Regulators at an Oct. 28 meeting of the Colorado Public Utilities Commission opened an investigatory proceeding into the continuing operations of the 750-MW Unit 3 of the coal-fired Comanche power plant in Pueblo. The 10-year-old unit has been nonoperational since June due to major damage to a pump, and was off line for other repairs in 2015 when it was just five years old.
Xcel Energy-Colorado is the majority owner and operator of the 1.4-GW, three-unit plant, Colorado's largest. Intermountain Rural Electric Association has a 25-percent stake in Unit 3, and Holy Cross Energy an 8-percent stake. Xcel wholly owns units 1 and 2.
Unit 3, Colorado's newest coal unit, came on line in 2010 at a cost of around $1.3 billion, according to a 2010 Xcel corporate responsibility report. Xcel on its website touts Unit 3 as Colorado's "first advanced, highly efficient, supercritical coal unit" and says it can generate more electricity with less fuel, saving customers money by displacing more costly units and providing greater operating flexibility.
But the Colorado PUC in February disallowed $11.7 million in Xcel's general rate case for replacing Unit 3's finishing superheater section in 2015. The commission in July reversed that decision [19AL-0268E].
Unit 3 is scheduled for decommissioning in 2070. Xcel in June 2018 announced early closures for Comanche's 325-MW Unit 1 and 335-MW Unit 2 in 2022 and 2025, respectively, 10 and 11 years earlier than previously scheduled [16A-0396E].
"The Commission's records show a continuing history of construction and operational problems with the Comanche 3 unit that have forced the Commission to exercise careful scrutiny of the Company's investments in the plant and its ongoing operations," Colorado PUC Chair Jeffrey Ackermann and Commissioner John Gavan wrote in the July decision.
The PUC's deputy director, Eugene Camp, said at the meeting that the investigation will examine the cost of replacing the power lost from the most recent outage on June 2, which took Unit 3 off line during peak summer months. It will also look into the overall cost of the plant, including repairs, and compare that amount to what Xcel estimated the plant would cost when it sought regulatory approval, among other items.
At a May 13 meeting of the Colorado PUC, Ackermann said the investigation should consider "retiring options."
"I think that's putting it all on the table," he said.
The investigation will be performed by staff, but it would not result in any commission action in the proceeding itself, Camp said. However, it could affect future proceedings, such as a rate case or a clean-energy plan.
A 2019 study by Strategen Consulting, prepared on behalf of the Sierra Club, found that Comanche 3's operational costs through 2050 would total nearly $1.8 billion.
Also at the meeting, the CPUC learned that the economic fallout from COVID-19 will likely increase demand for assistance through utilities' percentage-of-income payment plans. A four-year report on Colorado's Low-Income Energy Assistance Program presented at the meeting indicated that the program, funded through state and federal energy assistance, is experiencing an uptick in applications but no proportionate increase in funding.
The report, commissioned by the Colorado Energy Office and produced by energy program analysts at ADM Associates, reviewed percentage-of-income payment plans offered by Xcel, Black Hills Colorado Electric and Gas, Atmos Energy Corp. and Colorado Natural Gas between November 2016 and October 2019. A triennial evaluation of regulated utilities' low-income assistance programs is required under state law.
ADM conducted program participant and nonparticipant surveys and interviews, and collected data from utilities on disconnections, disconnection notices, bill amounts and arrearages. Around one-third of survey respondents reported impacts to their employment from COVID-19, the report said. It also found that at the end of September 2019, the waitlist for Black Hills Energy's PIPP was more than 1,000 customers long with nearly as many enrolled.
But only 8 percent of eligible Colorado customers, or around 24,000 of 303,000, are enrolled in a PIPP, ADM found. PIPP enrollment is usually automatic for customers who qualify for LEAP, but in survey responses, the most common reasons why eligible customers reported not applying for LEAP were a lack of knowledge of the program or missing the application window.
Xcel funds its PIPP through an 18-cent rider on customer bills, while the charge for Black Hills customers is 31 cents. In order to serve all customers on Black Hills' waitlist, the utility would need to charge an additional 31 to 54 cents per month to residential customers. ADM suggested utilities increase the funding limit of PIPP programs in order to serve more qualifying customers.
There has been a 5-percent increase in Colorado LEAP applications since the start of the COVID-19 pandemic, according to the ADM report. Year to date, the program has received $54 million in funding for the 2019-2020 cycle.
Theresa Kullen, LEAP program manager, told commissioners that the program has not received any word about funding for the next application period, which begins Nov. 1. She anticipates it will be around $54 million, but LEAP is requesting an immediate release of 90 percent of the funds in anticipation of many pandemic- and weather-driven applications.
The federally funded LEAP program reduces heating costs for customers with incomes below 60 percent of the state median. Energy Outreach Colorado, a nonprofit energy bill assistance and weatherization program, provides assistance to those below 80 percent of median income. With its less stringent income requirement, EOC serves many customers that don't apply for LEAP or PIPP.
At the current pace of customer bill assistance and with the expected rise in assistance requests due to the economic impacts of the pandemic, EOC Executive Director Jennifer Gremmert said the program could run out of funding by spring 2021. So far, EOC has paid 23,669 customer bills in the 2019-2020 cycle—a 35-percent increase from the previous year.
Numbers might have skyrocketed even higher if the pandemic itself had not had an impact on program recruitment. Both LEAP and EOC ceased in-person service and moved to telecommunications and online application processing in response to COVID-19, Kullen said. Many of the newly qualified individuals might also have had trouble reaching out for assistance, she added: "It is an incredibly horrible experience to have to ask somebody for help."
Ackermann at the meeting floated the possibility of using rate design mechanisms to make income-based assistance more streamlined. "If the LEAP eligibility got you onto a [lower] rate, maybe [customers] would have more incentive to apply for LEAP," he said. "What else should and could the PUC be considering when it comes to low-income assistance?"