SC
Cherokee 3 Retire
Cherokee 4 SCR
Arapahoe 3 Retire SC
Arapahoe 4 Gas
Valmont 5 Retire
Hayden 1 SCR
Hayden 2 SCR
Pawnee SCR/LSD
Replacement
2 X 1 Cherokee On-Line
1 X 1 Cherokee
Peaker Cherokee
IPP Re-ups
Retirement and Controls Replacement Capacity
In-Period Post-Period
MW MW2 X 1 Cherokee 569 N/A1 X 1 Cherokee N/A N/A
Peaker Cherokee N/A N/A
Total 569
IPP Re-ups
MW YearSWG Arapahoe 0 N/ASWG Valmont 0 N/AThermo UNC 0 N/A
Total 0
Scenario 5B
SC = Synchronous Condensor SCR = Selective Catalytic Reduction Control Gas = Fuel Switch from Coal to Gas LSD = Lime Spray Dryer
Fuel
Plant MW Retired Controls SC Switch
Cherokee 1 107 107
Cherokee 2 106 106 Yes
Cherokee 3 152 152
Cherokee 4 352 352
Arapahoe 3 45 N/A Yes
Arapahoe 4 111 111
Valmont 5 186 186
Hayden 1 139 139
Hayden 2 98 98
Pawnee 505 505
In-Period Total 1,801 551 1,094 111
Post-Period Total N/A N/A N/A
9PSCo Electric 10M-245E
Scenario Analysis
Estimated Near Term Base Rate Effects STRATEGIST Revenue Requirements
0.0%
2.5%5.0%
7.5%
10.0%12.5%
15.0%17.5%
20.0%
22.5%25.0%
27.5%30.0%
2011 2012 2013 2014 2015 2016 2017
STRATEGIST Rates Analysis ($0/ton carbon)
0.0%2.5%5.0%7.5%10.0%12.5%15.0%17.5%20.0%22.5%25.0%27.5%30.0%
2011 2012 2013 2014 2015 2016 2017
Carbon Carbon Carbon
$0/ton $20/ton Effect
2010-2020 $M 28,547 31,266 2,719
2010-2030 PVRR $M 46,314 52,684 6,370
2010-2033 PVRR $M 50,735 58,046 7,311
2010-2046 PVRR $M 66,687 76,543 9,857
Capital Investments
Cost In
Plant Action $ million Service
Cherokee 1
Cherokee 2 SC 4 2012
Cherokee 3
Cherokee 4 SCR 174.9 2016
Arapahoe 3 SC 4.9 2014
Arapahoe 4
Valmont 5
Hayden 1 SCR 67.1 2015
Hayden 2 SCR 80.7 2016
Pawnee/LSD SCR 236.5 2014
2 X 1 Cherokee 481.4 2015
1 X 1 Cherokee N/A N/A N/A
Peaker Cherokee N/A N/A N/A
Transmission Upgrades 9.9
Total 1,059.4
Est
imate
d P
erc
en
tag
e In
crease
in
Base
Rate
s E
stim
ate
d P
erc
en
tag
e In
crease
in
Tota
l R
ate
s
Scenario 5B
10
NOx (2018) -89%
CO2 (2020) -29%
PSCo Electric 10M-245EScenario Analysis
Retirement and Controls Replacement Capacity
IPP Re-ups
Scenario 6.2J2011 2012 2013 2014 2015 2016 2017
Existing Coal Plant
Cherokee 1 Retire
Cherokee 2 Retire SC
Cherokee 3 Retire
Cherokee 4 Retire
Arapahoe 3 Retire SC
Arapahoe 4 Gas
Valmont 5 Retire
Hayden 1 SCR
Hayden 2 SCR
Pawnee SCR/LSD
Replacement
2 X 1 Cherokee On-Line
1 X 1 Cherokee On-Line
Peaker Cherokee
IPP Re-ups
SC = Synchronous Condensor SCR = Selective Catalytic Reduction Control Gas = Fuel Switch from Coal to Gas LSD = Lime Spray Dryer
MW YearSWG Arapahoe 0 N/ASWG Valmont 0 N/AThermo UNC 0 N/A
