The Colorado Public Utilities Commission last week verbally approved a $163.5 million rate hike for Xcel Energy to help meet carbon emission reduction targets set by Gov. Jared Polis’ Greenhouse Gas Reduction Roadmap.

What this effort will add to ratepayer’s bills is yet to be determined.

“I believe the commission approved annual base budgets of $78M for electric energy efficiency, $18M for gas energy efficiency, and $67.5M for beneficial electrification over 2024-2026,” said Gail Connors, spokesperson for the PUC in a statement.

Beneficial electrification goals, also called “Demand Side Management” for investor-owned utilities, were mandated by the General Assembly in Senate Bill 21-246, and signed into law by Polis in June 2021.

Xcel wants to bill customers $140 million to build massive, company-owned EV charging network

“Based on what we heard there will be very little impact to customers’ bills as a result of the commission’s decision,” said Michelle Aguayo, spokesperson for Xcel Energy in a statement to The Denver Gazette. “The budgets for electric and natural gas conservation programs are actually decreasing slightly. However, the commission did approve substantially expanded programs for electrification of heating loads, which will offset the decreases in conservation budgets.”

Aguayo said the company has imposed a Demand Side Management Cost Adjustment charge for years.

“Currently those charges account for about 2% of an average customers’ natural gas bill and 1.5% of the average electric bill and those charges are not expected to change substantially,” Aguayo added.

The law directs the PUC to “approve beneficial electrification plans for the purpose of incentivizing residential, commercial, and industrial utility customers to implement beneficial electrification projects voluntarily, without applying coercion or discriminatory treatment to customers that decline any incentives that may be offered to them.”

The law directs the PUC to allow utilities to “recover its prudently incurred costs” from ratepayers for implementation of such programs.

PUC wants to hear from Xcel customers on proposed rate hike

It also allows the PUC to provide “incentives” to utilities for exceeding electrification or emission reduction targets and allows utilities to charge ratepayers for the costs of those incentives through “the imposition of a rate rider on customer’s bills.”

The PUC decision requires phase-out of long-standing energy efficiency rebates for replacing older, less efficient natural gas appliances, including gas furnaces and hot water heaters, by 2027 to push consumers towards electric appliances such as induction cooktops and air-source heat pumps.

Environmental groups lauded the PUC’s decision even though it did not approve the $79 million for beneficial electrification they had asked for.

“We applaud the Colorado Public Utilities Commission for adopting beneficial electrification and efficiency targets that help lay the groundwork for Xcel to meet its Clean Heat emission reduction goals,” said Meera Fickling, senior climate policy analyst at Western Resource Associates in a news release. “The commission’s decision also redirects future efficiency investments toward electric heat pumps and heat pump water heaters and away from fossil gas appliances.”

Nuclear power generation renaissance underway — and Colorado may join in