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Colo. regulators set Xcel Energy's negative REC pricing petition for hearing

Colorado utility regulators decided to open a hearing on Xcel Energy Inc.'s petition for them to accept negative pricing of renewable energy credits as a policy.

In another proceeding, the state Public Utilities Commission on June 7 clarified it had not set a precedent to require Xcel Energy to analyze the economic and environmental impacts of carbon dioxide emissions in all future energy resource plans, but only to include modeling for comparative purposes in the utility's current plan.

Regarding the negative RECs pricing matter, PUC Chairman Jeffrey Ackermann said there was no question but that negative RECs are allowed by state law, and Commissioner Wendy Moser said Xcel Energy has been awarded bids using negative RECs, so she saw the petition by the utility for a declaratory ruling as a moot point. Xcel Energy, which operates legally as Public Service Co. of Colorado, had asked the commission to confirm that it may accept negative REC values for Community Solar Garden bids.

However, Commissioner Frances Koncilja objected, saying the commission had already "kicked the can down the road" too often and that it was unfair to the parties for the PUC not to address the issue. She pointed out the question was addressed in a major settlement concerning community solar programs, net metering and time-of-use rates and that parties agreed Xcel Energy would bring the negative REC pricing question to the commission.

Ackermann said that while there is no question Xcel Energy is on firm legal ground to award negative REC bids, there are many associated issues to address, including figuring out how to handle bill credits for community solar subscribers. He noted the community solar market has languished and the law requires the commission to do a better job in making the community solar programs successful.

The commissioners decided to set Xcel Energy's petition for a hearing to engage witnesses and directed their staff to frame their order for a hearing around the need to address larger issues than simply a declaration confirming Xcel Energy's legal right to accept negative REC pricing.

As for the carbon externalities issue, the commissioners concluded that all they wanted from Xcel Energy in its energy resource planning was for the utility to include computer modeling of carbon emissions concerning the broader impacts of its resource plan choices beyond direct costs to utility customers. Xcel Energy petitioned the PUC to clarify that it was not setting a precedent for future energy resource plans.

"I may be stating the obvious, but nothing we do is meant to be a precedent," Ackermann said. "The focus is on this specific proceeding."

Ackermann continued that what the commission wants is for Xcel Energy to "stress the model" to determine at what point making changes in resource alternative scenarios results in changes in external social costs of carbon. Otherwise, there may be no impact on selected resources from a broader societal perspective, he said.

"You want to force things to the extreme to get a meaningful data point. At what point is carbon as an externality value meaningful?" Ackermann said.

Koncilja agreed, saying, "We want as much data as possible in the sensitivity analysis so we can make rational, data-driven decisions."

Moser said she agreed with assigning a zero value to carbon in a base case, but she said there is not enough evidence to keep Colorado-specific data in a reasonable range for making such determinations.