CO PUC Mulls Changes to Utility Resource Planning Rules

As the Colorado Public Utilities Commission (PUC) considers whether to overhaul or eliminate its integrated resource planning (IRP) requirements for electric utilities in the state, the state commission is being urged to create a process that does not limit the resource options of utilities, while also allowing the PUC to continue its support of demand-side programs, among other things.

The PUC is considering either making changes to its IRP rules or scrapping them altogether. The rules were initially adopted in 1992 and utilities filed their first plans under the rules in the fall of 1993. The commission subsequently modified the IRP rules to require utilities to use a competitive resource acquisition process in acquiring resources over a six-year timeframe. The PUC recently completed considering the 1999 IRPs filed by Public Service Co. of Colorado and WestPlains Energy, a division of UtiliCorp United, and believes that now is an appropriate time to review its IRP rules.

In unveiling its inquiry last month, the PUC asked interested parties to respond to a number of questions related to the IRP process. Among other things, the commission asked whether the current rules adequately ensure service reliability and, if not, how can the rules be improved or replaced. Also, the PUC asked whether the lengthy process and prescriptive nature of the IRP rules degrade utility provision of service and unnecessarily restrict utility management discretion. Comments were due at the commission at the start of last week.

For its part, the Colorado Oil and Gas Association (COGA) used its reply comments to raise questions as to whether it is a sound idea to eliminate the IRP process. If the IRP rules are thrown out, interested parties will only have the opportunity to comment after the fact in a rate case after an investment has already been made, the association argued. But these comments can only be directed at whether or not the investment is used and useful and whether its cost was prudently incurred. "Retroactivity is not a sound regulatory approach; it introduces uncertainty and limits the opportunity to avoid mistakes," COGA said. The group is comprised of over 300 independent natural gas and oil producers, pipelines, processors, marketers and gas-fired power producers operating in the state.

Meanwhile, the Colorado Association of Municipal Utilities (CAMU) said that the overarching question posed by the PUC is whether the commission should have IRP rules. Given the indirect effect of these rules on CAMU members, the association said it was not in a position to suggest specific changes to the present rules. "That being said, CAMU questions the continuing need for IRP rules given the significant strides which have been made in the creation of a workable wholesale market in the western interconnect." If the PUC decides to continue the IRP process, CAMU strongly urged the PUC to create a process that does not artificially limit the resource options of jurisdictional utilities.

The Colorado Coalition for New Energy Technologies asserted that the PUC's IRP process has been very beneficial and that it is the best way of ensuring public input on decisions involving regulated utilities in Colorado. The coalition acknowledged that the state is not currently in the throes of a California-style electricity crisis. "However, California could happen in Colorado if we are not aggressive in our pursuit of a diverse portfolio of new generation sources and a continued commitment to energy efficiency."

The coalition urged the PUC to continue and increase its support of demand-side management programs. The cost of these efficiency investments averages less than three cents per kilowatt-hour, half the average national retail electricity rate. The coalition also asked the PUC to consider other market-based mechanisms for promoting renewable energy, such as a renewable portfolio standard that several states have adopted, including New Mexico, Arizona, Nevada and Texas.

The PUC will conduct an information meeting related to its IRP inquiry on July 19.

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