O_JSCRUR_2023A 03/20/2023 02:04:11 PM Committee Summary PUBLICSTAFF SUMMARY OF MEETINGOTHER COMMITTEE COMMITTEE ON JOINT SELECT COMMITTEE ON RISING UTILITY RATES Date 03/20/2023 Attendance Cutter X Lynch X Martinez * Simpson X deGruy Kennedy X Fenberg X Time 02:04:11 PM to 05:27:01 PM Place LSB A This Meeting was called to order by Fenberg This Report was prepared by Nina Forbes Hearing Items Action Taken hPresentation from Western Resource Advocates Committee Discussion Only hPresentation from Energy & Policy Institute Committee Discussion Only hPresentation from Pearl Street Station Finance Lab Committee Discussion Only hPresentation from Colorado Energy Consumers Committee Discussion Only 02:04:13 PM Chair Fenberg gave opening remarks. Presentation from Western Resource Advocates - Committee Discussion Only Attachment Tag File Name Attachment http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/13C1B8596529...$File/Attachment A.pdf?OpenElement Attachment A.pdf 02:04:37 PM Meera Fickling, Senior Climate Policy Analyst, Western Resource Advocates (WRA), introduced herself and explained the mission of WRA. Ms. Fickling's presentation is included as Attachment A. Ms. Fickling gave an overview of Xcel's base rate increase history, capital investments in gas pipeline infrastructure, and the amount needed to collect from ratepayers to break even. 02:05:37 PM Ms. Fickling went over what decarbonizing buildings looks like for reducing gas usage by 2050. Ms. Fickling explained how the potential of using renewable natural gas (RNG) and hydrogen in buildings is limited by hard physical and safety constraints. She continued by explaining how RNG and hydrogen are expected to cost several times the wholesale price of natural gas now and in the future. Ms. Fickling explained that the gas utilities investment model relies on continued growth of customers into the future. Ms. Fickling posited that this represents a risk if the customer base does not grow or does not grow at the rate expected, which could happen with the movement away from using natural gas. Ms. Fickling discussed the issue of gas lines being built at the same pace without the customer base growing in tandem. 02:23:14 PM Ms. Fickling went over line extension allowances (LEAs). Ms. Fickling gave an overview of who pays for utility infrastructure and who benefits. Ms. Fickling went over how the PUC treats gas LEAs. She then went over steps the General Assembly could take to eliminate gas LEAs and minimize stranded asset risk. Ms. Fickling went over other complimentary policy suggestions. 02:32:57 PM Ms. Fickling responded to questions from the committee about subsidies from utilities for customers to connect to the gas system. She also responded to questions about the costs of decommissioning gas pipeline infrastructure. Ms. Fickling answered questions about whether the average home can handle installation of heat pumps or transition away from gas without significant upgrades. Ms. Fickling answered additional questions about the modeling of reduction of use of gas infrastructure. Ms. Fickling answered questions about the electric grid load impact from transitioning from gas to electric. Ms. Fickling responded to questions about back up power if the electricity goes out. Ms. Fickling answered questions about start-up costs for electric hook-ups similar to gas hook-ups and how she views those differently in terms of stranded assets. Presentation from Energy & Policy Institute - Committee Discussion Only Attachment Tag File Name Attachment http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/444D352A8A6C...$File/Attachment B.pdf?OpenElement Attachment B.pdf 03:06:00 PM David Pomerantz, Executive Director, Energy & Policy Institute (EPI), introduced himself and explained the mission of EPI. Mr. Pomerantz's presentation is included as Attachment B. Mr. Pomerantz gave an overview of his presentation on utility use of ratepayer money for inappropriate causes. Mr. Pomerantz gave examples from across the United States of illegal bribery and dark money practices by utilities. Mr. Pomerantz then went over cases that were not necessarily illegal, but were unfair or deceptive acts by the utilities. Mr. Pomerantz clarified that Colorado has not experienced any scandals of that level. Mr. Pomerantz went over utilities' customer-funded political machines as well as those paid out of utilities's profits in Colorado. Mr. Pomerantz explained how political influence costs drive up rates. 03:17:06 PM Mr. Pomerantz then went over recent Colorado rate case expenses. He discussed Colorado utility donations and trade association dues. Mr. Pomerantz went over what the American Gas Association (AGA) spends on advertising, public relations, and social media influencers with Coloradan's money, noting that none of these activities meet the AGA's definition of lobbying. He also went over what Edison Electric Institute (EEI) does with Coloradan's money. 