IN THE MATTER OF THE APPLICATION OF PUBLIC SERVICE COMPANY OF COLORADO FOR APPROVAL OF ITS 2011 ELECTRIC RESOURCE PLAN

IN THE MATTER OF THE APPLICATION OF PUBLIC SERVICE COMPANY OF COLORADO FOR APPROVAL OF THE ACQUISITION OF THE BRUSH 1, 3 AND 4 GENERATION FACILITIES AND IN CONNECTION THEREWITH THE GRANT OF CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY IF REQUIRED AND THE APPROVAL OF COST RECOVERY THROUGH A GENERAL RATE SCHEDULE ADJUSTMENT IN THE MATTER OF THE APPLICATION OF PUBLIC SERVICE COMPANY OF COLORADO FOR APPROVAL OF THE POWER PURCHASE AGREEMENT FOR 118.8 MW OF NATURAL GAS GENERATION, EARLY RETIREMENT OF ARAPAHOE UNIT 4, AND A GAS SALES AGREEMENT

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

DOCKET NO. 11A-869E

DOCKET NO. 12A-782E

Colorado PUC E-Filings System

SOLARRESERVE, LLCS COMMENTS REGARDING THE PUBLIC SERVICE COMPANY OF COLORADOS 120 DAY REPORT

Colorado Public Utilities Commissions (Commission or CPUC) Rule 3613(f), respectfully submits the following Comments in response to the Public Service Company of Colorados (PSCO or the Company) 2013 All Source Solicitation 120 Day Report (120 Day Report).

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{00207878.1}

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SolarReserve, LLC (SolarReserve), through its undersigned counsel and pursuant to the

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DOCKET NO. 12A-785E

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BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

On November 8, 2012, the Commission met to conclude the Phase I hearing in this docket. Chairman Epel, after thanking the parties, reflected back to the start of the proceedings and said he now recognized that the Commission had the responsibility of developing an Energy Resource Plan (ERP) in the best interests of Colorado. 1 In particular, the Chairman

opinion that Section 123 is a statutory imperative [a]nd critical for this ERP. 4 In December 2012, the Commission stated in the Phase I Order that it is committed, however, to the consideration of the acquisition of Section 123 resources in this ERP 5 PSCO, in its Preferred Portfolio, has recommended that no Section 123 resources be acquired in this ERP. 6 SolarReserve files these comments to highlight how and where it thinks PSCO reached an erroneous conclusion and to urge the Commission to exercise its planning responsibility in a manner that includes Section 123 resources in this ERP. In 2007, with the support and advocacy of PSCO, the Commission approved a Colorado Resource Plan (CRP) with an acquisition requirement between 200 and 600 MW of solar

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Transcript of Evidentiary Hearing, Docket 11A-869E, Chairman Epel, at 102:6-8. Colo. Rev. Stat. 40-2-123(1)(a) (West 2012) (The commission shall give the fullest possible consideration to the cost-effective implementation of new clean energy and energy-efficient technologies in its consideration of generation acquisitions for electric utilities, bearing in mind the beneficial contributions such technologies make to Colorados energy security, economic prosperity, environmental protection and insulation from fuel price increases. The commission shall consider utility investments in energy efficiency to be an acceptable use of ratepayer moneys.) 3 Transcript of Evidentiary Hearing, Docket 11A-869E, Chairman Epel, at 102:20-22. 4 Id. at 102:24-25. 5 Decision No. C13-0094, Phase I Decision (December 18, 2012) at 99. 6 Public Service Company of Colorado, 2013 All Source Solicitation 120 Day Report, 2011 Electric Resource Plan, Docket 11A-869E (Public Version), hereinafter 120 Day Report (September 9, 2013), 10-14.

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emphasized Section 123 2 as an issue that was really important. 3 Chairman Epel stated his

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INTRODUCTION

acquisition of Section 123 resources in the CRP was deferred to this docket. PSCO now argues in this docket that no Section 123 projects should be selected in this ERP because the 2013 AllSource Solicitation was less successful in attracting bids from potential Section 123 resources that were either: 1) small or demonstration scale, or 2) larger scale and priced reasonably

SolarReserve submitted two alternative configurations of a CSP project (Project) to be located in Colorados San Luis Valley in response to PSCOs Request for Proposal. See SC01 and SC02. In consideration of the Commissioners questions and comments during the 2011 ERP proceedings concerning the scale of the SolarReserve 100 MW CSP Project and the overall resource need, SolarReserve reduced the proposed size of its Project to 50 MW and 75 MW alternatives.

PSCOs analysis of the Section 123 bids is based on an incorrect premise that larger scale Section 123 technologies should be priced reasonably competitive with commercial technology bids 9 and fails to give due consideration to the Section 123 statutory beneficial contributions provided by the Project. As described below, SolarReserve contends that the Projects benefits to the State of Colorado outweigh its costs by a significant margin. The quantifiable benefits alone are more than twice PSCOs calculated Present Value Revenue Requirement (PVRR) cost. Moreover, the Project provides the other significant Section 123 intangible benefits that must be a part of the statutory cost-effectiveness evaluation. SolarReserve discusses below the three reasons why PSCOs Preferred Portfolio with no

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7 8

Decision No. C08-09292, Phase I Decision (August 19, 2008) at 63. 120 Day Report at 6. 9 Id. Page 3

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competitive with commercial technology bids. 8

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thermal (CSP) with storage. 7 The selected 250 MW CSP project was never acquired and the

or bid SC02 should be adopted by the CPUC in Phase II of this ERP. 10 COMMENTS IN RESPONSE TO 120 DAY REPORT 1)

PSCOs conceptual framing of cost-effectiveness in the context of Section 123 is incorrect.