Total 0
I n-Period Post-Period
MW MW2 X 1 Cherokee 569 N/A1 X 1 Cherokee 314 N/A
Peaker Cherokee N/A N/A
Total 883
Fuel
Plant MW Retired Controls SC Switch
Cherokee 1 107 107
Cherokee 2 106 106 Yes
Cherokee 3 152 152
Cherokee 4 352 352
Arapahoe 3 45 N/A Yes
Arapahoe 4 111 111
Valmont 5 186 186
Hayden 1 139 139
Hayden 2 98 98
Pawnee 505 505
In-Period Total 1,801 903 742 111
Post-Period Total N/A N/A N/A
11PSCo Electric 10M-245E
Scenario Analysis
Retirement and Controls Replacement Capacity
IPP Re-ups
Benchmark 1.0
SC = Synchronous Condensor SCR = Selective Catalytic Reduction Control Gas = Fuel Switch from Coal to Gas LSD = Lime Spray Dryer
Fuel
Plant MW Retired Controls SC Switch
Cherokee 1 107 107
Cherokee 2 106 106
Cherokee 3 152 152
Cherokee 4 352 352
Arapahoe 3 45 N/A
Arapahoe 4 111 N/A
Valmont 5 186 186
Hayden 1 139 139
Hayden 2 98 98
Pawnee/LSD 505 505
In-Period Total 1,801 0 1,280
Post-Period Total N/A N/A
I n-Period Post-Period
MW MW2 X 1 Cherokee N/A N/A1 X 1 Cherokee N/A N/A
Peaker Cherokee N/A N/A
Total 0
MW YearSWG Arapahoe 0 N/ASWG Valmont 0 N/AThermo UNC 0 N/A
Total 0
2011 2012 2013 2014 2015 2016 2017
Existing Coal Plant
Cherokee 1 SNCR
Cherokee 2 SNCR
Cherokee 3 SCR
Cherokee 4 SCR
Arapahoe 3
Arapahoe 4
Valmont 5 SCR
Hayden 1 SCR
Hayden 2 SCR
Pawnee SCR/LSD
Replacement
2 X 1 Cherokee
1 X 1 Cherokee
Peaker Cherokee
IPP Re-ups
NOx (2018) -75%
CO2 (2020) -16%
Decisions on PSCo Plants
Unit Size Action Date
Cherokee 1
107 MW Retirement 2011
Cherokee 2
106 MW Retirement 2011
Cherokee 3
152 MW Retirement 2015
Cherokee 4
352 MW Conversion 2017
Arapahoe 3
45 MW Retirement 2013
Arapahoe 4
111 MW Conversion 2014
Valmont 5 186 MW Retirement 2017
Hayden 1 139 MW Controls 2015
Hayden 2 98 MW Controls 2016
Pawnee 505 MW Controls 2014
Source: Xcel Energy – Summary Report for Investors 2009
Colorado Coal Mining
Source: http://wvrhrc.hsc.wvu.edu/images/coal_mining_atlas_1994-2005_colorado.jpg
Long Term Natural Gas Contracts
Gas Prices: Market Forecast vs. Anadarko Long Term Contract
Forecast
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Market Forecast
4.21675
4.89145833333334
5.255375
5.49705365203815
5.87767330516668
6.44890188674174
6.70963350030651
6.8958627234
13
7.09921940820746
7.44317748624981
7.8108167208
651
8.21629433884868
Anadarko contract
NaN NaN 5.27 5.32 5.37 5.42 5.47 5.51 5.56 5.6 5.64 5.68
$3.50
$4.50
$5.50
$6.50
$7.50
$8.50
$/MMBtu
Thanks for the invitation.
I look forward to your questions.
Ron Binz, PrincipalPublic Policy Consulting
www.rbinz.com720-425-3335