Date: 03/25/2015

Final
BILL SUMMARY for HB15-1250

HOUSE COMMITTEE ON TRANSPORTATION & ENERGY

Votes: View--> Action Taken:
Refer House Bill 15-1250 to the Committee on FinanPASS


01:59 PM -- HB 15-1250

Representative Tyler, prime sponsor, came to the table to present House Bill 15-1250. The bill declares that certain objectives, other than minimizing short-term economic costs, deserve to be considered in establishing the rates and policies of investor-owned public utilities (IOUs). These objectives include maximizing:

These objectives should be achieved while simultaneously minimizing the following:

Accordingly, the bill directs the Colorado Public Utilities Commission (PUC) to initiate an investigatory proceeding to explore and recommend alternatives for improved utility business and revenue models to align utility earnings with specified public policy objectives. Specifically, the PUC, at a minimum, must:

The bill requires the PUC to conclude its investigation by August 1, 2016, and report its findings to the General Assembly and the Governor's Office by October 1, 2016.

Representative Tyler said that changes in energy markets and customer demands are increasing the need for utility adaptation towards energy efficiency, demand-side resources, and the use of "negawatts." He noted that the bill will start the conversation on how to better regulate utilities in Colorado. He said that Colorado will not be the first to make such changes, and that change within the utility industry is on the horizon.

02:18 PM -- Dan O'Connell, representing the Colorado Association of Commerce and Industry (CACI), spoke in opposition to the bill. He said that CACI worries about the implementation costs of the goals of the bill and the study that it would create, and said that these costs would most likely get passed down to the utility customer.

02:21 PM -- Heidi Morgan, representing Black Hills Corporation, spoke in opposition to the bill. She noted that Black Hills appreciates that Representative Tyler sought its opinion on the legislation. She detailed Black Hills' concerns with the bill, which include: the additional costs to meet increased renewable energy and demand-side management technology requirements; that Black Hills would struggle to meet energy diversification requirements; and how customer satisfaction could be affected by increased energy costs. Ms. Morgan responded to questions on what the bill could cost the average Black Hills customer, if the bill will result in a rate increase, Black Hills' concerns with the customer satisfaction provisions of the bill, Black Hills' current customer satisfaction, the region that Black Hills serves, and the current deficit in Black Hills' renewable energy standard adjustment (RESA) fund.

02:37 PM -- Diane Orf, representing the Colorado Mining Association and the Associated Governments of Northwest Colorado, spoke against the bill. Ms. Orf said the bill has the potential to increase energy costs and negatively affect economic development in the state.

02:39 PM -- Leslie Glustrom, representing herself, testified neutrally on the bill. The committee received a packet of articles and her testimony (Attachment A). Ms. Glustrom said that the bill only creates a study and does not mandate any changes to the regulation of public utilities. She noted the rising costs of coal and the need to examine the adequacy and affordability of future electric supplies and potential threats to the stability of the electric grid in Colorado. She directed the committee to page 9 of her testimony to highlight the growth of energy costs in Colorado. Ms. Glustrom responded to questions on whether regulatory costs drive up the price of electricity. Committee discussion ensued on energy price increases.

150325 AttachA.pdf150325 AttachA.pdf

02:56 PM -- Gene Camp, representing the PUC, spoke in opposition to the bill. Mr. Camp said that the bill would strain PUC resources and is not necessary. He noted that the PUC has already approved some aspects of the bill in relation to public utilities, that the PUC already utilizes performance-based regulation on a routine basis, and that it does not believe that legislation is required to mandate increased regulation of utilities.

03:05 PM -- Susan Perkins, representing herself, spoke neutrally on the bill. She said that she has been working with a number of different entities and organizations in the state and around Pueblo, which has experienced the worst rate increases in the state. She noted that rising energy costs are an issue for the residents of Pueblo. She said that the bill goes a long way in the right direction, but that it could be improved by having an independent entity perform the study, and not the PUC. Ms. Perkins responded to a question on whether the bill would help protect consumers in Pueblo.