The Commission stated in the 2011 ERP Phase I Order that it will determine whether the Section 123 resource is cost effective in that it can be acquired at a reasonable cost and rate impact, bearing in mind the projects beneficial contributions to Colorados energy security,

effectiveness, as used in Section 123 and by the Commission, relates to both costs and benefits.

Section 123 resources should be included because none were found priced reasonably competitive with commercial technology bids. 12 PSCOs PVRR-focused analysis of the

Section 123 cost-effectiveness requirement is flawed.

First, in considering the inputs into the cost-benefit equation, PSCOs interpretation of Section 123 fails to recognize the intent of the Colorado Legislature in enacting Section 123. In the words of its sponsor, Senator Reeves, Section 123 was written to encourage energy

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SolarReserve respectfully requests that the Commission examine its entire bid documents and not rely solely on the limited summary analysis provided in the 120 Day Report. In particular, the Narrative Topics and Executive Summary and Attachments 4 (Endorsements), 5 (Other Agreements), 7 (Economic Benefit Contribution), and 9 (Transmission Line Loss Estimates). 11 Decision No. C13-0094, Phase I Decision (December 18, 2012) 93. 12 120 Day Report at 6. 13 Senate Bill 144 (2001), Promotion of Energy Conservation, Senate Public Policy and Planning Committee (February 15, 2001); 1:48 p.m. 2:40 p.m., Certified Compact Disk 01-7-D. Unofficial Transcript, prepared for the Commissions convenience, hereinafter Unofficial Transcript (November 18, 2012) at 3-4:23-2. Page 4

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efficiency and new energy technologies . . . in Colorado. 13 In sum, the Legislature saw new

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PSCO, however, has concluded, without due consideration of Section 123 benefits, that no

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economic prosperity, environmental protection, and insulation from fuel prices. 11 Cost-

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Section 123 project should be rejected and a portfolio including either SolarReserve bid SC01

innovation.

By definition, new energy technologies are not yet commercial and do not compete on a price basis with commercial technologies. The Commission recognized this in its 2007

rulemaking, the requirement to consider new clean energy and energy-efficient technologies

adherence to the least cost resource requirement in our rules moot. 14 Recognizing the cost disadvantage for innovative (non-commercial) technologies, the Legislature specifically directed the Commission to bear [ ] in mind four beneficial contributions: (1) energy security, (2) economic prosperity, (3) environmental protection, and (4) insulation from fuel prices increases. 15 In considering cost-effectiveness, the Legislature directed the Commission to weigh the higher cost of innovative technologies against the other societal benefits provided by new technologies.

Second, PSCO did not look at the ratio of costs to benefits, but only the cost side of the equation. Section 123 directs that if a projects benefits (i.e. contributions to Colorados energy security, economic prosperity, environmental protection, and insulation from fuel prices) are greater than its costs, then it is by definition cost-effective. Although it is difficult to assign a standard quantitative value to some of the benefits listed in Section 123, the Commission is uniquely situated to evaluate the societal value of these benefits, and consider the relative size of costs and benefits, not just their absolute values.

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Decision No. C07-0829, Decision Adopting Emergency Rules (September 19, 2007) 15; see also Decision No. C07-1101, Order Adopting Permanent Rules (September 19, 2007). 15 Colo. Rev. Stat. 40-2-123(1)(a) (West 2012). Page 5

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in our consideration of resource acquisition of electric utilities effectively renders strict

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energy technologies as an opportunity for Colorado to lead in promoting renewable energy

accounting of the Section 123 benefits, that SolarReserves bids are not cost-effective due to the magnitude of the PVRR cost. 16 That is not the cost-effectiveness balancing test prescribed by

Section 123. PSCO suggests that smaller projects would be more cost-effective because the

magnitude of their costs would be lower. 17 A small project whose costs outweigh its benefits is

significant quantifiable and intangible benefits that outweigh the PVRR costs. This favorable cost-benefit ratio should be considered by the Commission. 2)

PSCO failed to properly weigh the Projects benefits.

As explained above, PSCO relies on PVRR costs alone and ignores important benefits when concluding that Section 123 CSP resources are not cost-effective. This type of analysis is inadequate. In its bid documents, SolarReserve provided evidence of over $900 million in present-value economic benefits that would accrue to Colorado. The $923 million in benefits quantified by an independent economists report in SolarReserves bid documents 18 include: Construction workforce: Operations workforce: Avoided cost of CO 2 emissions: Avoided cost of transmission line losses: Agricultural land reinvestment: SolarReserve contributions and taxes: Tourism impacts: $511 million $129 million $136 million $60 million $43 million $24 million $20 million

In addition, the following Section 123 benefits were also identified by SolarReserve in the SC01 and SC02 bids without a specific dollar figure:

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16 17

120 Day Report at 29. Id. at 14 (Stated another way, the added cost of the Section 123 portfolios is the direct result of the proposed facility size, operating characteristics and the bid pricing. . .). 18 SolarReserve, LLCs Bid, Harvey Economics, Section 123 Benefits of The Saguache Solar Energy Project (May 8, 2013) p. II (Attachment 9). Page 6

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still not cost effective. In this case, the SolarReserve utility-scale CSP project would provide

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But PSCO did not take this approach.

