Colorado PUC Says the Price of Electricity Can’t Affect EVs?

Colorado's PUC seems to have ruled that the price of electricity will not affect the adoption of electric vehicles, or that environmental interests affected by electric vehicle adoption are not tangible.

A successful transition to electric vehicles (EVs) is necessary to curb dangerous air pollution and address the climate crisis. The economics of that transition depend upon the potential cost savings electricity can provide relative to gasoline and diesel. And the price of electricity is determined by state commissions that regulate the rates proposed by electric utilities.

That’s why it is surprising that the Colorado Public Utilities Commission (PUC) denied the petitions to intervene filed by NRDC, other environmental groups, and environmental justice organizations in a public proceeding to review and approve a utility rate designed specifically to advance EV adoption.

That EV rate was proposed by Xcel, the largest utility in Colorado. The first decision issued by the administrative law judge presiding over the case denied our interventions on the grounds the environmental interests we sought to represent were not “tangible” or “possessing a physical form.” Our collective response noted that lungs harmed by vehicular air pollution possess a physical form.

A subsequent decision issued by the same judge seemed to accept that environmental interests are tangible, and instead asserted that environmental interests would not be affected by the outcome of the case, finding Xcel’s proposed EV rate “cannot affect the cost consumers pay to power EVs,” “cannot affect the number of EV charging stations,” and thus cannot impact environmental outcomes. This is equivalent to arguing that the price of oil doesn’t have environmental consequences, even though higher oil prices result in reduced oil use, just as higher EV rates result in reduced EV use.  The EV rate proposed by Xcel will determine the price of electricity paid by operators of EV charging stations and operators of fleets of electric cars, trucks, and buses.

The decision concluded that “advancing electrification in the transportation sector … is not at issue here.” However, the governing Colorado law makes it clear that advancing electrification was not just an issue in the case — it was the entire point of the case.

This EV rate proceeding was the first case resulting from a transportation electrification bill signed into law earlier this year that required Xcel to propose “a specific rate or rates for electricity supplied to commercial and industrial facilities used to charge electric vehicles that encourage vehicle charging and that support the operation of the electric grid.” The law also requires the Colorado PUC to consider whether “rate designs… that encourage vehicle charging that supports the operation of the electric grid” are “expected to contribute to meeting air quality standards, improving air quality in communities most affected by emissions from the transportation sector, and reducing statewide emissions of greenhouse gases by forty percent below 2005 levels by 2030 and eighty percent below 2005 levels by 2050.”

Accordingly, the PUC was bound by the statute that required this specific proceeding to consider environmental and environmental justice impacts. And Xcel certainly recognized those impacts when it originally proposed the new EV rate in May of this year, noting that the rate would advance the utility’s “leadership and vision with respect to environmental stewardship and specific carbon reduction goals.”

In response to Xcel’s proposal, NRDC filed a petition to intervene in July “to protect [its] members’ environmental, health and economic interests and rights that may be affected by the outcome of this proceeding,” and to ensure that the proposed EV rate is “designed to accomplished [its] objectives.” We also explained that Xcel’s EV rate proposal “could be improved to optimize and accelerate commercial vehicle electrification,” with “potential modifications relating to issues such as rate delineation, peak period timing, demand charges, and critical peak pricing.”

NRDC has participated in countless PUC proceedings across the nation focused on utility policies to accelerate EV adoption. When it comes to the type of rate design at issue in the Colorado proceeding, NRDC, and the other groups denied entry here, have extremely relevant expertise. NRDC has submitted substantial testimony in very similar, precedent-setting cases in other states. We retain economic experts who provide real value, conduct original analysis, and whose recommendations have directly impacted the final outcomes of those cases. We hoped to do so on behalf of our 10,000+ members in Colorado.

NRDC and Earthjustice (on behalf of local environmental justice groups) appealed the judge’s decisions asserting that environmental interests were not tangible or would not be affected by the EV rate in question to the full PUC. In the final vote, the PUC commissioners did not explicitly embrace the argument that environmental interests are not tangible nor the assertion that the price of electricity could not affect EV adoption. Instead, the commissioners simply denied our motions on the grounds our petitions were “insufficient on their face,” while failing to explain how they were insufficient.

We subsequently requested meetings with commissioners to seek guidance as to what we should do differently going forward, but those meeting requests were denied, again with no explanation. Accordingly, we can only guess at what we’re supposed to do differently next time.

The PUC needs to provide clarity as to what is expected in a petition to intervene. The barriers to public participation in utility regulatory proceedings are already extraordinarily high. Those barriers prevent most non-profits from being heard (especially those representing communities most heavily impacted by local air pollution) by the public officials who regulate one of the largest sources of pollution in the nation.

NRDC generally has the legal know-how and the resources to overcome those obstacles. In our office, I sit next to an attorney, Ralph Cavanagh, who has been practicing before utility commissions in states across the union for over 40 years. He started in 1979, the year I was born, and he can’t recall a single instance in which NRDC was denied intervention in such a proceeding.

At the other end of the spectrum, this was the first Colorado PUC proceeding in which the environmental justice groups represented by Earthjustice attempted to participate. The Colorado commissioners have made public statements soliciting the input of such groups, but they denied their first petition to intervene in a substantive case. If the Commission is serious about weighing environmental justice concerns, it needs to allow those voices to be heard when real decisions are being made.

Those voices and the testimony NRDC sought to provide will not be heard in a case that will directly impact EV adoption and have significant environmental consequences as a result. It’s too late to fix that, but the PUC can help prevent this from happening again. First and foremost, the PUC needs to explain exactly what is required of public-interest groups going forward.

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