Colorado regulators criticized Xcel Energy-Colorado's plan to provide $30 million in ratepayer-backed incentives for electric-vehicle purchases, a new component of the utility's proposed 2021-2023 transportation-electrification plan. The plan is being discussed over five days of remote hearings at the Colorado Public Utilities Commission that began Nov. 13 and will conclude Nov. 23.
Xcel on Oct. 23 submitted a number of adjustments to the plan, including a new EV purchase rebate program that has increased the plan's budget by around $30 million, to about $133 million [20A-0204E]. When Xcel first submitted the plan on May 15, it estimated a cost of $102 million (see CEM No. 1591).
The $30-million rebate program would offer a $4,000 rebate to Xcel customers purchasing new EVs, a $1,500 rebate for used EVs, and an additional $1,500 for low-income customers. The rebate would be applied at the point of sale.
"There's no doubt [the plan] got bigger," Jack Ihle, director of regulatory and strategic analysis at Xcel, said during the Nov. 13 hearing.
Xcel in its updated filing proposed earmarking rebates as a regulatory asset that accrues interest at 6.97 percent and recovering those costs over a 10-year period.
Colorado PUC Deputy Director of Fixed Utilities Gene Camp in testimony filed Oct. 23 to the commission said that a rebate program under the company's proposed recovery scheme would not be in the public interest. He pointed out that on a dollar-for-dollar basis the rebate program would be significantly more costly to the ratepayer than a separate tax credit program offered by the State of Colorado.
"Each EV Rebate dollar provided . . . to an EV vehicle purchaser will cost ratepayers $1.42 or 42 percent more than taxpayer-funded state EV tax credits," Camp said in his testimony. He agreed with commission member Megan Gilman at the Nov. 18 hearing that tweaks to the rebate program could alleviate his concerns.
Camp also said in his testimony that 2019's SB 077, which allows utilities to recover costs associated with building out EV charging infrastructure, does not grant the commission authority to implement a ratepayer-funded rebate program.
Commission staff also disputed Xcel's proposed mechanism to recover costs associated with the plan. Xcel proposed to recover costs in a bill rider, but commission staff recommended that all associated costs be recovered in a general rate case.
The "regulatory lag" offered by a general rate case, in which there is a delay in the time it takes for increased costs to be introduced to rates, is advantageous to ratepayers because it incentivizes utilities to operate as efficiently as possible to increase profit, commission senior economist Fiona Sigalla said in Sept. 28 testimony. It is "similar to the incentives a company would typically face in a competitive market," she said.
Ihle in testimony filed Oct. 23 called Sigalla's recommendations "particularly concerning."
"Staff leans heavily on the purported merits of regulatory lag, which would practically mean years of delayed, or potentially forfeited, cost recovery for [the utility]," he said.
Those recommendations could potentially damage the company, he said during the Nov. 13 hearing.
Staff economist Nardos Ghebregziabher recommended at the Nov. 18 hearing that the commission reject a $10-million research, innovation and partnership portfolio that Xcel proposed as part of its transportation plan, on the grounds that it "lacked detail to justify" its budget. Staff would not oppose it "if there is a process in place for [the commission] to ensure projects benefit ratepayers," she said. Xcel did not propose specific projects as part of the portfolio.
Colorado PUC engineer Joseph McCabe in Oct. 23 testimony raised concerns related to Xcel's estimated wind curtailments for 2021. The company anticipates 950,756 MWh of potential wind energy will not be delivered next year.
"This is the total renewable energy from wind curtailments that could potentially be supplied to EV charging in 2021. But this energy will not be supplied to EVs for charging," McCabe said during his testimony. He also said the commission should apply a five-year depreciation period to EV chargers, as opposed to the 10-year period proposed by Xcel, and encourage the company to develop carbon-free EV charging resources.