Instead, PSCO concludes, without a full

The quantified benefits alone in SolarReserves bid documents are more than double the

PVRRs attributed to SC01 and SC02 ($369 million and $390 million, respectively). 19 The

intangible statutory benefits from the SolarReserve Project, as discussed below, also have a value that the Commission should weigh in conducting the Section 123 cost-benefit analysis. a) The value of water conservation should be recognized.

Although Section 123 explicitly mentions the benefit of reducing the consumption of

Day Report. SolarReserves Project would consume less than 100 gallons of water per MWh of output, which is significantly less than PSCOs reported average of 368 gallons/MWh. 20 This CSP water conservation benefit is represented graphically in Exhibit A, attached. 21 More significantly, SolarReserves Project would reduce pressure on the San Luis Valleys overdrawn aquifer to the economic benefit of this rural agricultural community. 22 The significance of local water savings was recognized in the comments submitted in this docket by

use benefit in its Section 123 cost-benefit consideration.

19

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Further, as described below, there is also good reason to believe that the PVRR impacts stated in the 120 Day Report are inflated. See infra at paragraph 3. 20 2011 ERP at 2:60-66. 21 Id. 22 Exhibit No. 93, Mike Spearman, SolarReserve, LLC, Answer Testimony (June 4, 2012) at 11:21 12:2. 23 As submitted in Attachment 4 of SolarReserve, LLCs bid, comments from the agricultural community focusing on the water conservation benefit provided by the Project include Colorado Page 7

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several agricultural groups in the San Luis Valley. 23 The Commission should weigh the water

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water for electric generation, PSCO performed no quantitative analysis of water issues in the 120

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Water conservation for an agricultural community Optimal use of limited transmission capacity Targeted investment and economic development in the rural San Luis Valley Enhanced local electric reliability and energy security Innovative new technology with energy storage, delivering solar energy during periods of peak demand and after dark

Another Section 123 benefit for Commission consideration is economic prosperity. Saguache County in the San Luis Valley is particularly worthy of this consideration given that it

is one of the poorest counties in Colorado. 24 This areas unique economic constraints and needs are one reason why SolarReserves Project has gained strong local and state-wide support. 25

Sponsors of Section 123 cite the benefits to the rural economy in their support of the Project. See Exhibit B. Yet, in the 120 Day Report, PSCO assigns zero credit for economic development in this poor, rural community. PSCO also attributes no value to the tax revenues, funding of local job training, support for tourism, and other economic contributions to the area that could be

c)

PSCO failed to consider the Section 123 benefit of insulation from fuel price increases. For example, on Table 19 of the 120 Day Report, 27 the Company gives no credit to SolarReserves Project for insulation from fuel price increases. The PPA offered by

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Potato Administrative Committee, Rocky Mountain Farmers Union, Rio Grande Water Conservation District, Rio Grande Inter-Basin Roundtable, San Luis Valley Irrigation District, San Luis Valley Water Conservancy District, and Center Conservation District. 24 Exhibit No. 93, Mike Spearman, SolarReserve, LLC, Answer Testimony (June 4, 2012) at 4:11 23 (detailing the high poverty rate and unemployment). 25 Id. at 13:10-11. Letters of support have been sent to the Governor from US Congressmen Scott Tipton, Jared Polis, and Ed Perlmutter, Colorado legislators Matt Jones, Leroy Garcia, Gail Schwartz, Larry Crowder, and Ed Vigil, and many county commissions and municipal governments in and around the San Luis Valley. See Attachment 4 (Endorsement and Support Letters) in SolarReserves bid documents. See also, Exhibit B, Letters of Support to Governor Hickenlooper from Scott R. Tipton, Jared Polis and Ed Perlmutter, Members of Congress; Leroy M. Garcia, State Representative; Matt Jones, Senate District 17; Penfield W. Tate, III, cosponsor of SB 01-144; and Joyce Lawrence, co-sponsor of SB 01-144. 26 Direct contributions are detailed supra at Paragraph 1. 27 120 Day Report at 78 (Table 19).

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made by SolarReserve. 26 Section 123 requires that the Commission consider these benefits. CSP insulates Colorado from fuel price increases and should be credited.

