Good news for clean energy and energy efficiency out of the Colorado Public Utilities Commission: PSCo will disassociate its profits from the amount of energy it sells.
Right now, the more electricity PSCo sells, the more money it makes. This creates a clear disincentive for the utility to promote energy efficiency, rooftop solar and third party community solar, which decrease the amount of electricity that households purchase from the company.
To be implemented promptly, this compensation change will mean that rates change more often, i.e. annually, to ensure that PSCo can recover its costs and fixed profit. This small change to how our electric utility makes money will help all of us customers see the savings benefits of investing in energy efficiency and solar energy.
All customers of Xcel will see an adjustment on their monthly bills related to the difference between the amount of revenue it was allowed to collect versus the amount it did collect. If the utility falls short of its allowed revenue, the mechanism will collect additional funds to make up the difference. Conversely, if the utility received more than its allowed revenue, customers will see a reduction on their bills.
Now, the Commission has the opportunity to go a step further and implement Performance Based Ratemaking. Under this innovative structure the utility earns more for doing the right thing -- like increasing reliability, or adding more rooftop solar to the grid. The Commission will consider this new payment structure later this year and consider public support. We’ll let you know when it’s time to make your voice heard.