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Colorado regulators raise Xcel’s energy-efficiency target by 25%

Author: Mark Jaffe - June 20, 2018 - Updated: June 28, 2018

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Howard Geller, executive director of the Southwest Energy Efficiency Project, advocates expanded use of LED lighting as a way to improve energy efficiency. (iStock)

The Colorado Public Utilities Commission has raised the energy-efficiency bar for Xcel Energy Inc. even as Colorado’s biggest power utility sought to hold it steady.

Under a 2007 state law, investor-owned utilities, like Minneapolis-based Xcel, have to implement programs to cut the demand for electricity—known as “demand-side management” or DSM— in return for financial incentives.

In setting the targets for the next five years, Xcel’s subsidiary, Public Service Company of Colorado, had sought a goal of 400 gigawatt-hours of electricity reductions, the same as the last five years. A gigawatt is enough energy to power 230 average homes for a year.

Xcel executives have said that the easy energy savings, the “low hanging fruit,” have been attained and that each year, it gets more challenging and expensive to wring out DSM savings.

But energy-efficiency and environmental groups called for a higher bar, and the PUC this month agreed and voted to raise the target to 500 gigawatt-hours.

“While Public Service has historically argued for lower energy savings goals based on a ‘changing marketplace,’ we conclude that the Company’s achieved annual DSM savings demonstrate a remarkably stable market for cost-effective electric DSM,” the commission said in its ruling.

The Xcel proposal submitted to the commission had the backing of several businesses and state agencies, including the Colorado Office of Consumer Counsel, which represents residential and small business interests, and the commission’s own staff.

Xcel said in a statement that the “the process is ongoing and parties will be filing requests for reconsideration in the near future.”

“Xcel has succeeded in the past when the PUC asked them to aim higher on energy efficiency goals, and we are confident they will meet these goals, too,” said Noah Long, legal director for western energy at the Natural Resources Defense Council, one of the environmental groups pressing for a higher standard.

Howard Geller, executive director of the Southwest Energy Efficiency Project or SWEEP, said that Xcel has consistently tried to keep the targets low and voiced concern that easiest and cheapest efficiency gains have been made.

“There are still plenty of opportunities for energy savings,” Geller said. For example, there are gains in high-efficiency LED lighting, not only in homes, but schools, business, and streetlights, he said. These bulbs offer energy savings of 50 to 70 percent.

The use of heat pumps in residential appliances, such as hot water heaters and clothes dryers, is another emerging energy-saving area, Geller said. The pumps capture and recycle heat.

The DSM programs are financed by a charge on the monthly electricity bill based on how many kilowatt-hours a customer uses. On the average residential bill, it comes to around $1.

Among Xcel’s initiatives have been rebates for the purchase of high-efficiency appliances and the “Home Energy Squad,” which conducts energy audits and makes energy improvements, as well as weatherization programs.

Xcel DSM spending has gone from $19.6 million in 2008 to $88.3 million in 2017, according to SWEEP, with a total expenditure over 10 years of $647 million and energy savings equaling $3.3 billion. Overall, there was an 11-percent reduction in electricity consumption.

These savings come in fuel costs, reduced maintenance, avoiding costs for new generation and lower customer bills, Geller said.

Xcel had sought $78 million for programs in its DSM application. The PUC raised the cap on expenditures to a little more than $90 million.

Mark Jaffe

Mark Jaffe

Mark Jaffe has covered energy, environment and government issues for The Philadelphia Inquirer, Bloomberg News and The Denver Post. He was a Knight Fellow at Stanford University and studied environmental economics as a Nieman Fellow at Harvard. He is the author of two books, "And No Birds Sing, The story of an ecological disaster in a tropical paradise" and "The Gilded Dinosaur-The fossil war between E.D. Cope and O.C. Marsh and the rise of American science."