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b)

Economic development in one of Colorados poorest rural areas should be considered.

reduce exposure to any future greenhouse gas-related taxes. Furthermore, CSP with storage is uniquely capable to support Colorados grid as it approaches a 30% mix of intermittent

renewable resources. Recent analysis by the U.S. Department of Energy, National Renewable Energy Laboratory (NREL) has shown that CSP with storage allows for greater penetration of

storage would allow the Project to adjust throughout its life to continue to meet the needs of the grid, even if the timing of greatest demand is different in the future. This innovative technology is particularly capable of providing insulation from fuel price volatility by adding flexibility and diversification to the Colorado grid, and as such, should be given credit for the benefit it provides. d)

In the 120 Day Report, PSCO states that the Section 123 requirement to consider energy security is satisfied through an evaluation of fuel sources (i.e. domestic sources such as wind or solar) and geographic diversity. 29 The Company fails to recognize that local electric reliability is an element of energy security, particularly in the San Luis Valley, an isolated agricultural area

reliability was central to Tri-State Generation and Transmissions CPUC-approved application

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D. Lew, G. Brinkman, E. Ibanez, A. Florita, M. Heaney, B.-M. Hodge, M. Hummon, and G. Stark, NREL, J. King, RePPAE, S.A. Lefton, N. Kumar and D. Agan, Intertek-APTECH, G. Jordan and S. Venkataraman, GE Energy, The Western Wind and Solar Integration Study Phase 2 (2013). 29 120 Day Report at 76. Page 9

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heavily dependent on a single transmission path for reliable electricity. Insufficient electric

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Energy security in the form of reliability and transmission effectiveness is a Section 123 benefit to be considered.

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intermittent renewables on the grid. 28 The dispatch control afforded by molten salt energy

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SolarReserve would fix energy costs throughout its term. Fully carbon-free generation would

providing stable and reliable local generation in the San Luis Valley. The San Luis Valley Rural Electric Co-op has recognized this capability. 31 PSCO wrongly attributes no value to local reliability benefits.

A related transmission concern is the effective use of available transmission capacity.

transmission interconnection capacity is left in the San Luis Valley. 32 Indeed, PSCO argues that its selection, in its Preferred Portfolio, of 50 MW of PV would preserve some transmission capacity for other uses. 33 But the Company does not quantify the cost to the ratepayer of using up this limited transmission resource with intermittent PV generation, nor of the eventual cost or feasibility of building new transmission required for sufficient reliable supply. 34 SolarReserves CSP technology, with a 61-74% capacity factor, would by definition use 61-74% of its allocated transmission, but PV solar, with a roughly 25-30% capacity factor, would use far less. CSP can therefore put limited transmission to higher and better use, but PSCO assigns no value to these attributes. PSCO also gave zero value to the Projects

demonstrable reduction in transmission line losses, even though such a prospect was independently verified in the bid 35 and would reduce ratepayer costs. These transmission

benefits ultimately result in long-term ratepayer savings and should be included in the costbenefit analysis.
30

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Tri-State Generation and Transmission Association, Certificate of Public Convenience and Necessity for the San Luis Valley-Calumet-Comanche Transmission Project, Docket 09A-324E. 31 SolarReserve LLCs Bid, Letter of Intent between San Luis Valley Rural Electric Co-op and SolarReserve (April 24, 2013) (Attachment 5). 32 120 Day Report at 12. 33 Id. at 49. 34 Id. 35 SolarReserve, LLCs Bid, San Luis Valley Loss Calculation (May 6, 2013) (Attachment 9). Page 10

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The San Luis Valley is transmission constrained.

As noted by PSCO, only 100 MW of

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for a new transmission line to the area. 30 CSP with storage would enhance reliability by

As Senator Reeves pointed out in arguing for the passage of Section 123, Colorado energy technology innovation is a key rationale for the statute. 36 In the 2012 Phase I Order, the Commission correctly recognized that energy diversity is a critical focus of Section 123: [T]he Commission is mindful of costs and rate impacts with respect to resource selection, including ratepayer impact based on scale and scope of the proposed project, and our statutory obligation to give the fullest possible consideration to the potential acquisition of Section 123 resources bidding into the competitive bidding solicitation. We recognize that these technologies are intended to benefit Colorado in the future, including by diversifying its energy resources. (Emphasis added). 37

It is difficult to give a quantitative value to innovation and energy diversity and PSCO did not attempt to value these statutory benefits. Yet, SolarReserves Project would diversify Colorados energy mix, provide new energy innovation - CSP with storage - and put Colorado in the forefront of clean energy technology. NREL has entered into an agreement with SolarReserve 38 that recognizes how SolarReserves CSP Project in Colorado would substantially advance the understanding of CSP with molten salt storage. The agreement would provide unprecedented access to the facility for NRELs world-class researchers. This agreement with NREL represents an important and productive step towards widespread, cost-competitive deployment of this new and innovative technology. This result seems to be what the Colorado Legislature had in mind when it enacted Section 123 - Colorado leading the way to a new energy future through support of innovation.

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36 37

Infra at footnote 13. Decision No. C13-0094, Phase I Decision (December 18, 2012) at 94. 38 SolarReserve LLCs Bid, Memorandum of Understanding between Alliance for Sustainable Energy, LLC, Managing and operating Contractor for the National Renewable Energy Laboratory and SolarReserve, LLC (February 13, 2013) (Attachment 5). Page 11

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e)

The Commission should recognize the value of innovation and energy diversity.

While SolarReserve appreciates that some effort was made by the Company to improve its modeling of Section 123 bids, the modeling suffers from flaws that understate CSPs capabilities.

First, PSCO represents its efforts as a best case, 39 but the Independent

Evaluators (IE) report indicates otherwise. According to the IE,

PSCO ultimately settled on an approach that did not give [CSP] additional credit for the flexibility that [it] would be able to provideAccion recommends that in future renewable integration studies, the benefit of highly flexible resources be calculated in a very detailed manner. 40 SolarReserve agrees with the IEs observation CSP provides flexibility that should be credited, and such credit is missing from PSCOs analysis. Based on other technical studies, SolarReserve anticipates that a full accounting for the Projects flexibility would increase the value by tens of dollars per MWh. 41 Obviously, understating a bids capabilities will artificially inflate the PVRR cost. The IEs comments support SolarReserves position that CSP would be systematically and uniquely disadvantaged 42 in PSCOs analysis. Second, PSCOs own example of best case CSP dispatch contains a significant apparent error. Specifically, in Figure 33, 43 PSCO illustrates the system marginal cost versus solar thermal dispatch. See Exhibit C (Figure 33 modified by SolarReserve). While this graph was intended to demonstrate that PSCO was capable of modeling CSP dispatch during the

39 40

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120 Day Report at 119 (Appendix 3). Independent Evaluators Final Report, Public Version (October 9, 2013) 18. 41 See e.g. NREL, Denholm et al. An Analysis of Concentrating Solar Power with Thermal Energy Storage in a California 33% Renewable Scenario (illustrating, for example, $17/MWh of value from co-optimization of energy provision and ancillary services). 42 SolarReserve, LLCs Bid, Apparent Shortcomings in the Ability to Accurately Model CSP with Molten Salt Storage in Public Service Company of Colorados 2013 All-Source Solicitation (May 2013) (Attachment 8). 43 120 Day Report at 119 (Figure 33, Appendix 3). Page 12

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3)

PSCO has understated CSPs capabilities and, therefore, overstated the PVRR cost of CSP with storage in its modeling.

priced time, and not during the next day when prices were higher. A best case simulation should have saved its energy for the higher-priced time period. This clear error begs the

question of whether there are other errors in the Companys modeling that understate the unique benefits of CSP with storage that are not so obvious to the bidders, the IE, or the Commission.

extension of the expiring Wind Production Tax Credit, PSCO did not give similar treatment to the likelihood of an extension of the Solar Investment Tax Credit (ITC). SolarReserve offered a commensurate price reduction if the ITC is extended one year into 2017 or if the ITC is amended to require a commencement of construction by 2016, rather than the current requirement to be in commercial operations by 2016. 44 See Exhibit D. The 120 Day Report shows that this would reduce the PVRR by $101 million to $119 million, but this significant reduction is barely noted and was not incorporated into PSCOs conclusions. 45 The Commission should take into consideration that the solar ITC may be extended or modified to provide for additional time as the deadline approaches, and should give the corresponding reduced price the appropriate degree of consideration.

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PSCO has recommended a Preferred Portfolio without Section 123 resources.

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CONCLUSION Page 13

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Third, despite PSCOs willingness to expedite the wind RFP to take advantage of an

Commission must now act to give the fullest possible consideration to the Section 123 resource bids included in the modeling stage and ensure that the intended purpose of the statute

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Response of SolarReserve LLC to Decision No. C13-0278 Regarding Motion to Permit Wind Bids to be Considered Prior to Expiration of Certain Recently Extended Federal Tax Credits, Docket 11A-869E (March 5, 2013) pg. 3 (Explanation of issues around the 2016 ITC expiration); see also Exhibit D, Letter dated October 21, 2013 from Western Governors Association. 45 See 120 Day Report at 40 (Table 9, Note 4).

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The

highest-value times, the modeled system illustrated was dispatched one day during a lower-

proposed Project provides significant Section 123 benefits that outweigh its costs.

innovative technology should be included in an ERP that is in the best interests of Colorado. DATED on this 24th day of October, 2013.

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/s/ Rebecca W. Watson______________________ Rebecca W. Watson, Atty. Reg. No. 18492 Chelsey J. Russell, Atty. Reg. No. 43624 1125 17th Street, Suite 2200 Denver, CO 80202 Telephone: 303-830-2500 Fax: 303-832-2366 E-mail: rwatson@wsmtlaw.com

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Respectfully submitted, WELBORN SULLIVAN MECK & TOOLEY, P.C.

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This

is achieved.

The complete SolarReserve bid documents contain ample evidence that the

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SolarReserve: 98 gal/MWh

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Exhibit A

Letters of Support to Governor Hickenlooper: 1.

Letter dated August 29, 2013 from Scott Tipton, Jared Polis and Ed Perlmutter, Members of Congress.

2.

Letter dated July 9, 2013 from Leroy M. Garcia, State Representative, House District 46. Letter dated September 28, 2013 from Matt Jones, State Senator, Senate District 17.

3.

4.

5.

Letter from Joyce R. Laurence, co-sponsor of SB 01-144.

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Letter dated August 27, 2013 from Penfield W. Tate III, co-sponsor of SB 01144.