03:13 PM -- John Milton, representing himself, testified neutrally on the bill. Mr. Milton said that the committee should consider strengthening the bill, for instance by increasing the number of commissioners on the PUC and compensating intervenors.

03:17 PM -- Kelly Crandall, representing the City of Boulder, spoke in favor of the bill. Ms. Crandall said that Colorado needs to look further into the future to build a more adaptable and resilient energy infrastructure. She responded to a question on the initiatives that Boulder has implemented that lend themselves to the goals of the bill.

03:22 PM -- Vincent Calvano, representing the Colorado Renewable Energy Society (CRES), spoke in favor of the bill. Mr. Calvano said that there is a need for change in utility regulation in Colorado. He stated that performance-based regulation would allow the PUC to penalize utilities for not meeting various goals, and that utilities need to transition toward a newer, cleaner energy mix.

03:25 PM -- Becky English, representing the Sierra Club and CRES, spoke in favor of the bill. Ms. English said that the PUC needs to perform the careful analysis of utilities that the bill would require, that consumers should be able to reap the benefits of new industry technologies, and that progressive measures are going to be needed to meet Colorado's carbon emissions reduction goals.

03:29 PM -- Gwen Farnsworth, representing Western Resource Advocates, spoke in favor of the bill. Ms. Farnsworth stated that utilities are currently incentivized only by increasing retail sales, and that performance-based regulation would help deliver value and make utilities focus on future goals. She added that utility earnings can be made more predictable through performance-based ratemaking.

03:35 PM -- Ronald Lehr, representing himself, spoke in favor of the bill. Mr. Lehr stated that the bill could lead to lower energy costs when utilities make lower-risk investments that result in lower capital investment costs. He said that significant change is coming for utilities and that regulation needs to adapt to this change. Mr. Lair responded to a question on how increased regulation of utilities in Colorado could be successful.

03:45 PM -- Julie Zahniser, representing herself, spoke in favor of the bill. Ms. Zahniser said that the rising cost of energy in Colorado needs to be addressed and that the reform of utility regulation could control rate increases better. She noted that it is essential to bring the public back into PUC proceedings that affect Colorado ratepayers, that more transparency needs to be built into regulation and rate setting, and that regulation should require utilities to have some monetary risk when choosing energy resources so that costs are not just passed onto the ratepayer.

03:49 PM -- Gerry McNally, representing himself, spoke in favor of the bill. Mr. McNally said that the regulation of utilities impacts the general public and needs to be increased.

03:52 PM -- The written testimony of Barbara Donachy, representing herself, was distributed to the committee (Attachment B).

150325 AttachB.pdf150325 AttachB.pdf

03:52 PM -- Mimsi Milton, representing herself, spoke in favor of the bill. She said that Xcel Energy has repeatedly underestimated the cost of coal, that there should be consequences for utilities that incorrectly model energy costs, and that the legislation would allow the PUC to make the planning and operations of public utilities more transparent.

03:54 PM

Ms. Morgan returned to the table to clarify information about Black Hills that was provided in the testimony of some witnesses. She discussed the investment activities of Black Hills, the difference in company size of Black Hills and Xcel Energy, and the disconnect policies of Black Hills. She responded to questions on coal prices, the utility's resources and how often power plants are online and producing energy, the utility's anticipated future rate increases, and the chances Black Hills has of experiencing a blackout.

04:05 PM

Representative Tyler made his closing comments on the bill, discussing how peak demand increases capital costs for utilities and how the creative use of power can save money for utility customers. The committee discussed the merits of the bill.
BILL:HB15-1250
TIME: 04:10:29 PM
MOVED:Tyler
MOTION:Refer House Bill 15-1250 to the Committee on Finance. The motion passed on a vote of 7-6.
SECONDED:Esgar
VOTE
Becker J.
No
Buck
No
Carver
No
Coram
No
Esgar
Yes
Kraft-Tharp
Yes
Melton
Yes
Moreno
Yes
Neville P.
No
Nordberg
No
Winter
Yes
Mitsch Bush
Yes
Tyler
Yes
Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS

04:13 PM

The committee adjourned.