Saturday, August 28, 2010

Post # 38 - Apparent Xcel Victory in Boulder

According to press reports, as part of settlement reached yesterday, staff of the Colorado Public Utilities Commission will not contest $44.5 million in costs associated with Xcel Energy's SmartGridCity project in Boulder. The Governor’s Energy Office also signed off on the settlement.

At issue was whether ratepayers or shareholders should foot the costs of the Boulder-based pilot project, which had tripled in price from initial estimates. Xcel Energy, the state’s largest utility, has attributed the cost overruns (from the initially estimated $15 million to the actually incurred $44.5 million) to unanticipated problems arising from laying fiber optic cable to 23,000 homes and related software expenses.

Overall, Xcel Energy serves approximately 1.1 million customers throughout the state. Despite the overruns and the fact that the improvements in power distribution and metering systems will be limited to 23,000 Boulder homes, Xcel argues that all ratepayers ultimately will benefit and should thus share the costs.

The PUC already had approved the costs as part of broad rate increases that went into effect at the beginning of this year, but had opened a separate case to consider getting back the money. Friday’s settlement apparently ends that challenge as far as PUC staff and the Governor's Energy Office are concerned.

However, the settlement will not apply to any expansions of the SmartGridCity project. Moreover, other parties to the PUC proceeding – Colorado's Office of Consumer Counsel, the community organization ArapaHOPE Community Team and a citizen intervenor, Leslie Glustrom – still will contest the rate increases for SmartGridCity at a hearing scheduled for August 31st.

So the full implications of the settlement remain unclear, at least at this writing. But at this point, it looks like a potential victory for Xcel.

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