Media Advisory: Colorado State University Professor Presents Findings for a New Model for Power Pricing to Colorado Public Utilities Commission

Catherine Keske, assistant professor of Agricultural and Resource Economics in the Department of Soil and Crop Sciences at Colorado State University, in conjunction with the Colorado Governor’s Energy Office, will present an overview of a new model for power pricing. The goal of the project is to maximize net social benefits from electricity generation for the citizens of Colorado.

WHEN: 1:30-3 p.m. Friday, Dec. 17.

WHERE: Department of Regulatory Agencies, Colorado Public Utilities Commission, Hearing Room A, 1560 Broadway, Suite A, Denver, Colo.

DETAILS: Keske will conduct a presentation of technical findings and offer details of a power pricing tool at the Colorado Public Utilities Commission Information Meeting. The majority of the presentation will consist of Keske outlining the background and assumptions of the benefit-pricing approach. A live demonstration of an Excel tool implementing the suggested approach using estimated values for environmental costs and performance costs also will be presented.

Under the proposed plan, power generating companies would be financially rewarded for lowering environmental costs that they pass on to customers or for lowering integration costs that they pass on to a bulk power provider. This would be in addition to existing incentives to lower their own private generation costs. The mechanism would provide incentives for electricity generators to modify existing operations and to innovate so that social benefits from electricity generation are maximized for Colorado citizens.

The purpose of this project is to develop a “benefit-pricing” model that reflects the full social costs of electricity generation. The full technical report illustrates how benefit-pricing could be used either as an alternative to, or in conjunction with, existing legislative policies and how the proposal would be applied to the regulatory environment. The benefit-pricing approach is technology neutral – it would link sourcing decisions to true social costs without favoring one technology platform over another. It is different from traditional, least-cost pricing structure.

Following Keske’s presentation, Colorado Public Utilities Commissioners will be able to ask questions as will members of the public.

The project was fully funded through a grant from the Governor’s Energy Office.