1. Colorado’s Renewable Portfolio Standard Making it a Success Matthew Baker, Commissioner Colorado Public Utilities Commission 1560 Broadway Denver, Colorado 80202 USA Tel: 303.894.2007 ~ Fax: 303.894.2065 Matt.Baker@dora.state.co.us 15 August 2008 EUCI RPS Planning & Implementation Conference San Francisco, CA USA

2. Legislative Declaration of Intent Amendment 37 Ballot Initiative – Where it Began  Why a Renewable Energy Standard?  Environmental concerns  Conservation of scarce resources (fuel, water)  Energy security  Economic development  Technological advance Cost reduction Promote specific resources (e.g. solar)  Therefore, in order to save consumers and businesses money, attract new businesses and jobs, promote development of rural economies, minimize water use for electricity generation, diversify Colorado’s energy resources, reduce the impact of volatile fuel prices, and improve the natural environment of the state, it is in the best interests of the citizens of Colorado to develop and utilize renewable energy resources to the maximum practicable extent.”

3. Colorado Electricity Sales by Ownership Type, 2004 Colorado Energy Forum, 2006, Colorado’s Electricity Future, Sep2006 PSCo & Aquila

4. Colorado Renewable Energy Standard (RES) Essential Elements (page 1 of 5)  Each IOU shall generate, or cause to be generated, electricity from eligible renewable energy resources in the following minimum amounts base on percentage of retail electricity sales (MWh)  Solar set aside: 4% of RES from solar energy Half of solar set aside from customer sited resources Applies only to IOUs  25% Colorado bonus: each kWh generated in Colorado shall count as 1.25 kWh for purposes of compliance  Each REA and Muni shall generate, or cause to be generated, electricity from eligible renewable energy resources in the following minimum amounts  2008 – 2010 1% of retail electricity sales (MWh)  2011 – 2014: 3%  2015 – 2019: 6%  2020+ : 10% Original RES Expanded RES 2007: 3% 3% 2008 – 2010 3% 5% 2011 – 2014: 6% 10% 2015 – 2019: 10% 15% 2020+ : 20%

5.  Energy generated on or after January 1, 2004 is applicable  No unbundling – RECs accompany electrical generation, BUT…  Utilities can use purchased RECs for compliance with all but the customer sited solar component  REC attributes  5-year lifespan  No geographic limits  Can borrow forward 2 years into the future for the first 4 compliance years  Can carry over excess costs into the following year for recovery  No stipulated penalties for noncompliance  1.5X multiplier for “community” projects Colorado Renewable Energy Standard (RES) Essential Elements (page 2 of 5)

6. Solar Incentive Program:  $2.00 per watt rebate for solar photovoltaic (PV) systems up to a maximum size of a 100 kW ($200,000). REC price to be determined by QRU (see below)  Allows customers to obtain rebates for any PV system installed after effective date of the statute, December 1, 2004  PV customers can also receive a REC payment for the RECs their system will generate. Price not specified in rule, allows QRU to adjust the REC price based on customer response. Presently set at $2.50 per watt for PSCo and Aquila  Specifies 20-year term for REC/energy purchases  No solar requirement for REAs and Munis  3.0X multiplier for solar Colorado Renewable Energy Standard (RES) Essential Elements (page 3 of 5)

7. Cost Recovery:  Rules allow for up-front cost recovery via forward looking Renewable Energy Standard Adjustment (RESA)  Must be identified separately on customer bills  PSCo RESA started at 0.6% on March 1, 2006, later increased to 1.42%  PSCo now seeking further increase to 2.0%  Aquila RESA started at 1.0% on September 1, 2006  Rate impact limited to one two percent of customer bills annually  Net of new alternative nonrenewable resources  Requires computer modeling of RES and NoRES plans  Alternate calculation for smaller QRU’s (Aquila) based on cost of solar alone  REA/Muni rate impact cap = 1.0 percent  Administrative costs capped at 10% of total annual collection  QRU may earn an extra profit equal to 50% of the net economic benefit to customers from a renewable facility it invests in Colorado Renewable Energy Standard (RES) Essential Elements (page 4 of 5) XX

8. Retail Rate Impact Rule §40-2-124(1)(g)(I),C.R.S., rev. “For each qualifying utility, the commission shall establish a maximum retail rate impact for this section of two percent of the total electric bill annually for each customer. The retail rate impact shall be determined net of new alternative sources of electricity supply from noneligible energy resources that are reasonably available at the time of the determination.” REA & Muni impact limited to one percent.

