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Colorado regulators: hurdles for SmartGridCity

In the matter of cost recovery for Boulder, Colo.'s SmartGridCity (SGC), in which Xcel Energy intends to recover another $16.6 million from ratepayers, the Colorado Public Utility Commission has established a schedule that would seem to reflect the complex nature of this proceeding.

The Colorado PUC has set Aug. 30 for a decision in the matter, but proceedings will begin with a series of deadlines in April, May and June. That timetable allows six months for discovery, arguments, testimony and a decision. You'll find the related documents in this case by going to the Colorado PUC's website and plugging in proceeding number 11A-1001E and hitting "search."

(More background is available in two recent, related columns, "Xcel: SmartGridCity Value Established" and "SmartGridCity: Did Xcel Get Results?")

Regulators last year approved $27.9 million in cost recovery for Xcel and its local subsidiary, Public Service of Colorado (henceforth "Xcel") on a project that ballooned from Xcel's own estimate of $15 million to about $45 million. But regulators withheld $16.6 million over whether Xcel had sufficiently demonstrated that the project was complete and its value demonstrated.

Specifically, the Colorado PUC said in a filing late last week, Xcel must provide convincing answers to a list of criteria by which regulators will assess completeness and value. The standard for full cost recovery will depend on the following criteria:

  • Xcel must "summarize how advisory groups are being engaged, identify smart grid investments and how such investments will benefit grid operations and customers;
  • Xcel must articulate how customers in the SGC service territory can "make practical use of SGC on their side of the meter through in-home devices and ... the interconnect ability of SGC with those customer devices";
  • Xcel must provide details for the future application of SGC findings for operational and customer benefits "sufficient to justify  the cost overruns ..."
  • Xcel needs to defend its strategic plan for the use of SGC investments.


The Colorado PUC acknowledged that Xcel has completed its application for cost recovery as of Feb. 2, 2012, and that triggered a 120-day cost recovery review, lengthened by regulators for another 90 days because the current cost recovery case affects an ongoing rate case in a different proceeding, hence the Aug. 30 decision deadline.

For its part, Xcel has filed eight exhibits and the testimony of six of its executives, plus a 128-page report by a contractor, MetaVu, titled "SmartGridCity Demonstration Project Evaluation Summary," all of which are intended to answer the regulator concerns spelled out above. (See the earliest exhibit filed in the proceeding.)

According to last week's status report (technically an "interim order") by regulators, Xcel argues that it has:

  • Answered regulators' requests for more information, and that "SGC is now fully installed and is an integral part of the distribution system serving the City of Boulder";
  • Offered discussion of 68 value propositions and how they affect future implementations;
  • Acknowledged that SGC is a "testing platform" and that three pilots—on dynamic pricing, on in-home devices and on electric vehicles (EV)—remain in progress;
  • Established a SGC Advisory Council to determine future testing opportunities;
  • Established that it is entitled to full cost recovery.

The Colorado PUC responded by articulating the topics to be discussed in the upcoming cost recovery hearings.

Have any SGC benefits been achieved in a cost-effective manner?

What constitutes "completeness" in a pilot or demonstration project such as SGC?

How can typical cost/benefit analyses be applied to a pilot project?

Given that applying a certificate of public convenience and necessity (CPCN) to a demonstration project is "relatively unique," "what sufficiently constitutes the realization of the capabilities of the SGC project?"

So Colorado regulators have articulated the hurdles to full cost recovery and Xcel has argued and will continue to do so that it has cleared those hurdles. My own take is that completing the physical addition of hardware and software to the distribution feeders and residential properties involved in the SGC project is of relatively little value. What would create tangible value are valid, replicable results from those ongoing pilot projects on dynamic pricing, in-home devices and EVs. Until then, nothing of value has been derived. I think Xcel is turning the notion of value on its head by claiming that SmartGridCity was never intended to be more than a test bed for assessing value propositions.

At least now we have a schedule by which to follow how the Colorado PUC will approach the related issues.

Phil Carson
Intelligent Utility Daily

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