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Exhibit B

SCOTT R. TIPTON 3rd District, Coloraoo

AGRICULTURE NATURAL RESOURCES

218 Cannon House Office Building I202' 225-4761

Congress of ttie Hmteb States

OTagfjinaton, 3iC 20515-0603

August 29, 2013

John W Hickenlooper, Governor

136 State Capitol

Denver, CO 80203-1792

Dear Governor Hickenlooper:

as defined in Colorado statute 40-2-123, authorize the Colorado Public Utilities Commission, when reviewing the resource plans of the state's electric utilities, to take into consideration on a case by case basis the benefits of innovative clean energy technologies and give priority to

energy resources, attract new businesses and jobs, promote development of rural economies. . ." it is ". . .in the best interests of the citizens of Colorado to develop and utilize solar energy
resources in increasing amounts."

The Saguache Solar Energy Project in the San Luis Valley is an innovative proposal that would provide a clean, renewable energy source while supporting economic growth and job creation. The project uses molten salt energy storage technology to provide reliable and stable power day or night, even 24/7 if needed. This is important for the San Luis Valley's fragile transmission
grid, especially during critical agricultural periods. Further, this project would conserve water by

reducing withdrawals from the area's stressed aquifer and ease pressure on the area's farms.

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Additionally, the project would provide a major economic boost to San Luis Valley and many other areas of the state. Harvey Economics projected that 1,500 direct and indirect jobs, including as many as 600 on-site jobs, and over $900 million in economic benefits would result
in Colorado from this effort.

The Saguache Solar Energy Project could create significant jobs and investment in Colorado, conserve precious water resources, and improve energy security while providing environmental benefits. We are encouraged that the project will be privately funded and that SolarReserve has worked closely with Saguache County officials and other regulators throughout the planning process and all substantive required permits have been secured. We ask you give the proposed Saguache Solar Energy Project in the San Luis Valley every appropriate consideration consistent
with all applicable laws and regulations. Thank you for your consideration.
Sincerely,

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PRINTED ON RECYCLED PAPER

projects that offer "the prospect ofjob creation and local economic growth." Further, Section 123 directs the CPUC to specifically consider projects with "energy storage" and which "reduce the consumption of water." It also specifically recognizes that "in order to diversify Colorado's

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As members of the Colorado congressional delegation, we are aware of the importance of creating new jobs and economic development in Colorado. As you know, Section 123 Resources

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SMALL BUSINESS

Jjouse of EepreScntatilJES

Scott Tipton

ifed Folis

Ed Perlmutter

Member of Congress

lem^er of Congress

Member of Congress

Cc:

Joshua Epel, Chairman, Public Utilities Commission

Pam Patton, Commissioner, Public Utilities Commission James Tarpey, Commissioner, Public Utilities Commission

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COLORADO
H O U SE O F R EPR E S E NT A T IV E S State Capitol Denver 80203

July 9, 2013

Dear Governor Hickenlooper:

As one of Pueblo's elected leaders in the Colorado General Assembly, I wish to voice my support for the proposed Saguache Solar Energy Project in our neighboring San Luis Valley. I strongly urge you to support in any way you can the proposal by SolarReserve. This project has many economic and environmental advantages. First, the SolarReserve technology actually stores the power created by the sun so that on cloudy days or in dark hours, the power will be available to the Valley and beyond. We find this technology not only exciting but innovative, meaningfully addressing the intention of Section 123 with a significant contribution to the power grid and not simply a demonstration project. I believe and support the development of renewable energy to broaden the number of resources from which we power homes and businesses to keep our economy moving. I am behind this project because it will also give both short and long term job opportunities to the San Luis Valley and beyond, including skilled workers in the Pueblo area. At peak, more than 600 construction jobs will be available to meet the necessary man hours to build the project. SolarReserve has told your Office of Economic Development and International Trade that it intends to fill these jobs with Coloradans to the greatest degree possible. Upon completion of construction, 50 permanent jobs will be available in the Valley. While that

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The Honorable John Hickenlooper State Capitol Building 200 E. Colfax Avenue #136 Denver, CO 80203

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State Representative LEROY M. GARCIA Colorado State Capitol 200 East Colfax Avenue, Room 271 Denver, Colorado 80203 Office: 303-866-2968 Email: leroy.garcia.house@state.co.us

Member: Agriculture, Livestock, & Natural Resources Committee Local Government Committee

Gov. Hickenlooper Page 2 July 8, 2013

number is not a huge injection of opportunity in the metro area, it certainly is a major economic development in a region where jobs are scarce and incomes are low. I know of your commitment to a broad approach to energy development, and so I ask that you give encouragement and support to the Saguache solar project as you discuss energy with key policy and decision-makers and with Coloradans throughout the state. Sincerely,

Leroy M. Garcia State Representative House District 46

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MATT JONES
Senate District 17
State Capitol Building 200 E. COLFAX AVENUE Denver, Colorado 80203

STATE, VETERANS & MILITARY AFFAIRS COMMITTEE VICE CHAIR

Capitol: (303)866-6291 Capitol FAX: (303) 866-4543

Email: matt.jones.senate@state.co.us

September 28, 2013

Dear Governor Hickenlooper,

I am writing to voice support for the proposed SolarReserve renewable energy project in Saguache County, which is currently under consideration by the Public Utilities Commission under its request for proposals for projects referred to as Section 123 projects.

