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Xcel Energy, Inc. (XEL) Ordered by Colorado PUC to Conserve

Colorado’s largest power utility, Xcel Energy Inc. (XEL), will launch one of the biggest energy-conservation efforts in the nation, costing well over $1 billion in the next 12 years — by order of the Colorado Public Utilities Commission (CPUC).

The CPUC, which regulates Xcel, announced its decision recently, outlining goals for the utility’s energy-efficiency programs between now and 2020. The decision is part of a multi-pronged case before the CPUC called the Colorado Resource Plan, which will decide the source of energy for most Coloradans in the next several years. Xcel serves power and natural gas to about 70 percent of Colorado’s population.

The CPUC ruled that Xcel should cut a rising percentage of its annual electricity sales to retail customers, with a goal of cutting 1.2 percent of annual sales in 2020, and eliminate between 886 megawatts and 994 megawatts of demand in that time. That’s triple the cuts currently achieved by Xcel’s energy-efficiency programs and equivalent to eliminating all the power generated by Xcel’s three Denver-area power plants — Zuni, Cherokee and Arapahoe.

How that’s going to be accomplished still has to be worked out. Xcel is supposed to file a plan with proposed programs with the CPUC on Aug. 1. Many of Xcel’s existing energy-conservation programs probably will be included in the plan, spokesman Mark Stutz said.

Businesses are likely to be targeted for many of the programs because it’s easier to get more energy conservation from a business than from a home. Probable programs include getting new, more efficient lighting systems in office buildings; ensuring that building systems are running at peak performance; and using more efficient motors and heating and cooling systems.

It’s unknown how much it will cost Xcel — and the consumers who will pay for the programs through a special charge on their monthly utility bills — to reach the CPUC’s goal. Xcel estimated that hitting a goal of 1 percent in reduced sales would cost between $1.8 billion and $2.4 billion, in 2006 dollars. But others say those costs will be outweighed by the amount of money Xcel and its customers won’t spend building new power plants and buying power on the spot market.

Howard Geller, executive director of the Boulder-based Southwest Energy Efficiency Project, has said he thinks Xcel can achieve the CPUC’s goals at a cost of between $700 million and $1 billion. He also pegged the economic benefit of the energy-efficiency goals at about $1.5 billion.

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