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Did the PUC Call Xcel’s Bluff on HB 1365?

The PUC finally issued a written ruling addressing appeals to its December decision on a HB 1365 implementation plan. As I noted here, virtually every stakeholder had requested a rehearing. The PUC issued an oral ruling on January 26, but I didn’t listen to it at the time, and media reports covered only the PUC’s rejection of coal interests’ appeals. So, until last night, I didn’t know how the PUC responded to rehearing requests from non-coal stakeholders, like Xcel.

Remember, HB 1365 allows the utility to walk away from the process for whatever reason, and thereby scuttle the legislation. In its appeal motion, Xcel used strong language to express its displeasure with the PUC’s decision regarding cost recovery. It even intimated that it would be willing to sink the process unless it got its way. Without going into too much detail, Xcel wanted to recover costs for “construction work in progress” (i.e., tearing down old power plants, building new ones, and installing pollution controls), as the work was performed, while the PUC insisted on a deferred cost recovery.

According to Xcel’s appeal motion:

  • “The Decision fails to put into place one of the cornerstones of this historic legislation”
  • “The Commission’s position is contrary to the express provision of [HB 1365] and the Commission must reverse it on rehearing in order to enter an order that complies with the Clean Air Clean Jobs Act.” [I added formatting]
  • “The early plant retirements and/or large capital investments the Clean Air Clean Jobs Act requires can only be implemented if we are provided adequate and timely rate recovery.” [I added formatting]

Despite this strong language demanding more timely cost recovery, the PUC didn’t budge. In its decision, the PUC states, “We are not persuaded by Public Service’s arguments regarding [cost recovery for HB 1365]…” Accordingly, the PUC rejected Xcel’s request to be paid as they spend on “construction work in progress.”

Given the stern language of Xcel’s appeal motion (the PUC “must” reverse its December decision on cost recovery; HB 1365 “can only be implemented if” Xcel gets current cost recovery, as defined by Xcel), it would seem that the PUC’s refusal to give the utility what it wants could cause the utility to walk away from the process, as is its right under HB 1365.

Yet, speaking on the subject of the PUC’s appeals decision, Xcel spokesman Mark Stutz told Brian Smith of the Craig Daily Press, “There were no really major issues that would cause us to change our minds about moving forward with the plan.” This statement simply doesn’t jibe with the record. Indeed, throughout the HB 1365 hearings, in its Statement of Position, and in its appeal, Xcel has demanded immediate cost recovery on construction work in progress. Quite contrary to what Stutz told the Craig Daily Press, the PUC’s rejection of Xcel’s preferred cost recovery plan is the culmination of a “really major issue.”

As such, I don’t know whether Stutz is out of the loop, or if Xcel has been bluffing the whole time. If the latter is true, then the PUC is one heck of a poker player.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute