O_JSCRUR_2023A 03/07/2023 02:05:49 PM Committee Summary PUBLICSTAFF SUMMARY OF MEETINGOTHER COMMITTEE COMMITTEE ON JOINT SELECT COMMITTEE ON RISING UTILITY RATES Date 03/07/2023 Attendance Cutter X Kirkmeyer X Lynch X Martinez X deGruy Kennedy X Fenberg X Time 02:05:49 PM to 05:40:17 PM Place Old State Library This Meeting was called to order by Fenberg This Report was prepared by Nina Forbes Hearing Items Action Taken hPresentation from the Public Utilities Commission Committee Discussion Only hPresentation from the Office of the Utility Consumer Advocate, Department of Regulatory Agencies Committee Discussion Only hPresentation from Energy Outreach Colorado Committee Discussion Only hPresentation from the Colorado Energy Office Committee Discussion Only 02:05:51 PM Chair Fenberg gave opening remarks on the purpose of the Joint Select Committee and the thought process behind its formation. 02:09:42 PM Chair Fenberg gave an overview of the agenda for the day and a preview of the committee's work going forward. Presentation from the Public Utilities Commission - Committee Discussion Only Attachment Tag File Name Attachment A http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/9A0DF9722C1E...$File/Attachment A.pdf?OpenElement Attachment A.pdf 02:14:42 PM Erin O'Neill, Chief Economist for the Public Utilities Commission (PUC), introduced herself and began her presentation (Attachment A). Ms. O'Neill gave an overview of the PUC's mission, why the PUC exists, how the PUC approves rate changes by utilities. Ms. O'Neill next gave an overview of the winter 2022-2023 rates and their impact on ratepayers. Ms. O'Neill gave a more in-depth description of the experience of the typical Xcel Energy customer this winter. Ms. O'Neill went over the four primary factors driving high utility bills as well as outlining factors that are not driving high utility bills this year. 02:30:44 PM Ms. O'Neill went over the first main driver of increases: the commodity price of natural gas. She discussed the history of gas cost adjustment. She discussed wholesale gas prices and the fuel charge. Ms. O'Neill then went over the second main driver: the especially cold winter season during winter 2022-2023. She then went over the third driver: deferred costs from Winter Storm Uri. Finally, the fourth driver: the base rate increase, which were driven by the utility "cost of service." She went into detail about the Xcel gas rate case. 02:38:14 PM Ms. O'Neill responded to questions about the base rate changes and the difference between Xcel's requested base rate increase and what was approved by the PUC. Ms. O'Neill responded to additional questions about the infrastructure costs. Ms. O'Neill responded to additional questions about rate setting and infrastructure for gas storage. Gene Camp, Deputy Director of the PUC, answered additional questions about gas storage facility requirements. 02:54:56 PM Ms. O'Neill gave an overview of the slides that she was not able to go over in detail. She discussed the Xcel gas rate increases over the years in perspective with the proportion of total gas rates broken out into base rates, cost recovery costs, and fluctuating gas prices. Ms. O'Neill answered questions about over or under charging on the part of utilities based on the actual price of natural gas and explained the refund or extra charge process based on actual rates. Ms. O'Neill explained the concept of budget billing to the committee. 03:05:52 PM Ms. O'Neill answered additional questions about blunting the impact of rate changes and the incentive of utilities to control rates. Ms. O'Neill closed by showing a chart comparing the average gas rates across Colorado in comparison to the country as a whole. On average Colorado's rates are lower than the national average. Lastly, she gave an overview of the PUC's activities to try to address affordability concerns for Colorado consumers this winter. 03:12:40 PM Ms. O'Neill responded to questions about what the PUC decides is a "just and reasonable" increase or rate. Ms. O'Neill answered a question about denying rate increase requests based on the "just and reasonable" requirement. Ms. O'Neill and Mr. Camp responded to a question about penalties for outages. Ms. O'Neill answered a question about rulemaking and possible costs associated with those in comparison to litigated rate cases. Presentation from the Office of the Utility Consumer Advocate, Department of Regulatory Agencies - Committee Discussion Only Attachment Tag File Name Attachment B http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/B2BE5DE14195...