April 18, 2024
DENVER – In a major win for energy affordability and the environment, the Colorado Public Utilities Commission earlier this week finalized its decision on Xcel’s first Gas Infrastructure Plan. The landmark decision puts the gas company on a path towards scaling down investment in fossil infrastructure and incorporates many of the suggested improvements made by WRA, Sierra Club, the Southwest Energy Efficiency Project (SWEEP) and National Resource Defense Council (NRDC) to improve the company’s gas planning processes to scale up the investment in clean energy resources.
The Commission decision directs Xcel’s future gas infrastructure plans to assess a broader suite of opportunities for replacing polluting and expensive fossil gas investments with non-pipeline alternatives. Examples like energy efficiency and electrification can reduce demand for fossil gas, postponing or eliminating the need for new pipeline extensions, replacements, or capacity and unlocking emissions reductions and cost savings for Coloradans.
Colorado’s Clean Heat Goals
In 2021, Colorado’s legislature passed Senate Bill 21-264, requiring the state’s largest utilities to reduce climate pollution from their gas systems by deploying “Clean Heat” resources, such as beneficial electrification and energy efficiency. As gas utilities cut emissions, gas use is expected to decline as households transition to clean, electric appliances – meaning that any new gas infrastructure put in the ground today may be unnecessary before it is paid off by customers. These poorly-planned investments are often called stranded assets.
To ensure that gas investments are aligned with Colorado’s long-term affordability and climate goals, the Commission opted to require the state’s gas utilities to file a biannual gas infrastructure plan, with the first detailing planned gas investments and comparing a select few to non-pipeline alternatives. As Colorado’s largest gas utility, Xcel filed its first plan last year.
Business-as-Usual Gas Investment “No Longer Acceptable”
Xcel’s plan presumed that its gas system will continue to grow in coming decades – a proposal that is clearly at odds with Colorado’s climate goals and experts’ calls for a rapid reduction in pollution coming from gas burned in buildings.
The Commission’s decision recognizes Xcel’s future gas infrastructure plans must plan for an affordable, clean energy future. The ruling finds that “legacy planning processes” and business-as-usual gas investment is “no longer acceptable nor in the best interest of ratepayers. It directs Xcel to update its forecasted gas needs to account for factors like local building electrification policies, which will help avoid overstating the expected gas need and making unnecessary investments that are out-of-line with Colorado’s climate goals and market trends. The Commission further emphasized that if Xcel moves forward with gas infrastructure investments without gas infrastructure plans or other regulatory review, “it is likely doing so at its own risk.”
In its decision, the Commission also stated: “We find that at this critical point in the transition decarbonizing heating, with significant outside incentives and wide availability of highly efficient electric heating options, it is imperative that we evaluate feasible options to save money for ratepayers and reduce the potential for stranded assets, rather than continuing in a business-as-usual fashion with [gas] infrastructure investments.“
Ultimately, the Commission’s order will make welcome changes aligning Colorado’s gas infrastructure planning processes with best practices. For its next gas infrastructure plan, due in 2025, the order requires Xcel Energy to evaluate non-pipeline alternatives for all large gas infrastructure projects that propose to expand the company’s gas system – up from the five alternatives that Xcel was required to present in its first gas infrastructure plan.
This decision will deliver significant affordability and climate benefits to Coloradans. Xcel projects total gas system expenditures of about $2.38 billion between 2023-2027, and much more beyond that five-year period. The Commission’s decision will begin to align this massive gas utility investment with Colorado’s climate targets, saving customers money and reducing the risk of stranded gas assets.
This post was co-authored by Sierra Club, WRA, SWEEP and NRDC.
Media Contact:
James Quirk, 908-902-3177, james.quirk@westernresources.org
