4 Colo. Code Regs. § 723-3-3660
Current through Register Vol. 47, No. 23, December 10, 2024
Section 4 CCR 723-3-3660 - Cost Recovery and Incentives(a) The investor owned QRU shall be entitled to timely cost recovery through retail rate mechanisms for all funds prudently expended to comply with these rules, including the costs the QRU incurs to administer the standard rebate offer and the acquisitions of eligible energy and RECs. The QRU shall be entitled to recover its investment and expenses associated with these rules through appropriate adjustment clauses, including the RESA, that allow recovery of expenditures without the full resetting of electric rates.(b) In its compliance plans and reports, the investor owned QRU must demonstrate that the RESA satisfies the retail rate impact established in paragraph 3661(a).(c) So long as the RESA does not exceed the retail rate impact under paragraph 3661(a) and in accordance with either an approved resource plan under the Commission's Electric Resource Planning Rules or an approved compliance plan under rule 3657, the investor owned QRU may: (I) collect and bank funds in the RESA account for acquiring eligible energy in future periods; and(II) advance funds from compliance year to compliance year to augment the amounts collected from the RESA for the acquisition of more eligible energy resources.(d) Each QRU shall separately identify the RESA on its customers' bills.(e) Interest shall accrue on the deferred balance (positive or negative) of the RESA account at the investor owned QRU's most recent authorized after-tax weighted average cost of capital, so long as the RESA does not exceed two percent of the total annual electric bill for each customer.(f) If the investor owned QRU incurs costs in acquiring eligible energy to meet the RES, the QRU shall be entitled to carry forward these costs to a future year for cost recovery so long as the investor owned QRU complies with limit on the retail rate impact under paragraph 3661(a).(g) The investor owned QRU shall be entitled to earn an extra profit on the QRU's ownership investment in a specific eligible energy resource if that eligible energy resource provides net economic benefits to customers. For these investments, the QRU shall be entitled to a return equal to the QRU's most recent authorized rate of return on rate base plus a bonus limited to 50 percent of the of the net economic benefit as long as the QRU is in compliance with these rules implementing the RES. If the QRU's investment in a specific eligible renewable energy resource does not provide a net economic benefit to customers, the QRU shall be entitled to a return equal to the QRU's most recent authorized rate of return on rate base.(I) For the purposes of this rule 3660, net economic benefit shall mean that the specific eligible energy resource in which the QRU has made an ownership investment results in an average retail rate impact less than the rate impact that would have resulted from the acquisition of the alternative eligible energy resource meeting the same component of the RES that would have been selected absent the QRU's investment. The QRU shall set forth its calculation of the proposed net economic benefit either at the time of a compliance plan filing, an annual compliance report filing, a QRU rate filing or by application. The Commission shall determine the level of the net economic benefit and the level of the bonus after review of the utility's filing. The Commission may set the matter for hearing if appropriate under the Commission's Rules of Practice and Procedure.(II) To the extent that a QRU uses computer modeling in its analysis of net economic benefit, the QRU shall use the same methodologies and assumptions it used in its most recently approved electric resource planning case, except as otherwise approved by the Commission. Confidential information may be protected in accordance with rules 1100 through 1103 of the Commission's Rules of Practice and Procedure.(III) Any net economic benefit for which the QRU qualifies to receive a bonus shall be charged against the RESA account.(h) An investor owned QRU may propose to develop and own, in whole or in part, a new eligible energy resource by filing an application with the Commission. The Commission may set the matter for hearing, if appropriate, under the Commission's Rules of Practice and Procedure. For the purpose of this paragraph 3660(h): (I) A QRU shall be allowed to develop and own as utility rate-based property, without being required to comply with the competitive bidding requirements in rule3656, up to twenty-five percent of the total new eligible energy resources that the QRU acquires from entering into power purchase agreements and from developing and owning resources after March 27, 2007 if the Commission determines that the QRU-owned new eligible energy resource can be constructed at a reasonable cost compared to the cost of similar eligible energy resources available in the market.(II) A QRU shall be allowed to develop and own as utility rate-based property, without being required to comply with the competitive bidding requirements in rule 3656, up to fifty percent of the total new eligible energy resources that the QRU acquires from entering into power purchase agreements and from developing and owning resources after March 27, 2007 if the Commission determines that the QRU-owned new eligible energy resource can be constructed at a reasonable cost compared to the cost of similar eligible energy resources available in the market and that the proposed new eligible energy resource would provide significant economic development, employment, energy security, or other benefits to the state of Colorado.