The Cost of Climate Pollution

Colorado PUC Requires Utility to Use SCC in Electric Resource Plan

FColorado Electric Power Sector May 2017

• Application

  Integrated resource planning

• Date

  May 2017

• Details

  In 2017, the Colorado Public Utilities Commission ordered that the Public Service Company of Colorado (a.k.a. Xcel Energy) take into account the social costs of carbon 1 in its Electric Resource Plan (ERP). 2 In early 2019, the Colorado State Legislature passed a bill requiring the utilites commission to evaluate "the cost of carbon dixoide emissions" in resource planning, using the IWG Social Cost of Carbon values initially and increasing to $46 per ton in 2020. 3

• SCC Value(s)

  $43 per ton in 2022; increasing to $69 per ton in 2050, 4 based on IWG SCC at 3%.

• Reference

  Proceeding No. 16A-0396E

• Legal Authority

  Colorado PUC had considered externalities, like public health effects, in other ERP proceedings, and has authority under §40-2-123(1)(b), C.R.S. to include such considerations in resource planning. 5

• Status

  CPUC initiated Proceeding No. 17M-0694E in October 2017 to implement its rules regarding Electric Resource Planning and incorporate its findings of Decision No. C17-0316, including changes to Rules CCR 723-3, 3604(k) and 3611(g).

• Commentary

  In its decision, the commission noted that by modeling these social costs of carbon, “we can test the robustness of the portfolios and assess the impact to customers of a broader range of costs from carbon emissions.” 6 The Commission also found that the IWG estimate “is a reasonable quantification of the potential cost of externalities for the purpose of [resource plan] model portfolios.” 7

1.  We use the term “social costs of carbon” to refer generally to the concept of a monetization of the harm from each ton of carbon dioxide emissions, with the 2016 IWG report comprising the best available estimate of this value. ↩︎
2.  Colorado PUC, Decision No. C17-0316, In the Matter of the Application of Public Service Company of Colorado for Approval of its 2016 Electric Resource Plan, Proceeding No. 16A-0396E, available here. ↩︎
3. Colo. Sen. Bill 19-236 (passed May 3, 2019). ↩︎
4.  Colorado PUC, Decision No. C17-0316, at 30, In the Matter of the Application of Public Service Company of Colorado for Approval of its 2016 Electric Resource Plan, Proceeding No. 16A-0396E. ↩︎
5.  See §40-2-123(1)(b), C.R.S (“The commission may give consideration to the likelihood of new environmental regulation and the risk of higher future costs associated with the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.”). ↩︎
6. Id. ↩︎
7.  Id.  ↩︎

Feedback? Please email [email protected].