After shooting through most of its energy efficiency budget for this year, Xcel Energy has suspended all its programs for businesses and asked state regulators for an additional $34 million above the $93.6 million already agreed on.
In a filing to the Colorado Public Utilities Commission, Xcel Energy’s Colorado subsidiary — Public Service Company of Colorado — said that there was “unexpectedly high customer interest and participation in the company’s electric energy efficiency offerings this year.”
The request has drawn pushback by consumer and business advocates and the staff of the PUC, as well as support from Denver and environmental groups, who fear long-term damage if the programs are shut down.
It has left the utility commission facing “the tension” of balancing cost-effective programs that support vendors and their employees and the need for cost containment and compliance with budget caps, PUC Chairman Eric Blank said at Sept. 4 commission meeting.
The commission, however, has not yet issued a decision. “Nothing has been resolved,” said Justin Brant, utility program director for the Southwest Energy Efficiency Project or SWEEP, which supports adding the $34 million
“This could have a long-term chilling effect on an industry we have work hard to build,” Brant said
The groups and agencies representing customers, who would pick up the tab, see Xcel Energy’s request differently.
“This problem was caused solely by PSCo due to the company’s mismanagement of these programs,” the Colorado Office of Utility Consumer Advocate, which represents residential and small commercial customers, said in a PUC filing.
“UCA’s constituency has done nothing to cause this mismanagement problem and must not be held responsible for recovery of costs that exceed the commission-approved goals and the associated budget cap,” the agency said.
Xcel Energy’s residential energy efficiency programs — such as home weatherization and rebates for energy efficiency appliances and upgrades to heating and cooling systems — are still being offered.
Colorado Energy Consumers, which represents big industrial and commercial customers, said in a filing that it was only in May that Xcel Energy and a group of intervenors, including itself and the consumer advocate, had agreed to a settlement budget of $78 million with a 20% budget cushion.
Just giving Xcel Energy another $34 million, Colorado Energy Consumers said “would send the resounding and disturbing message that cost containment has no meaningful place at the commission or as part of this energy transition.”
But freezing the programs until Xcel Energy’s next Demand Side Management or DSM budget in 2025 — as the utility has suggested as an alternative — could have an adverse impact on the market for energy efficiency projects and contractors.
“Denver is concerned that this is already occurring, as we have heard from customers and vendors that the freeze on electric EE offerings is threatening to cause canceled projects,” the city said in a filing. “Quick resolution is important to Denver.”
Xcel Energy said that by the end of July it had spent more than $74 million of its budget — with $54.4 million going to business programs and $14.9 million to residential and low-income programs. That left about $18 million, after expenditures for education and planning programs.
Biggest demand? Mainly pot grow houses.
Business programs exceeded their target budgets by 144%, driven by demand from the “indoor agricultural market,” mainly marijuana grow houses.
“With grow lighting not slowing down as we had anticipated,” Xcel Energy said, “the company ended the grow lighting bonus early to assist with the costs affected by this bonus and our effectiveness in managing the budget.”
The announcement that the bonus program would close led to a wave of applications to beat the deadline, which compounded the problem.
“They experienced a gold rush from the cannabis industry and fumbled it in the usual manner and the usual manner is when they do something wrong, they come to the ratepayers for more money,” said Joseph Pereira, deputy director of the Utility Consumer Advocate office.
But both those advocating for additional funding and those opposing it agreed that Xcel Energy should have done a better job monitoring the program.
The PUC staff said it “does not consider Public Service’s questionable management of those programs to be a compelling reason justifying the imposition of additional costs onto ratepayers.”
In a scenario akin to robbing Peter to pay Paul, Blank suggested moving funds from the 2025-26 budget to fill the 2024 gap, which the other commissioners agreed on in principle.
“If we’re pulling this money forward from an existing year there is a high likelihood of having a shortfall in 2026,” Commissioner Tom Plant said. “But that now gives us at least a little time to give the stakeholders the opportunity to come together and try to come up with some sort of agreed upon solution.”
The problem for the UCA, Pereira said, is that in another negotiation there is implicit assumption that the budget will be increased. “It only goes in one direction,” he said.
“It doesn’t feel like there’s a really quick resolution here,” Commissioner Megan Gilman said at the Sept. 4 meeting, “and it’s not, like I feel we’re probably going to reach a win-win that satisfies the majority of the parties.”