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HB 1365 Update: Independent Power Producers Pitch a Plan That Is Sure To Be Ignored

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Independent Power Producers Pitch a Plan That Is Sure To Be Ignored

In the course of PUC deliberations on HB 1365, there’s been a long running dispute between Xcel and independent power producers (electricity generators that compete with Xcel on the wholesale power market) over whether the utility must consider implementation plans put forth by the IPPs. In a nutshell, Xcel isn’t interested in hearing the IPPs’ input, because an important part of Xcel’s strategy is to increase its market share at the expense of IPPs.

Xcel has a veto over whichever HB 1365 implementation plan the PUC ultimately adopts, so it seems like a waste of time to consider an IPP plan that is sure to be opposed by the utility. Nonetheless, Commissioner Matt Baker requested to hear the IPP proposal.

In supplemental cross answer testimony filed yesterday, David Rhodes, Vice President of Business Development & Asset Management at Southwest Generation Operating Company, proposed the IPP alternative, known as “IPP 2.” It is based on Plan 6.2J, an accelerated version of Xcel’s original, preferred plan, with the primary difference being that it would use imported IPP electricity and a 167 megawatt “peaker” natural gas plant in lieu of a new 314 megawatt natural gas plant at the Cherokee site northwest of Denver.

Given that the purpose of the IPPs’ plan is to limit Xcel’s gain on the wholesale electricity market, it is highly doubtful that the utility would accept it.

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