Energy efficiency, decarbonization measures and cost recovery concerns tied to one of the largest-ever Xcel Energy proposals came to a head in a settlement agreement signed on July 29. 

Xcel Energy’s Mountain Energy Project looks to address gas supply constraints at the Marshall Compressor Station’s gas supply in Boulder County, which feeds natural gas to the Eastern Mountain Gas System running through Summit, Grand, Lake and Eagle counties.

In the settlement, which still needs approval from the Colorado Public Utility Commission to actualize it, intervenors and the energy provider agreed on a set of terms mandating actions that scale back aspects of the project and measures geared at protecting customers. 

The group in the settlement involves intervening parties that wanted a seat and a voice in the matter during the project’s review because of issues they had with the original proposal. One of the intervening parties is coalition of Summit County government and the area’s municipal governments going under the name Mountain Community Coalition. Other intervenors include environmental nonprofit Sierra Club and the Southwest Energy Efficiency Project.

The July 29 settlement isn’t unanimous because one intervening party, the Colorado Office of the Utility Consumer Advocate, opposes the settlement agreement, and another intervening party’s legal counsel hadn’t gotten approval from its clients yet at the time of the settlement’s approval.

Breckenridge’s sustainability manager Jessica Burley, a key player in Mountain Community Coalition’s efforts, said a settlement in this case warrants Xcel Energy to make a second proposal of sorts, revising components of what the energy provider first brought to the table. She said the commission tasked with reviewing the settlement can either accept or deny the entire settlement, or accept or deny parts of the settlement.

She said the top concerns of the intervenors are the cost recovery portion of the settlement and the effort to ensure the project is affordable. 

“(It’s) not just that we don’t want our bills to go up, but there was a proposal on the table — that is still kind of on the table by the (Utility Consumer Advocate) — to pay for the cost of this project from just our geographic region,” she said. “So the Eastern Mountain Gas System would have to pay the full amount of the $155 million project.”

A pillar of the Mountain Energy Project is bolstering non-pipeline alternatives to encourage a transition from natural gas in a $49 million proposal meant to serve as funds to incentivize the shift for customers through rebates. Burley said the Mountain Community Coalition advocated for the $49 million price tag to not fall solely on the Eastern Mountain Gas System customers. The coalition wants the cost to be paid by all gas rate payers, systemwide. The same goes for the project’s price tag, at-large. She said the pending settlement also calls for additional incentives above current offerings. 

Another segment of the project focuses on what Xcel officials refer to as “stop-gap” measures for natural gas as it works toward becoming a net-zero energy provider by 2050. It entails a liquefied natural gas tank site in Breckenridge and a compressed natural gas site in Keystone. Negotiations cut the number of proposed liquefied natural gas tanks from eight to five, which Burley said reduced the capital outlay of that portion of the project by $3 million. The settlement requests that Xcel commit to working with local land-use authorities to mitigate visual site disturbance of the tanks.

Additionally, she said the settlement seeks to avoid a $300-million gas infrastructure upgrade, which was the baseline alternative presented. 

The settlement also requests Xcel Energy provide an electric heating rate pilot program for residential customers by July 2026. Burley said the request folds into sustainability goals locally to encourage electric heating over gas heating.

She said an argument many make is gas heating is cheaper than electric. She said homes with old electric heating equipment can make for a very energy-intensive, yet low-efficiency, situation that can come with a higher price tag compared to newer gas equipment. 

Burley said when local officials encourage people to switch to electric, they aren’t talking about just electric heating, but heat pumps. She said this is because heat pumps are a technology that is three times more efficient than electric baseboard heating. 

Similar to how the cold weather impacts can result in intensified supply constraints in the Eastern Mountain Gas System, cold affects heat pumps too, she said. This causes heat pump expenses to rise in the winter with the current rate structure that Xcel Energy has, she said. 

“If one of the goals here is to get people to electrify their heating with heat pumps, we cannot make the argument to our residents and businesses that it’s going to be cheaper. That’s a barrier,” Burley said. 

The Mountain Community Coalition thinks Xcel Energy should come up with a different way of charging people who are committing to a more efficient system, and they want it to partially take form in a winter-specific heat pump rate, according to Burley. She said Xcel already offers something similar in Minnesota, and the energy provider has to do this by statute in 2027.

Intervenors sought to tackle health and safety concerns in the settlement, as well. The settlement aims to give more oversight to local officials by ensuring local government and first responders have access to facility sites and requiring collaboration with local authorities related to wildfire risk. It also mandates Xcel empty gas tanks during summer months when they are not needed. 

Burley said intervenors negotiated the immediate deployment of non-pipeline alternatives with bonus rebates. She said that includes gas-for-gas and gas-to-electric appliance rebates as well as other building-related measures to ensure energy choice for residents and businesses.

The settlement sets a Dec. 1, 2028, deadline for an “Interim Regulatory Filing.” This regulatory review will take place through the Colorado Public Utilities Commission. The commission will review plans for the implementation of non-pipeline alternatives and those for supplemental energy supply resources while also vetting cost-recovery proposals.

She said the Colorado Public Utility Commission will hold a public hearing on Aug. 4 from 11 a.m. to noon and from 6-7 p.m. Both can be attended virtually. The link can be found at PUC.Colorado.gov/puccalendar.