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CO Public Utilities Commission Rejects Xcel Energy’s Bid To Collect Remaining $16.6 Million in SmartGridCity Costs

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I last wrote on this topic a couple of months ago, following a Denver Post article that started with a Judge’s decision that ratepayers should not be responsible for cost overruns associated with Xcel’s SmartGridCity program.  The judge’s decision was not the final step in the matter.  As a matter of course, the final step was the Colorado’s Public Utilities’ Commission decision whether to grant Xcel’s request to collect $16.6 million from Colorado ratepayers.

If this is the first time you’ve read about this, here is a short history.  In 2008, Xcel proposed SmartGridCity, in which they would install approximately 50,000 smart meters in the city of Boulder by year’s end.  It was one of the most ambitious smart grid projects announced at the time.  Xcel’s proposal totaled $15 million in costs, which they themselves would completely bear.  Seven partner companies were supposed to pay for the remainder of the $100 million project.  A little something called the Great Recession got in the way, along with little transparency and project mismanagement on Xcel’s part.  Today, 23,000 smart meters are installed – at a cost of $44.5 million, triple the original estimate for less than half the project deployment.  The PUC previously approved Xcel’s request for $27.9 million, which is currently collected through customer rates, not from Xcel’s assets.

Thankfully, the PUC decided today to reject Xcel’s request with prejudice, which means Xcel cannot appeal the decision.  I support this decision mainly because I do not think Xcel should saddle regional ratepayers with costs for benefits they cannot receive.  That is a disgusting business practice and terrible precedent to set for future projects.  In a similar vein, Xcel’s success in expanding a coal plant in Pueblo, CO seemed to many to be a grab at capital to pad profit.  Ratepayers overwhelmingly rejected the plant’s expansion because it would generate more electricity than demanded by the population as well as its long life: Xcel stuck CO with this expanded plant for the next 50 years.

I have expressed my frustration with the PUC on occasion.  I do not think they exert the appropriate level of oversight over Xcel when the energy utility asks for rate increases, especially given Xcel’s lack of correctly forecasting generation capacity or demand.  This decision doesn’t atone for past decisions I didn’t agree with, but I am glad of this result.

I reiterate my general support for the smart grid.  I think we will eventually witness a significant transformation of the US’s power sector, including its infrastructure.  Smart grid technologies could usher in an era of increased efficiency.  Energy consumers currently do not have much access to data on their usage.  Many (not all) people could change their consumption habits if they had access to that data.

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