Xcel Energy has requested state regulators to approve a plan to expedite the bids on up to 4 gigawatts of renewable energy projects to enable it to claim federal tax credits before they are phased away by new federal legislation, with the Colorado Public Utilities Commission staff, Colorado Energy Office and Utility Consumer Advocate office joining the motion as time becomes critical because of the accelerated phase-out of tax credits in new federal legislation.
The pressing timetable leads to a record regulatory demand
State regulators are being solicited by Xcel Energy to approve a plan to expedite bids on up to 4 gigawatts of renewable energy projects to allow it to claim the federal tax credits before they are phased out, according to The Denver Post. It may take months or more before the Colorado Public Utilities Commission approves a proposal by utilities to include additional sources of power, but Xcel hopes to gain the green light by Friday to initiate the process.
This needs to be done at the earliest possible time since the federal tax and spending bill signed on July 4 slows down a lot the transition of tax credits of up to 30 percent for projects in renewable energy. Wind and solar projects are subject to the tax credits under the new laws only by being in service by Dec. 31, 2027, or commencing construction by July 5, 2026.
To attempt to beat the deadlines, Gov. Jared Polis instructed the state agencies to simplify and formulate quicker clean energy projects. Will Toor, the executive director of the Colorado Energy Office, said that he sees it as an attempt to safeguard Colorado ratepayers against federal administration and congressional actions.
Expedited process targets February decision deadline
The significantly accelerated timeframe of taking into account the renewable projects suggests that Xcel Energy should begin receiving bids at the latest by the end of this week, and proposed dates of submissions of comments by external parties and a written ruling by the PUC in early February. The move aims at endorsing a procedure that is likely to be in the form of as much as 4,000 megawatts of renewable power.
According to an email by Xcel Energy spokeswoman Michelle Aguayo, the tax credits will assist in covering cost-effective generation highly required in supporting our promise of offering our customers clean, reliable, safe, and affordable energy. Growth in demand is unprecedented and puts strains on the system in ways that we have not witnessed in recent memory.
Separate from the comprehensive transition plan
This push to qualify new wind and solar facilities under the fading tax credits comes as the PUC enters a thicket of debate over a proposal by Xcel Energy to bring on board a few thousand megawatts of new, in addition to electricity sources, in the next five years. The strategy of the largest electricity utility in Colorado would displace coal plants that will be closed down and satisfy increasing demand caused by electric vehicles, building electrification, and massive computing centers.
Those involved in the discussions of the so-called just transition plan have noted it to be bloated and too costly, and members of the utilities commissions have questioned the necessity of the quantity of new resources being sought by Xcel, which originally suggested the addition of up to 14 gigawatts.
The frenzied rush by Xcel Energy to get renewable energy projects completed in time to take advantage of federal tax credits proves the critical nexus of policy time and clean energy economics as Colorado utilities scramble to meet the accelerated deadlines of federal tax credits to achieve cost reductions that can be transferred to ratepayers as electricity demand grows faster than it has ever grown.