(III) The QRU shall be allowed to develop and own as utility rate-based property more than the percentages of total new eligible energy resources set forth in rules 3660(h)(I) and (h)(II), if the QRU bids to own the new eligible energy resources in a competitive solicitation and is selected as a winning bidder in that competitive solicitation.(IV) The QRU may develop and own new eligible energy resources either solely or jointly with other owners. If the QRU owns the new eligible energy resource jointly, the entire jointly owned resource shall count toward the percentage limitations set forth in paragraph 3660(h). For purposes of this rule, participation by any parent, affiliate or subsidiary of a QRU in a QRU's owned new eligible energy resource shall count towards the percentage limitations. The QRU's rate base portion of any new eligible energy resource is limited to only the QRU's ownership percentage in the new eligible energy resource.(V) If the QRU intends to develop and own new eligible energy resources as provided for under subparagraphs 3660(h)(I) or (h)(II), it shall propose for Commission approval, in advance of filing its application under this rule, the name of the independent evaluator whom the utility intends to hire to conduct an assessment of whether the proposed new eligible energy resources can be constructed at a reasonable cost compared to the cost of similar eligible energy resources available in the market. The independent evaluator will develop a report to the Commission on its assessment of whether the proposed new eligible energy resources can be constructed at a reasonable cost compared to the cost of similar eligible energy resources available in the market. The independent evaluator shall have at least five years' experience conducting and/or reviewing the conduct of competitive electric utility resource acquisition, including computerized portfolio costing analysis. The independent evaluator shall be unaffiliated with the utility; and shall not, directly or indirectly, have benefited from employment or contracts with the utility in the preceding five years, except as an independent evaluator under these rules. The independent evaluator shall not participate in, or advise the utility with respect to, any decisions relating to the proposed new eligible energy resource. The utility shall conduct any additional modeling requested by the independent evaluator to test the assumptions and results of the cost analyses. The independent evaluator's report shall be filed with the utility's application for approval of the proposed new eligible energy resource. The evaluator's report shall contain the evaluator's views on whether the proposed new eligible energy project can be constructed at a reasonable cost compared to the cost of similar eligible energy resources available in the market.(VI) Nothing in paragraph 3660(h) shall prevent the Commission from waiving, repealing, or revising any Commission rule in a manner otherwise consistent with applicable law.(i) When an investor owned QRU applies for a certificate of public convenience and necessity, the Commission shall consider rate recovery mechanisms that provide for earlier and timely recovery of costs prudently and reasonably incurred by the QRU in developing, constructing, and operating the eligible energy resource, including: rate adjustment clauses until the costs of the eligible energy resource can be included in the utility's base rates; and, a current return on the utility's capital expenditures during construction at the utility's most recently authorized weighted average cost of capital, including its cost of debt and its most recently authorized rate of return on equity, during the construction, startup, and operation phases of the eligible energy resource. (j) The utility is entitled to recover through rates, its prudently incurred expenditures. While not the exclusive method for establishing prudence, if the Commission approves a renewable energy supply contract or a renewable energy credit contract, the expenditures of the investor owned QRU under the contract shall be deemed to be prudent expenditures.(k) If the investor owned QRU recovers fuel and purchased energy expense through an incentive adjustment clause, the QRU shall not receive a benefit from the incentive adjustment clause for the energy generated from QRU-owned eligible renewable energy resources, but the QRU shall be entitled to recover all the fuel and purchased energy costs associated with the eligible energy resource.(l) Each wholesale energy provider shall offer to its wholesale customers that are cooperative electric associations the opportunity to purchase their load ratio share of the wholesale energy provider's electricity from eligible energy resources. If a wholesale customer agrees to pay the full costs associated with the acquisition of eligible energy resources and associated renewable energy credits by its wholesale provider by providing notice of its intent to pay the full costs within sixty days after the wholesale provider extends the offer, the wholesale customer shall be entitled to receive the appropriate credit toward the RES as well as any associated renewable energy credits. To the extent that the full costs are not recovered from wholesale customers, a qualifying retail utility shall be entitled to recover those costs from retail customers.38 CR 17, September 10, 2015, effective 9/30/201539 CR 06, March 25, 2016, effective 4/14/201639 CR 08, April 25, 2016, effective 5/15/201640 CR 22, November 25, 2017, effective 12/15/201742 CR 03, February 10, 2019, effective 3/2/201942 CR 07, April 10, 2019, effective 4/30/201942 CR 09, May 10, 2019, effective 5/30/201943 CR 08, April 25, 2020, effective 5/15/202043 CR 12, June 25, 2020, effective 7/15/202043 CR 20, October 25, 2020, effective 11/14/202044 CR 13, July 10, 2021, effective 7/30/202144 CR 24, December 25, 2021, effective 1/14/202245 CR 18, September 25, 2022, effective 10/15/202246 CR 02, January 25, 2023, effective 2/14/2023