The SolarReserve storage technology is both innovative and clean. It will provide a needed

economic boost to the San Luis Valley in both the short and long-term by creating hundreds of
construction jobs and 50 permanent positions in an economically distressed part of the state. It

will also provide insulation from fuel price increases as the cost of the power will be fixed in the contract between SolarReserve and Xcel energy.

These considerations are directed in Section 123. As importantly, this project will make a
significant contribution to the energy grid. Small, pilot-level projects are important in the

development of new technologies as we seek to diversify our energy portfolio. However, when a more significant generation of power is available through a clean energy technology, I believe it

is important to employ that power generation as envisioned in Section 123 of SB 01-144.

Sincerely,

Matt Jones

State Senator

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1 offer my support and urge you to do so as well. Thank you for your consideration.

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AGRICULTURE COMMITTEE MEMBER

TRANSPORTATION COMMITTEE
MEMBER

GT GreenbergTraurig
Penfield W. Tate III Tel, 303,685.7442
Fax 720.904,6142 tatep@gtlaw.com

August 27, 2013

Governor John Hickenlooper Colorado State Capitol Denver, Colorado 80203

Dear Governor Hickenlooper,

I am writing to encourage consideration for the proposed SolarReserve project in Saguache County. This project is proceeding through the Public Utilities Commission process as one contemplated by a bill passed in the 2001 session of the General Assembly.

this year.

The SolarReserve project, as currently proposed, appears to be the type of project I envisioned when co-sponsoring this legislation. The stated storage technology is innovative and has the potential to make a significant contribution to the energy grid; it appears to be well beyond a
"pilot" or demonstration project.

The bill and 40-2-123 C.R.S., also asks that the PUC "[bear] in mind the beneficial contributions such technologies make to Colorado's energy security, economic prosperity,

The SolarReserve plan seems uniquely situated to enable the PUC to use the criteria in the bill to determine the cost-effectiveness of this project not only for Xcel but for the citizens of the State of Colorado. As planned, the project should generate hundreds of job opportunities during its
construction phase, and most importantly, will do so in a rural region of the state whose economy could use that boost. Promoters expect the project to create significant permanent jobs in the San Luis Valley, provide energy security important to agricultural producers, contribute to diversifying our energy resources and put a solar storage technology to use that is indeed innovative and efficient.

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GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM

The Tabor Center 1200 17th Street Suite 2400 Denver, CO 80202 Tel 303.572.6500 Fax 303 572.6540

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environmental protection and insulation from fuel price increases."

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In 2001, I was a co-sponsor of SB 01-144, which was designed to promote energy efficiency. The bill's Section 4, creating 40-2-123 C.R.S., said in part, "The Commission shall give the fullest possible consideration to the cost-effective implementation of new clean energy and energy-efficient technologies in its consideration of generation acquisitions for electric utilities." As a result of this section, the PUC issued a request for proposals that will be decided upon later

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Governor John Hickenlooper

August 27, 2013

Page 2 of 2

SolarReserve's project will be privately financed and is not reliant on any government loan or guarantees. Such companies and projects deserve strong consideration, and we ask that you do so for a project which precisely fits the criteria and the intent of SB 01-144.

Penfield W.

/cnh Enclosures

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GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWWGTLAW.COM

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PWT/cnh

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JUN-1 1-1996

00=35

P. 01/01

Governor John Hickenlooper

Colorado State Capitol

Denver, Colorado 80203

Dear Governor Hickenlooper,

We are writing to encourage strong consideration for the propose d SolarReserve project in Saguache County as it makes its way through the Public Utilities Commission process.

Section 123 also asks that the PUC bear in mind "the benefic ial contributions such technologies make to Colorado's energy security, economic prosperity, environmental protection and insulation from fuel price increases."

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determine the cost-effectiveness of this project not only for Xcel but for the citizens of the State of Colorado. The project will generate hundreds ofjob opportu nities during its construction phase, and will do so in a rural region of the state whose econom y could use that boost. It will create significant permanent jobs in the San Luis Valley, provide energy security important to the agricultural producers, and contribute to diversifying our energy resources and put to use a solar storage technology which is indeed innovative and efficient.

The SolarReserve plan seems uniquely situated to cause the PUC to use those criteria to

SolarReserve 's project will be privately financed and is not reliant on any government loan guarantees. Such companies and projects deserve strong consideration, and we ask that you do so for a project which precisely fits the criteria and the intent of Section 123,

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The SolarReserve proposed project is the type of project we envisioned when sponsoring this legislation. We believe that its storage technology is innovat ive and can make a significant contribution to the energy grid; it is well beyond a "pilot" or demonstration project and is the type of project anticipated by the statute.

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said "The Commission shall give the fullest possible conside ration to the cost-effective implementation of new clean energy and energy-efficient technologies in its consideration of generation acquisitions for electric utilities." It is under this section that the PUC issued a request for proposals, to be decided upon later this year.

