As CUB supporters know, a bill at the legislature this year would allow Xcel Energy to build and own a new natural gas power plant, bypassing any of the usual regulatory review, and making Xcel customers foot the bill. CUB has won significant ratepayer protections in the version of the bill that will come before the Senate tomorrow.
The bill as originally written gave Xcel license to build a power plant at the size it proposed, and put ratepayers on the hook for all costs, whatever they were.
At 1:00 p.m. Thursday, the Senate Energy and Utilities Committee will hear an amended version of the bill (SF 85/HF 113). The amendment affirms the Public Utilities Commission’s (PUC) prerogative to approve only the costs that are “reasonable and prudent,” and it provides for a basis for determining what those reasonable and prudent costs are. [Update, 2/9/17: The new bill language can be found here.]
Under the amended version, there are important steps:
1. Integrated Resource Planning, an every-other-year public process at the PUC. Investor-owned utilities go through this process to forecast electric need over the next 15 years and determine the best plan to supply that electricity. The public, Attorney General, Department of Commerce, and advocates like CUB can weigh in, and the plan must be approved by the PUC.
This process can be used to build a public record of how much power Xcel needs, and how much it should cost to build a power plant to meet that need. A budget submitted by an independent evaluator can be an additional piece of evidence.
2. The Rate Case, where investor-owned utilities get approval of what they can charge their customers. The rate case is where Xcel will make the case that it should pass along construction costs (and its rate of return) to its customers. We believe that if Xcel spends more than it should on the plant – for example, if it builds a larger plant than necessary or goes over budget – the PUC can and should limit how much of those costs Xcel can pass onto its customers.
This happened recently, after Xcel spent more than double its estimate to refurbish the Monticello nuclear plant. The Commission looked carefully at whether that spending would result in cost-effective generation, and in the end denied Xcel’s rate of return on the investments that were over budget.
Decisions about specific utility investments like this are complicated, and should be handled through regulatory processes that have worked for decades. While CUB does not support legislating the construction of a new power plant, we were able to win important provisions that should help protect consumers in this instance.
Your calls to legislators and the governor were crucial in winning these additional protections. Thank you for making your voices heard.