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Will Peabody’s Motion Scuttle HB 1365?

A Quick Review of HB 1365

HB 1365, the Clean Air Clean Jobs Act, mandates that Xcel file a plan by August 15 2010 that would:

  • be implemented by December 31, 2017;
  • meet “reasonably foreseeable” state and federal air quality regulations;
  • achieve at least 70% reductions in nitrogen oxides emissions from at least 900 megawatts of coal fired power plants

The Public Utilities Commission (“PUC”) must approve, deny, or modify Xcel’s proposed plan by December 15, 2010, but only after the Department of Public Health and Environment (“CDPHE”) determines that the plan would meet “reasonably foreseeable” air quality regulations.

The legislation gives Xcel the right to withdraw its plan (i.e., the right to walk away) if it “disagrees with the [PUC’s] modifications.”

A Very Brief History of HB 1365 Implementation Plans

  • August 13: Xcel chose “preferred” Plan 6.1E for achieving HB 1365, from nine possible scenarios. Click here for a 1-page summary of the nine scenarios.
  • October 21: The PUC disqualified Xcel’s “preferred” Plan 6.1E because it included actions that would have occurred after a 2017 deadline.
  • October 25: Xcel chose a new “recommended” plan from the nine possible scenarios that were set forth in August (Plan 5B), and it concomitantly proposed three new versions of its original, “preferred” plan (Plans 6.2J, 6E FS, and 6.1E FS). Click here for a detailed review of the new plans.
  • November 3: Xcel, which is accorded veto power over all of the plans before the PUC for consideration, disqualified a number of possible plans. To see a 1-page summary of plans that are “in play,” click here.

Will Peabody’s Motion Scuttle HB 1365?

Today was the deadline for parties to respond to Peabody’s motion to dismiss the proceedings. The motion argues that the “lynchpin” of HB 1365 is the submission of an implementation plan by August 15, 2010. Peabody alleges that Xcel violated this provision of HB 1365 when the utility issued Plans 6.2J, 6E FS, and 6.1E FS on October 25. As such, Peabody argues, “to continue in its current posture would violate the Act (HB 1365, the Clean Air Clean Jobs Act), basic principles of due process, and the Commission’s own regulations.”

The Peabody motion further chronicles decisions and assertions of the PUC and Xcel, respectively, by which they belied their understanding that these proceedings were meant to address the plan that Xcel filed last August—and only that plan. They are made to look silly by their subsequent willingness to consider a new set of plans.

In its response, Xcel claims that Plans 6.2J, 6E FS, and 6.1E FS aren’t new plans; rather they are “slight modifications.” The other parties make similar arguments. Colorado Department of Public Health and Environment, for example, states that Plans 6.2J, 6E FS, and 6.1E FS are “simple modifications and logical outgrowths of the original scenarios.” The Gas Interveners (natural gas producers like Chesapeake Energy and Noble) assert that Plans 6.2J, 6E FS, and 6.1E FS are “refinements and variations.”

These arguments ring hollow, but don’t take my word for it. Just ask the people who have to do the work. The PUC Staff filed testimony stating that “Staff has serious procedural, due process and practicality concerns” about Xcel’s issuance of new implementation scenarios, because, “present[ing] a new fallback alternative in the late stages of an already condensed proceeding is unjustified and highly prejudicial.” Normal resource acquisition dockets last years; HB 1365 compresses such a docket into months. The PUC Staff argues that there simply isn’t enough time to adequately analyze Xcel’s new scenarios. Clearly, the PUC Staff disagrees with claims by Xcel, CDPHE, and the Gas Interveners that Plans 6.2J, 6E FS, and 6.1E FS are “simple” and “slight.”

What do I think will happen? The PUC has the power to rule either way. HB 1365 requires the PUC to “approve, deny, or modify” Xcel’s plan, and the word “modify” is vague enough to allow the PUC as much discretion as it wants.

It’s highly unlikely that the PUC would dismiss the proceedings, but it’s far less implausible that it would eliminate some if not all of Plans 6.2J, 6E FS, and 6.1E FS. The PUC Staff has targeted 6.2J in particular, so I think that’s most likely plan for excision. I wouldn’t be terribly shocked if the PUC also jettisoned the other two plans.

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