Environmental groups are celebrating the plan, which added dollars for electrification and no longer contains elements they had opposed, such as mixing hydrogen into fuel.
The plan will see the utility provider, responsible for most of the Denver area, invest $440 million in energy efficiency and electrification through 2027. Although the plan will be funded through bill riders, organizers believe the energy-efficiency measures in the plan will save customers money.
“Those are not only going to help lower emissions, but they're also going to help improve indoor air quality,” Sarah Tresseder, building electrification field organizer with the Sierra Club, says of those measures. “As an Xcel customer, the bills have been ever-increasing, so it's hopeful we will help prevent some of these skyrocketing gas bills that we're seeing.”
In 2021, the Colorado Legislature passed a bill requiring gas utilities to reduce greenhouse gas emissions from 2015 levels by 4 percent before 2025, and by 22 percent before 2030; this has to be done by filing a clean heat plan with the Public Utilities Commission. Xcel has also committed to a net-zero system by 2050.
Xcel filed its plan in August 2023. The PUC finished deliberating in May, after environmental groups pushed for more public health concessions.
“This has been a case with a lot of twists and turns,” says Meera Fickling, a building decarbonization manager with Western Resource Advocates. “This is a really positive decision, but secondly, the plan wound up in a rather different place from where it started.”
Win for Environmental Activists
In an August filing, Xcel presented a plan that included carbon offsets and certified natural gas in addition to the four legislatively stated methods for emissions reduction: electrification, renewable natural gas, green hydrogen and energy efficiency measures.Certified natural gas is fuel made with high standards to prevent methane leaks and other environmental problems, but it's not a renewable energy source.
“That was problematic for us, because neither certified gas nor carbon offsets would actually reduce emissions from burning gas,” Fickling says.
Xcel submitted a new plan that cut out the carbon offsets and certified natural gas elements in November after strong opposition from environmental and public advocacy groups. However, the utility still requested cost recovery for selling certified natural gas, and kept in the idea to add hydrogen to its fuel mix as a means of decreasing emissions.
The environmental groups pushed Xcel to reconsider those aspects, too.
“The problem with including those clean fuel resources is that they're both risky and expensive,” Fickling says. “They take away ratepayer resources that could instead be spent on measures like electrification that are more cost-effective and can be deployed at a larger scale. The commission eventually agreed with us on a lot of those points.”
The $440 million budget that the PUC is likely to approve is similar to the cost originally proposed by Xcel, but only $10 million maximum can go to renewable natural gas. The majority of funding will go toward measures like rebates for heat pumps to replace gas furnaces in homes or insulation and windows that make homes more energy-efficient.
Xcel originally modeled that electrification incentives would get much higher as time goes on. However, Fickling says the opposite: As the market adjusts, those incentives should be smaller.
“That's true for new technologies, like iPhones,” she explains. “It's also true for [electric vehicles], and we would expect it, similarly, to be true for heat pumps. Ultimately, the commission agreed with our understanding of how these new markets develop.”
Buildings across all economic spectrums need to invest in transitioning away from gas, Tresseder adds. The plan contemplates doing just that.
Advocates have long argued that gas infrastructure built today will end up as stranded assets in the future, unused before customers finish paying them off, as is currently the case with Xcel's remaining coal plants. During deliberations for the clean heat plan, Tresseder says, the PUC seemed to understand the economic reasons for focusing on electrifying.
“They indicated this level of understanding that we need to move away from fossil fuels,” she says.
The Xcel clean heat plan will likely end up with more than five times the amount of money dedicated to an ell-electric building pilot than the company had initially planned on.
Through spokesperson Tyler Bryant, Xcel says it expects to expand existing efficiency and electrification programs to help Colorado achieve its goal of transforming the state’s energy system into one that is net-zero on carbon emissions.
“We believe our customers should have a broad portfolio of options available to help reduce greenhouse gas emissions in their homes and businesses,” Bryant says. “We look forward to providing more details once we receive the written order from the Colorado Public Utilities Commission.”
According to PUC spokesperson Katie O’Donnell, the written order will likely be issued in mid-June, as the commission decided not to re-discuss the draft, so it hasn’t come back on its schedule yet.
Once the PUC issues its decision, another process will lay out the implementation details for the exact amounts of each rebate. Fickling expects that process to take around ninety days.