In 2001, we sponsored SB 01-144, which promoted energy efficiency. The bill's Section 123

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TOTAL P. 01

The blue line shows the System Marginal Cost, or the value of energy. Approximately twelve days are shown. Every day, the 100 MW CSP plant (the red line) ramps up from zero to 100 MW, holds steady at 100 MW, and then drops back down to zero. This model apparently dispatched during a time (highlighted by SolarReserve in green), when prices were roughly $50, at the expense of generating the next day, when prices were closer to $60 (highlighted by SolarReserve in purple).

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Page 17

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Exhibit C

Letter dated October 21, 2013 from John Hickenlooper, Governor, State of Colorado, WGA Chairman and Brian Sandoval, Governor, State of Nevada, WGA Vice Chairman.

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Exhibit D

October 21, 2013 The Honorable Max Baucus Chairman Senate Committee on Finance SD-219 Dirksen Senate Office Bldg. Washington, DC 20510 The Honorable Orrin Hatch Ranking Member Senate Committee on Finance SD-219 Dirksen Senate Office Bldg. Washington, DC 20510 The Honorable Dave Camp Chairman

House Committee on Ways & Means 1102 Longworth House Office Bldg. Washington, DC 20515

The Honorable Sander Levin

House Committee on Ways & Means 1106 Longworth House Office Bldg. Washington, DC 20515

Dear Chairmen Baucus and Camp and Ranking Members Hatch and Levin: In June, 2013, Western Governors released a 10-Year Energy Vision

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its investors. industry and job growth in our states.

comprised of six energy goals on which our governors agree: achieving energy security; generating clean, affordable and reliable energy from a

diversified portfolio of energy sources; increasing energy efficiency; maintaining sufficient and reliable infrastructure; protecting the

environment and wildlife, and making the West the leader in energy education and innovation. To attain these goals, it is essential that federal

energy policies provide the necessary certainty to the energy industry and

We are therefore writing to urge you to modify the Section 48

Renewable Energy Investment Tax Credit (ITC) from a placed in service standard of eligibility to a commence construction standard. The Section 48 ITC benefits a variety of technologies and industries that are important to

our state economies, including solar energy, fuel cells, microturbines,

combined heat and power, small wind and thermal energy. Changing the ITC to a commence construction standard would allow these industries to make full and effective use of the 30 percent investment tax credit for the duration of its existing authorization (which currently expires on December

31, 2016), and will allow them to attract further investment - driving

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Ranking Member

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The Honorable Max Baucus The Honorable Dave Camp The Honorable Orrin Hatch October 21, 2013 Page 2

Currently, in order for a renewable energy project to qualify for the ITC, it must be

placed in service by December 31, 2016. While this may seem like ample time, many large-scale projects - such as utility-scale Concentrating Solar Power (CSP) plants - take 5 to 6 years to

projects also take several years to come online, depending on their size. And these projects often undergo timely, yet appropriate, scrutiny by state utility regulators as part of resource planning processes. This critical oversight and coordination improves the final investment that are financed using the third-party ownership model will face investment planning deadlines by mid-2015. The risk that any of any of these projects could face an unanticipated and unforeseeable delay in permitting or construction - and possibly become ineligible for the important 30 percent ITC - creates a high degree of uncertainty for both project sponsors and investors. At the same time, under a commence construction standard, the credit could still not be claimed until the project is placed in service providing important protection of taxpayer dollars. Furthermore, a project would be eligible for the ITC only if the strict IRS rules for commence construction are met.

Over the past eight years the ITC has been tremendously successful in growing clean energy industries in our states and across the United States, creating American jobs, expanding solar and other Section 48 technologies across the country, and driving down prices for American consumers. With a compound annual growth rate of 77 percent since 2006, the solar industry alone is supporting more than 119,000 American jobs in all 50 states, and contributed economic growth in Western states. Our states have now achieved more than 5,700 megawatts of solar power capacity, supplying enough electricity to power more than one million homes and representing more than 65% of all the solar built in the United States to date. In 2012 alone, the solar industry employed 71,000 people at nearly 3,000 companies in our states. By changing the Section 48 ITC to a commence construction standard Congress can

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support continued domestic energy production and job creation in the West - strengthening our national and economic security and creating a diversified, reliable, and affordable supply of energy.

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$11.5 billion to the U.S. economy in 2012. The ITC has been particularly effective in catalyzing

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decision making, yet it can conflict with the ITC timetable. Similarly, residential solar projects

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develop, permit, finance, construct and place in service. Large commercial photovoltaic (PV)

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The Honorable Sander Levin

The Honorable Max Baucus The Honorable Dave Camp The Honorable Orrin Hatch October 21, 2013 Page 3

The ITC originally became law with strong bipartisan support. Modifying the eligibility for the ITC to a commence construction standard will provide the certainty that is needed to fully and effectively utilize the existing tax credit, and continue the investment and growth in eligibility for the Renewable Energy Production Tax Credit, and now Western Governors strongly urge you to apply the same policy to renewable energy technologies that qualify for the ITC. We thank you for your consideration of this request. Sincerely,

John Hickenlooper Governor, State of Colorado WGA Chairman

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Brian Sandoval Governor, State of Nevada WGA Vice Chairman

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American clean energy industries. Last year the WGA supported the commence construction

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The Honorable Sander Levin