Building the New Energy Economy: Decisionmaking in a time of uncertainty

1. Building the New Energy Economy:Decisionmaking in a time of uncertainty Keystone Energy Board Remarks of Ron Binz, Chairman Colorado Public Utilities Commission February 6, 2010

2. Outline of this presentation • Brief introduction to the Colorado PUC • Our energy regulatory priorities • Stress energy efficiency • Stress renewable energy development • Employ progressive resource planning • Support advanced generation development • CCS • CAES • Accelerate state and regional transmission development • Our climate priorities

3. Caveat • I am one of three equal commissioners • My positions are my own • I am confused by many things and have not made up my mind on much at all • I don’t even agree with some of the things I say • Good advice: don’t believe everything you think

4. PUC Structure: Commissioners • Three Commissioners • Appointed by the Governor • Confirmed by majority vote of State Senate • Serve four-year teams – may be reappointed • No more than two Commissioners from one political party • Judicial functions and legislative functions

5. The Commissioners Ron Binz Matt Baker Jim Tarpey

6. What Do We Regulate? 60% • Investor-owned electric utilities • Investor-owned natural gas utilities • Intrastate natural gas pipelines----------------------------------------------- • Some telecommunications carriers & services • Passenger transportation • Railroad crossings • Investor-owned water utilities • Pipeline safety • Relay Service for the hearing impaired 15% 1% 10% 10% 4%

7. Types of Colorado Electric Utilities

8. State Clean Energy Policies as a Foundation for GHG Reductions State Complementary Policies Available at:www.naruc.org

9. Our State Energy Priorities • Stress renewable resources • Aggressive State Renewable Portfolio Standard • Progressive resource planning at Commission • Healthy renewables industry • A commitment to addressing climate change • Boost Energy Efficiency • Customer: education • Utility: engagement • Regulatory: incentive regulation; rate structure changes • Advanced technologies development • Research and demonstration for carbon sequestration • Concentrating solar field at PSCo’s Cameo coal-fired plant • CAES and other storage strategies • Smart grid test bed in Boulder, Colorado • Transmission development • SB 100 in Colorado • Western Renewable Energy Zones participation

10. Colorado’s Balanced Approach • Coal producing state (#8 of 50 states) • Natural gas producing state (#7 of 50 states) • Substantial wind and solar resources • Moderate electric rates • Governor with a “New Energy Economy” focus • Supportive Legislature • Regulators and utilities with an eye on the goal

11. History of Colorado’s RPS • Amendment 37 (2004) • Voter initiated; 10% by 2020; solar carve-out; net metering • HB 1281 (2007) • 20% by 2020; 10% for Munis, Coops; solar carve-out • HB 1001 (2010) • 30% by 2020; carve out for DG of 3% by 2020(~650 MW PV)

12. Electric Generation Fuels in Colorado1990-2008

13. Colorado Approach to Electric Resource Planning -- Resource Planning -- New Rule Old Rule • “Resource Planning” • “Least Cost Planning” • Fuel Neutrality • Clean Energy Preference • Independent Evaluator • Utility models new portfolio • Optional Post-bid Review • Utility selects bid resources • Little energy efficiency • New DSM emphasis

14. PUC’s ERP Decision for XcelEnergy Major Decision Items • Affirmed commitment to competitive bidding for resources • Approved closure of two coal plants • Approved large solar projects (200 - 600 MW) • 750 MW of additional wind capacity (to 1950 MW) • Assumed future CO2 price in modeling ($20/ton + 7% growth)

15. Colorado’s Energy Efficiency Commitment • DSM goals in legislation (HB 1037) • Commission rules • Exceeded statutory minimum (growing to 1.2% of sales) • Expedited cost recovery • Bonus mechanism • Tie-in to utility electric resource planning • Requirement of a recent CPCN for gas turbines • Demand response solicitation • Expanding residential AC program • Significant weatherizaton and EE activity coming from ARRA funding

16. Customer Education Two 75-watt Compact Fluorescent Lights will reduce CO2 emissions by One Metric Ton over their lifetime

17. Reduce Colorado’s carbon emissions by 20% below 2005 levels by 2020 • Reduce Colorado’s carbon emissions by 80% below 2005 levels by 2050

18. EPRI Prism Analysis (2008)

19. Price Levels and Volatility 4.9 to 1.0

20. NREL Wind Resource Map

21. Concentrating Solar in Colorado Concentrating solar w/storage $ Other baseload (coal w CCS; nuclear)

22. San Luis Valley

23. Solar Electric Density • Use: 100 MW(ac)/mile2 • Colorado Peak Integrated Demand: 11GW • Result: 110 mile2 required land area

24. San Luis Valley

25. But what if 11 GW of solar were spread around the state in 100 MW installations? It might look like this...

27. Integrated GasificationCombined Cycle Coal Plant

28. Integrating Gas Generation with Wind

29. Compressed Air Energy Storage (CAES)

30. CAES Characteristics • CAES turbine has heat rate that is only about 50% of conventional gas turbine (~4000 BTU/kWh) • CAES has a relatively high round-trip efficiency • Eastern Colorado appears to have suitable sites • EPRI studies underway

32. Energy Zones Tot 3 Expansion Project EPTP NNMI HIGH PLAINS EXPRESS Albuquerque SunZia WYOMING Wyoming Generation High Plains Express Dave Johnston LRS Pawnee/ Story COLORADO Midway Limon Comanche Lamar Holcomb ARIZONA Gladstone NEW MEXICO Phoenix Socorro Tucson

33. Thanks for the invitation. I look forward to your questions.