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The Evolution and Status of the Colorado Renewable Energy Standard (RES) Jonathan Miller Policy, Regulatory and Outreach Team

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WeatherizationCommercial and Residential EfficiencyTransmission and Smart GridTransportation FuelsState and Local OutreachRenewable Energy DevelopmentFinance GEO Programs Policy, Regulatory and Outreach Legislation Relationships and planning Investor owned utilities REAs, Munis and Co-ops Education Energy issues analysis

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Colorado Governors Energy Office (GEO) The Governors Energy Office promotes sustainable economic development in Colorado through advancing the states energy market and industry to create jobs, increase energy security, lower long term consumer costs, and protect our environment. Cost Security Jobs Mission Environment

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BIG announcement 5/12/11 Xcel Energy announced it would meet their 30% RES compliance commitment 8 years ahead of schedule.

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History of the RES Amendment 37 11/2004 10% by 2015 HB-1281 4/2007 20% by 2020 HB-1001 3/2010 30% by 2020

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Colorado RES compliance progress

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Xcels RES compliance estimates Source: 2012 Renewable Energy Standard Compliance Plan: Public Service Company of Colorado. May 13,2011.

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Colorado RES compliance progress

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What counts towards the RES Eligible renewable-energy resources include solar-electric energy, wind energy, geothermal-electric energy, biomass facilities that burn nontoxic plants, landfill gas, animal waste, hydropower, recycled energy, and fuel cells using hydrogen derived from eligible renewables.

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Renewable Energy Standard Adjustment (RESA)

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ECA= Electric Cost Adjustment; RESA= Renewable Energy Standard Adjustment; TCA=Transmission Cost Adjustment; AQIR= Air Quality Improvement Rider; DSMCA= Demand Side Management Cost Adjustment; Fort St. Vrain= PSCoowned gas peaking units; Comanche= coalfired generating station in Pueblo; Base S&F= Base Service and Facility Rates or Base Rate; PCCA= Purchased Capacity Cost Adjustment paid to independent power producers; CPI= Consumer Price Index Fuel Costs (natural gas and coal) Base Rates (utility asset recovery) RES (~1.3 GW, capped at 2% rate impact) New Coal Generation (~0.5 GW, 6% rate impact) ECA= Electric Cost Adjustment; RESA= Renewable Energy Standard Adjustment; TCA=Transmission Cost Adjustment; AQIR= Air Quality Improvement Rider; DSMCA= Demand Side Management Cost Adjustment; Fort St. Vrain= PSCoowned gas peaking units; Comanche= new 750 MW coalfired generating station in Pueblo; Base S&F= Base Service and Facility Rates or Base Rate; PCCA= Purchased Capacity Cost Adjustment paid to independent power producers Produced by the Colorado Governors Energy Office. Source data: CoPUC

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RESA applied to the incremental cost of RE? Source: Public Service Company of Colorado Renewable Energy Standard Adjustment Revenues Collected and Expenditures. May 10, 2011.

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The RESA deferred balance Source: Public Service Company of Colorado Renewable Energy Standard Adjustment Revenues Collected and Expenditures. May 10, 2011.

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Adding in the deferred balance The added cost of the RESA deferred balance. 0.74% Thus, the actual RESA cost is ~2.74%

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The cost of the RES Fuel Costs (natural gas and Coal) Base Rates (utility asset recovery) RES (~1.3 GW, capped at ~2.74% rate impact) New Coal Generation (~0.5 GW, 6% rate impact) ECA= Electric Cost Adjustment; RESA= Renewable Energy Standard Adjustment; TCA=Transmission Cost Adjustment; AQIR= Air Quality Improvement Rider; DSMCA= Demand Side Management Cost Adjustment; Fort St. Vrain= PSCoowned gas peaking units; Comanche= new 750 MW coalfired generating station in Pueblo; Base S&F= Base Service and Facility Rates or Base Rate; PCCA= Purchased Capacity Cost Adjustment paid to independent power producers Deferred Balance Added Produced by the Colorado Governors Energy Office. Source data: CoPUC

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How does it all add up? The incremental cost of meeting or exceeding the RES has a < 3% rate impact The RES is ahead of schedule Colorado has the 2 nd most aggressive Renewable Portfolio Standard in the US Behind California. Is it time for a celebration?