9. Rate Impact Limitation R. Mignogna, 2007

10. Other Provisions:  Net metering for IOUs (not required of REAs or Munis)  Resources up to 2 MW  Excess generation paid annually at average hourly incremental cost of electricity supply  Second meter required for systems >10 kW for counting RECs  Interconnection based on FERC Order 2006 Colorado Renewable Energy Standard (RES) Essential Elements (page 5 of 5)

11. HB07-1281 – Renewable Energy Standard Summary  Expands RES to all electric utilities except municipal utilities <40,000 customers  REA’s (Electric Coops) included  IOU RES increased to  2008 – 5%  2011 – 10%  2015 – 15%  2020 – 20%  REA & Muni RES  2008 – 1%  2011 – 3%  2015 – 6%  2020 – 10%  Repeals the opt-out provision  REAs and large munis to provide compliance report to PUC but not for approval  Small munis self certify  Adds “recycled energy” to list of eligible energy resources  Resource bands (only get one)  1.25 x for in-state generation  1.5 x for community R/E projects  3.0 x for solar for REAs & munis  Increases retail rate impact to 2% for IOUs  Leaves intact the method for determining rate impact  Allows QRU to spend full amount even if RES is met  Rate impact for REAs set at 1%  Allows QRUs to rate base a portion of new resources acquired under PPAs

13. 2007 Legislative Activity PUC Related Legislation

14. 2008 Legislative Activity REA/Muni net metering

15. PUC Resource Acquisition Changes (1 of 2)  Change from Least Cost Planning to Electric Resource Planning  Sec 123 Resources (§40-2-123(1), C.R.S.) “The commission shall give the fullest possible consideration to the cost- effective implementation of new clean energy and energy-efficient technologies in its consideration of generation acquisitions for electric utilities, bearing in mind the beneficial contributions such technologies make to Colorado‘s energy security, economic prosperity, environmental protection, and insulation from fuel price increases. “  Rule 3602(o)): “Section 123 resources” means new energy technology or demonstration projects, including new clean energy or energy-efficient technologies under § 40-2-123 (1), C.R.S., and Integrated Gasification Combined Cycle projects under § 40-2-123(2), C.R.S.

16. PUC Resource Acquisition Changes (2 of 2)  Rule 3602(c): “Cost-effective resource plan” means a designated combination of new resources that the Commission determines can be acquired at a reasonable cost and rate impact. A cost effective resource plan may comprise the following: renewable resources to comply with the Renewable Energy Standard, 4 CCR 723-3-3650 et seq.; demand-side management to comply with § 40-3.2-104, C.R.S.; Section 123 resources proposed to be acquired without competitive bidding; selected bids from a competitive acquisition process; and, backup bids intended to replace the loss of one or more of the selected bids.  Issues concerning how RES rules and new ERP rules interact. Conflicts impact:  Resource acquisition (especially wrt/Sec 123 Resources)  Cost recovery

17. Climate Change Initiatives Colorado GHG Sources, 2000 2005 GHG Emissions: 118 MMTCO 2 e BAU 2020 GHG: 158 MMTCO 2 e

18. Colorado (Governor’s) Climate Action Plan

19. Colorado Climate Action Plan

20. Contact: Matt Baker, Commissioner Colorado Public Utilities Commission 1560 Broadway Denver, Colorado 80202 Phone: 303.894.2007  Fax: 303.894.2065 Email: matt.baker@dora.state.co.us