Testimony of Ronald L. Lehr in support of EPA's Section 111d Carbon Rules July 29, 2014

I support EPA strengthening its carbon reduction requirements for the nation and for Colorado in particular. There are three reasons for strengthening these rules. First, early carbon reductions put us on a better glide path to reach IPCC carbon goals. Second, efficiency improvements, particularly in end use electricity, can provide cost-effective consumer solutions that reduce carbon output from fossil electric plants and save consumers money. Third, Colorado's recent renewable energy bid results show that fossil fuel can be replaced with renewable energy from sun and wind at a savings to consumers.

I want to focus mainly on the third reason. In 2011, Public Service Company of Colorado, Xcel Energy, Inc.'s operating utility here in Colorado filed its "Energy Resource Plan" with the Colorado Public Utilities Commission. The plan consisted of Requests for Proposals and supporting materials that the company wanted approval to issue to obtain power for the period 2014 to 2018. In approving the issuance of the RFP, the commission indicated its support for a diverse portfolio of new generation and demand side resources to be acquired by the utility.

When responses to the RFP were received, PSCo found itself with over 6,200 MW of proposed generation from which it could chose the most cost effective plants, and from which it could fill out the diverse portfolio the commission had indicated it wanted them to pursue. That's a large bid response, indicating that bidders were comfortable sending in their bids, since PSCo's monopsony incentives (a monopsony is the only buyer in a market) had previously been heavily tested and regulated by legislation and regulation, so bidders had confidence that their bids would be evaluated fairly (an independent evaluator oversees this process) and that information about the bidding, while held confidential during the bid process, would eventually be disclosed sufficiently to give confidence that the bids were fairly judged.

The outcome of the bid evaluations were then taken before the commission for approval. On Decemb er 20, 2013, the commission reached its decision in Docket 11A-869E (see: http://action.sierraclub.org/site/DocServer/C0 PUC Decision.pdf?docID=14761) finding that 450 MW of new wind plants and 170 MW of new solar electric photovoltaic generation beat all the other bids, including natural gas bids, on price. In fact, these wind and solar PV are obtained at prices that are lower than the system average cost of PSCo's existing generation fleet. This amazing result means that here in Colorado on the PSCO system, we can replace the old, inefficient, polluting fossil generation units that are above the utility's system average cost with new, clean renewable wind and solar plants while consumers save money . If PSCo can do it, so can other utilities that are willing to just follow the leader. If PSCo can replace fossil with renewables at a savings to consumers, there's no reason not to increase the standards EPA is proposing.

There's a lot of supporting work that we are doing in the West and nationally that can help facilitate the transition to clean energy. Some of it is posted on the Western Grid Group web site: www.westerngrid.net , including a Clean Energy Vision for the West at: www.cleanenergyvision.org

. Another good resource is America's Power Plan (www.americaspowerplan.corn) where policy recommendations, including my own for new utility business models and regulatory reforms, can be found. http://americaspowerplan.comithe-planiutility-business-models/

Thanks for your work to reduce carbon emissions from the electric sector. Please consider making your proposed rule stronger.