Dive Brief:
- The Colorado Public Utilities Commission on Friday adopted building electrification goals and budgets for Xcel Energy that are expected to cut greenhouse gas emissions by more than 107,000 metric tons between 2024 and 2026 and reduce natural gas usage by about 2 million dekatherms.
- Regulators also voted to phase out energy efficiency rebates for certain gas-fired equipment, including hot water heaters and gas heating in new homes. The PUC wants to entirely sunset the subsidies by 2027.
- The goals are “ambitious and achievable, although we must keep costs affordable for customers,” Xcel said in a statement. The utility plans to propose a demand-side management and beneficial electrification plan later this year to meet the new targets.
Dive Insight:
Colorado legislators in 2021 set greenhouse gas emission targets for gas utilities and required investor-owned utilities to invest in beneficial electrification. The goals set by the PUC on Friday are the first since the legislation was passed, and efficiency advocates celebrated the decision.
The PUC “took a big step towards achieving the state’s decarbonization goals,” said Justin Brant, utility program director for the Southwest Energy Efficiency Project, or SWEEP. “We look forward to working with Xcel Energy to design and implement programs to achieve these goals in the coming years.”
A final order is expected out within the next couple of weeks. The commission adopted a $67.5 million budget for Xcel’s electrification programs, which will represent “an almost twenty-fold increase from Xcel’s current beneficial electrification spending by 2026,” several conservation groups and the city of Boulder said in a statement cheering the PUC’s decision.
Precise targets and budgets will be set in the final order, but Xcel said it believes SWEEP and others’ analysis “accurately reflects the Commission’s recent deliberations.”
“We expect to propose our next demand-side management and beneficial electrification plan later this year and will offer a suite of programs intended to cost-effectively achieve the maximum amount of electric and gas energy savings,” the utility said.
Efficiency and electrification is already a part of Xcel’s strategy to reduce emissions, the utility said, though the new goals will represent a marked increase in investment. Last year Xcel’s demand-side management programs resulted in over 262,000 tons of avoided carbon dioxide emissions from its electric and natural gas systems, the utility said.
Xcel will need to file a Clean Heat Plan by Aug. 1, which the PUC says may include both supply-side resources to replace gas and demand-side resources to reduce consumption.
The commission’s decision “is a step closer to a clean energy future,” Carolyn Elam, the city of Boulder’s sustainability senior manager for energy systems, said in a statement. “It sends a strong message that our utilities need to prioritize helping customers transition away from natural gas to affordable, healthier electric options.”
The decision to direct future efficiency investments toward electric heat pumps and heat pump water heaters rather than gas-fueled appliances “will most effectively reduce Colorado’s greenhouse gas emissions over time,” said Meera Fickling, senior climate policy analyst at Western Resource Advocates.
