What Not to Wear (As Regulatory Policy)

Current Issues 2011The Santa Fe Conference

New Mexico State University

Center for Public Utilities

Remarks of

Ron Binz, Chairman

Colorado Public Utilities Commission

March 15, 2011

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Outline of this presentation

• CapEx for US Electric Supply 2010-2030– With and without carbon regulation

• How big is the challenge?– EPRI Prism/Merge

– Brattle Group Analysis

– International Energy Agency Analysis

• What are the regional differences?

• What changes are needed in our regulatory and policy tools?

EPRI Prism/Merge

Efficiency

Biomass

Wind

Hydro

Nuclear

Gas

Retrofit CCS

New CCS

Non-CCS Coal

Efficiency

Biomass

Wind

Hydro

Nuclear

Gas

Retrofit CCS

New CCS

Non-CCS Coal

What would this 2030 portfolio cost?

Brattle Group CapEx Estimate

EIA Regional Groupings

Brattle Group CapEx Estimate

Brattle Group CapEx Estimate

Implications of Brattle Group Estimates

Between 2010 and 2030

• Net assets of electric utilities will increase to approximately $2.16 trillion from today’s $1.10 trillion, an increase of 93%.

• Approximate new capacity additions for selected states:– Texas: 23,400 MW– Florida: 12,200 MW– Illinois: 11,000 MW– Ohio: 8,500 MW– Pennsylvania: 6,300 MW– New York: 5,400 MW– Colorado: 2,500 MW

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International Energy Agency View

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$0.57 T $1.79 T

$2.36 Trillion

Implications for State Regulation

• Strong upward pressure on rates• Strong pressure on utility balance sheets, earnings

– Highest capital requirements ever

• Frequent rate cases– Regulatory system will be severely stressed

• Heightened need for additional EE and DR• Traditional markets

– Heightened need for integrated planning– New look at prudence reviews– New regulatory techniques

• For organized markets– Increased pressure to solve impediments to new transmission

and generation

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Thank you.

I look forward to your questions.