Swimming Upstream: Influencing the Influencers

Accelerating Change for Renewables and Energy Efficiency

Presentation of Ron Binz, Chairman

Colorado Public Utilities Commission

April 8, 2008

Outline of this presentation

• Introduction to the Colorado PUC

• The challenge we face

• Elements of a state energy policy

• Some concrete suggestions

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

The Colorado PUC

• Independent agency, created in the constitution• Three Commissioners, appointed by the Governor• Four year terms• Partly judicial, partly legislative• Ninety-member staff is an agency within the

Department of Regulatory Agencies

The Public Utilities Commission's mission is to achieve a flexible regulatory environment that provides safe, reliable and quality services to utility customers on just and reasonable terms, while managing the transition to effective competition where appropriate.

Colorado Commissioners

Matt Baker Ron Binz Jim Tarpey

The Challenge We Face

Colorado Climate Change Action Plan

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

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

Projected Colorado Electric Energy Growth 2007-2025

The Take-Aways

• Colorado’s demand for electric energy services is projected to grow 60% in the next seventeen years.

• Think of this curve as demand for energy services denominated in kilowatt-hours

• Projection does not include transportation applications for electricity (plug-in hybrids).

EPRI “Prism” Analysis

ASES “Wedge” Analysis

Meet a Colorado residential electric customer

• Average monthly electric use: 686 kWh

• Average monthly electric bill: $62.23

• CO2 Emissions for electricity: 1301 lbs/mo

• Annual CO2 emissions for electricity: 7.1 Metric Tonnes

Colorado Electric Generation by Fuel

Coal

Hydro

Natural Gas

Renewables

Colorado Electric Generationby Fuel Type -- 2005

Generation Fuels in Colorado

Colorado Electric Generationby Fuel Source 1990-2007

Coal

Hydro

Natural Gas

Renewables

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(e)

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thou

rs

US Residential Electric Rates by State – 2007

Elements Of A State Energy Strategy

• Boost Efficiency– Customer: education– Utility: engagement– Rate structure changes

• Stress renewable resources– Regulators and utilities with a commitment to

addressing climate change– State RPS– Progressive resource planning at Commission– Healthy renewables industry

• Advanced generation development– Research and demonstration for carbon sequestration

Elements Of A State Energy Strategy

• Boost Efficiency– Customer: education– Utility: engagement– Rate structure changes

ACEEE State Rankings

Sources of US Carbon Emissions (2002)

Source: Oak Ridge National Laboratory

Customer Education

Customer Education

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

One Metric Tonne over their lifetime

Customer Education

• Consumer need to be told that the future belongs to the energy efficient.

• In more mundane terms, the key to avoiding future higher bills is using energy more efficiently.

• DSM programs should be spread to all customer classes

• Market transformation and early intervention is essential

Utility Engagement

• DSM goals in legislation• Commission rules establishing a bonus

mechanism• Expedited cost recovery• Tie-in to utility resource planning• Requirement of a recent CPCN

– Demand response solicitation– Expanding residential AC program

Utility Engagement, cont’d

• Colorado Investigation of Utility Incentives– “Stem to stern” look at regulatory incentives– How to alleviate “build vs. buy” biases– How to align incentives for efficiency

investment– How to retain management efficiency

incentives

Changes in Rate Structures

• Colorado’s Investigation of Rate Structure– Seasonal rates– “Inverted-block” rates– Time of use rates– Impact of smart grid technologies

Elements Of A State Energy Strategy

• Stress renewable resources– Regulators and utilities with a commitment to

addressing climate change– State RPS– Progressive resource planning at Commission– Healthy renewables industry

• See: Colorado’s New Energy Economy

HB 1281 – Colorado’s Renewable Energy Standard

• IOUs -- 20% renewables by 2020• REAs, Munis -- 10% renewables by 2020• For IOUs, 4% of renewables must be solar, half

on-site• 1.25x for in-state resources• 1.5x for community-based projects• 3.0x for REAs use of solar• Maximum rate impact 2% for IOUs, 1% for Munis

and REAs

Renewable Resources Required by HB 1281

-

20.00

40.00

60.00

80.00

100.00

2004 2007 2010 2015 2020 2025

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New Renewable Resources

Existing Renewable Resources

Non-Renewable Resources

Back to the wedge...

Colorado Regulatory Response

• Least Cost Planning

• Fuel Neutrality

• Utility models new portfolio

• Utility selects bid resources

• Resource Planning

• Clean Energy Preference

• Independent Evaluator

• Optional Post-bid Review

Prior Rule New Rule

• New DSM emphasis

-- Resource Planning --

Some Conclusions• This is no time for small ideas.• Most states’ energy efficiency activities are too

small, probably by an order of magnitude. Look for transformation opportunities.

• Demand reductions are important to pursue in addition to energy reductions.

• It is possible to acquire significant renewable resources with an acceptable rate impact.

• Leadership and political will are needed.• We are the leaders we’ve been waiting for.

Thanks for the invitation.

I look forward to your questions.