Xcel Energy's Energy Efficiency Programs Bounce Back After Budget Overrun

Xcel Energy's commercial energy efficiency programs, which were temporarily shut down due to budget constraints, have been revived after a decision by state utility regulators. The Colorado Public Utilities Commission (PUC) has allowed the company to reallocate $34 million from next year's energy rebate budget to cover the shortfall, enabling the resumption of these vital programs.

Restoring Vital Energy Efficiency Initiatives

Addressing the Budget Overspend

In July, Xcel Energy's subsidiary, the Public Service Company of Colorado, filed for emergency relief with the PUC, stating that it had exceeded its $92.9 million budget for the year by spending over $74 million. This led to the temporary suspension of commercial energy efficiency rebates, causing turmoil among contractors and vendors.

Reallocating Funds to Mitigate the Shortfall

The PUC had initially approved a $78 million residential and commercial demand-side management (DSM) budget, with a 20% cushion. However, the utility was on pace to spend $115.6 million, primarily due to bonuses and rebates for energy-efficient lighting driven by demand from the "indoor agricultural market," primarily marijuana grow houses.

Stakeholder Concerns and the PUC's Balancing Act

The PUC faced a challenging decision, as it had to balance the need to maintain the integrity of the approved budget agreements and cost controls, while also recognizing the importance of minimizing disruptions to the energy efficiency market. The Colorado Energy Office, the Southwest Energy Efficiency Program (SWEEP), and the City and County of Denver all supported providing additional funds to Xcel Energy.

The PUC's Compromise Solution

The PUC's final decision was to look at the budget over the full three-year energy efficiency plan from 2024 to 2026, totaling $280 million, and move $34 million to the 2024 budget. This solution allowed Xcel Energy to restart its business and energy management programs, while also acknowledging the concerns raised by stakeholders about the potential impact on future savings targets.

Xcel Energy's Request for Reconsideration

Xcel Energy has filed a request for the PUC to reconsider the language in the order, seeking more budget flexibility and ensuring that its future performance bonuses won't be adversely affected in 2025 and 2026 due to the shift in funds.

Stakeholder Reactions and Ongoing Concerns

While the Energy Efficiency Business Coalition and other stakeholders are pleased to see the programs restarted, they still have concerns about the long-term implications of the budget reallocation. Justin Brant, the utility program director at SWEEP, expressed that they are "happy that they've restarted incentives in the short-term, but definitely still have concerns that we're taking monies from future years and likely just kicking the can down the road."The Xcel Energy saga highlights the delicate balance between maintaining the integrity of approved budgets and ensuring the continuity of vital energy efficiency programs. As the utility industry continues to evolve, stakeholders and regulators must work together to find innovative solutions that support the long-term sustainability of these critical initiatives.