03:24:11 PM Mr. Pomerantz discussed trade associations lobbying against transparency. Mr. Pomerantz pointed out that the Colorado PUC has a policy that advertising expenses be taken out of rates, unlike many other states. Finally, Mr. Pomerantz explained that utilities claim they do not charge customers for lobbying, but that what utilities actually consider to be lobbying is limited. Mr. Pomerantz went over utilities's definitions of lobbying and possible gaps in Colorado's current reporting. Mr. Pomerantz went over a report EPI put out earlier this year that may contain some policy actions the General Assembly could take. Mr. Pomerantz closed withexamples of actions taken by other states to hold utilities more accountable. 03:35:39 PM Mr. Pomerantz answered questions from the committee on best practices in other states. Mr. Pomerantz answered questions about how to classify misinformation versus opinions on policy. Mr. Pomerantz answered questions on whether EPI has a preferred model. Mr. Pomerantz answered a question about who funds the EPI. Mr. Pomerantz answered a question about whether there have been studies done on the exact impact on rates of some of these policy suggestions. Presentation from Pearl Street Station Finance Lab - Committee Discussion Only Attachment Tag File Name Attachment http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/2483B9DEB9D5...$File/Attachment C.pdf?OpenElement Attachment C.pdf 03:45:37 PM Albert Lin, Executive Director of the Pearl Street Station Finance Lab, and Ron Lehr, Former Chairman of the Public Utilities Commission (PUC), introduced themselves and began their presentation. Mr. Lin and Mr. Lehr's presentation is included as Attachment C. Mr. Lin went over how the United States and Colorado got to the current state of utility provision, including the 1973 Oil Embargo and advancements to the ways we generate and manage electricity. Mr. Lin went over how the motivation to harm consumers is high under the current system. Mr. Lin went over how electricity is the number one customer to natural gas. Mr. Lin discussed what the General Assembly could do to to align policy and the real world. Mr. Lehr went over additional strategies to improve planning into the future. 04:04:20 PM Mr. Lehr continued to explain how to optimize planning for a better future. 04:09:44 PM Mr. Lin went over some examples of other states who are trying to get off the "zero bound" 0 percent exposure utilities have to these costs and share the risks between utilities and the consumers. Mr. Lin stated that the fuel cost adjustment has lost its applicability in the current world. 04:14:33 PM Mr. Lin answered questions from the committee about coal and natural gas. Mr. Lehr answered a question about the PUC's planning model. Mr. Lehr answered a question about multi-year rate plans. Mr. Lehr and Mr. Lin answered questions about sharing risk and how to apportion exposure. Mr. Lehr and Mr. Lin answered questions about managing the transition away from natural gas. Mr. Lin answered a question about the ability of utilities to attract capital and capital at favorable rates. Presentation from Colorado Energy Consumers - Committee Discussion Only Attachment Tag File Name Attachment http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/6CA3553A6525...$File/Attachment D.pdf?OpenElement Attachment D.pdf 04:38:56 PM Michelle King, Partner at Holland & Hart LLP and Counsel for Colorado Energy Consumers (CEC), introduced herself and began her presentation. Ms. King's presentation is included as Attachment D. Ms. King explained what the CEC is and who it serves. The CEC serves larger entities not represented by the Office of the Utility Consumer Advocate. Ms. King went over the balancing of interests involved in the regulatory compact. Ms. King went over the inherent tensions between the public's interest and the utility's interest. Ms. King discussed how to re-balance the interests, including avoiding automatic ownership, promote competitive bidding, sharing risks/ rewards, cost predictability, accountability in forecasts and provided estimates, and discernment with performance incentive mechanisms (PIMs). 05:05:48 PM Ms. King answered a question about demand-side management programs and who should administer them. Ms. King answered a question about how to improve information asymmetry. Ms. King answered a question about when in the past there has been re-balancing. Ms. King answered a question about other states and their level of stakeholder interest. Ms. King answered a question about which recommendation would be the most impactful. Ms. King addressed a question about what should be confidential or withheld in rate cases with public utilities and only available through legal discovery versus what should be public information. Ms. King answered questions about PIMs and how often the PUC actually considers them when they are included in legislation. Ms. King answered a question about potentially switching to the retail-choice model. 05:26:49 PM Chair Fenberg gave closing comments. 05:27:01 PM The committee adjourned.