$File/Attachment B.pdf?OpenElement Attachment B.pdf 03:22:30 PM Joseph Pereira, the Deputy Director of the Office of the Utility Consumer Advocate (UCA) within the Department of Regulatory Agencies. introduced himself and began his presentation. Mr. Pereira gave an overview of his role within the UCA and the UCA's role and statutory authority. Mr. Pereira's presentation is included as Attachment B. 03:27:54 PM Mr. Pereira gave an overview of the causes of recent high utility costs. Mr. Pereira discussed the development of monopoly energy utilities and the "regulatory compact." Mr. Pereira described what the UCA considers to be the "public interest." He gave an overview on the return on equity (ROE) that utilities are allowed to collect, which is how utilities attract capital investments. Mr. Pereira responded to questions from the committee on rate-making and recovery costs and projections versus reality of costs. Mr. Pereira went over common customer misconceptions about regulation. Mr. Pereira answered questions about legal costs for rate cases. 03:59:19 PM Mr. Pereira answered questions about the UCA budget and funding and explained that ratepayers pay for the PUC, UCA, and the utility's legal counsel and consultants. Mr. Pereira answered questions about the UCA's legal counsel and why it is part of DORA. Mr. Pereira responded to a question about the UCA's outreach to consumers. Mr. Pereira went over risks to the "public interest" approach, in the UCA's view. Mr. Pereira went over the main complaints they have received from consumers. Mr. Pereira closed by discussing strategies to return public interest to the center of the discussion. 04:21:33 PM Mr. Pereira answered additional questions from the committee about the main focus of the UCA's advocacy work. Mr. Pereira answered additional questions about the areas of focus for rate cases. Mr. Pereira answered questions about what constitutes commensurate value. Presentation from Energy Outreach Colorado - Committee Discussion Only Attachment Tag File Name Attachment C http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/83B4B2C4C06A...$File/Attachment C.pdf?OpenElement Attachment C.pdf 04:34:50 PM The committee took a brief recess. 04:49:51 PM The committee came back to order 04:50:00 PM Jennifer Gremmert, the CEO and Executive Director of Energy Outreach Colorado (EOC), introduced herself and explained the mission of EOC. Ms. Gremmert provided a copy of EOC's 2022 Annual Report (Attachment C). Ms. Gremmert explained EOC's work around energy efficiency. Ms. Gremmert responded to questions from the committee about getting customers signed up for assistance programs. Ms. Gremmert responded to questions about amounts going to shareholders versus costs to consumers. Ms. Gremmert responded to questions about contributions to the EOC. Presentation from the Colorado Energy Office - Committee Discussion Only Attachment Tag File Name Attachment D http://www2.leg.state.co.us/CLICS/CLICS2023A/commsumm.nsf/0/44D4AD5D8817...$File/Attachment D.pdf?OpenElement Attachment D.pdf 05:07:14 PM Keith Hay, Senior Director of Policy at the Colorado Energy Office (CEO) introduced himself and gave an overview of the CEO's role. The presentation is included as Attachment D. Mr. Hay discussed the traditional principles of rate design. Mr. Hay went over the comparison between electric rates between Colorado and the United States as a whole, specifically noting that Colorado is below the national average. Mr. Hay went over the change over time in the commodity cost of gas, which has varied widely over the past two decades. Mr. Hay discussed the CEO's work to move away from natural gas. Mr. Hay discussed clean energy progress in Colorado. Mr. Hay went into detail on Xcel's Clean Energy Plan and the projected decline in emissions. Mr. Hay went over Colorado's building decarbonization strategy. Mr. Hay discussed gas utility planning rules. Mr. Hay went over Xcel residential customer gas and electric bill savings in 2021 as a result of energy efficiency programs. Mr. Hay responded to questions from the committee about the cost savings data. Mr. Hay went over to changes to building energy codes as a result of legislation and how those changes translate into customer savings. 05:21:30 PM Mr. Hay discussed federal funding available to the state for energy efficiency-related projects. Mr. Hay answered questions from the committee about the federal funds. Mr. Hay discussed clean energy tax credits currently available to consumers for all-electric homes. Mr. Hay responded to questions from the committee about weatherization investments made by the CEO. Mr. Hay answered additional questions from the committee about emissions reduction plans from the utilities. 05:39:51 PM Chair Fenberg gave closing remarks. 05:40:17 PM The committee adjourned.