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Four factors to consider This isnt the whole story.

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#1: Small utilities Electric utilities serving less than 40,000 people are NOT subject to the RES. ~15% of Colorados generation

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#2: Rural Electric Associations (REAs) and Municipal utilities REAs and Munis that serve more than 40,000 people are subject to a 10% RES by 2020 ~25% of Colorados generation

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#3: Investor Owned Utilities (IOUs) IOUs ARE subject to the 30% RES by 2020 ~60% of Colorados generation Public Service Company of Colorado (Xcel Energy) Black Hills

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#4: Multiplier for in-state generation Generation in CO receives a 125% multiplier that counts towards RES compliance Nearly all COs Renewable Energy Credits (RECs) will be generated in CO X 125%

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The basic breakdown Small Utilities 40,000 25% x 10% = 2.5% Investor Owned Utilities (IOUs) 60% x 30% = 18% Total 20.5%

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The basic breakdown Small Utilities 40,000 25% x 10% = 2.5% Investor Owned Utilities (IOUs) 60% x 30% = 18% Total 20.5% Factor in Multiplier for In- State Generation 20.5% 125%

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Effective state-wide Colorado RES ~16.4%

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Other benefits of the RES

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Electric power transformation in the Rocky Mountain Region

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3% of IOU revenue will go to distributed generation Comparison of estimated renewable energy minimum generation requirements from HB07-1281 and HB10- 1001. 669 MW IOU projected MW capacity needed for 2020 RES compliance 239 MW Total capacity projected for Xcel in the 2013 compliance plan 430 MW Additional capacity needed by 2020

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Geothermals opportunity for distributed generation Geothermal electric energy can qualify for distributed generation if it meets the following conditions 1.Must be located at the site of a customer and is connected to the customers side of the meter 2.Must be less than 30 MW 3.Does not qualify as retail distributed generation 4.Systems of 1 MW or greater must be registered with a REC tracking system (selected by the PUC)

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Opportunity Uncertainty Source: NREL Energy Analysis Office (www.nrel.gov/analysis/docs/cost_curves_2005.ppt) Source : http://www.worldenergy.org/documents/ser2007_final_online_version_1.pdf Reducing Colorados Risk

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Economic Development Installed Renewable Energy $4.2 Billion Renewable Energy Capacity 2,100 Megawatts Colorado Jobs 10,000+

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Bringing jobs to Colorado

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Bringing Jobs to Colorado

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Success: Renewable Energy Jobs

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Making Colorado a Cleantech Hub In the U.S. for Cleantech Venture Capital Investment 18,000 Colorado Cleantech Jobs Source: Colorado Cleantech. www.cleantechhub.com #

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Lessons Learned Xcel can meet 30% RES compliance (~24% w/ in-state multiplier) It can be done in half the time as expected The rate impact is less than 3% Renewable energy is decreasing in cost Clean jobs in Colorado Colorado is a national & global leader

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GEOs Role Societal Interest Profits Balance

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Analytical Process Cost Jobs Security Environment Renewable Energy IOU Utilities REAsCoops Environmental Groups Natural Gas State Entities Regulators PublicCoal Policy and Regulatory Incentives $ Invest Engage Plan ACT

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Market Transformation The Old Paradigm Colorados Progress Market Adoption

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GEO Renewable Energy Subject Matter Experts Governors Energy Office State of Colorado 1580 Logan Street, Suite OL1 Denver, Colorado 80203 (303) 866-2202 TJ Deora Director Angie Fyfe Associate Director, Operations Stacey Simms Associate Director, Programs Morey Wolfson Senior Policy Advisor Jonathan Miller jonathan.miller@state.co.us 303-866-2204