After Xcel Energy used up most of its energy efficiency budget for the year, the company suspended all of its corporate programs and asked state regulators for an additional $34 million on top of the $93.6 million it had already agreed to.

In a letter to the Colorado Public Utilities Commission, Public Service Company of Colorado, a Colorado subsidiary of Xcel Energy, said there had been “unexpectedly high levels of customer interest and participation in the company’s energy efficiency offerings” this year.

The proposal faced opposition from consumer and business representatives and PUC staff, but also received support in Denver and from environmental groups that fear long-term harm if the programs are stopped.

The utility commission now faces the “tension” of having to balance cost-effective programs to support suppliers and their employees on the one hand with the need to contain costs and adhere to budget caps on the other, PUC Chairman Eric Blank said at a commission meeting on September 4.

However, the commission has not yet made a decision. “Nothing is finalized yet,” said Justin Brant, program director of the Southwest Energy Efficiency Project (SWEEP), which is supporting the additional $34 million.

“This could have a long-term chilling effect on an industry we have worked hard to build,” Brant said.

The groups and agencies that represent the customers and would have to pay the bill see Xcel Energy’s demand differently.

“This problem was caused entirely by PSCo due to the company’s poor management of these programs,” the Colorado Office of Utility Consumer Advocate, which represents residential and small commercial customers, said in a statement to the PUC.

“The UCA electorate has done nothing to cause this mismanagement problem and should not be held responsible for demanding costs that exceed the Commission’s approved objectives and associated budget cap,” the agency said.

Xcel Energy’s residential energy efficiency programs, such as insulating homes against the elements and offering rebates for energy-efficient appliances and upgrading heating and cooling systems, will continue to be offered.

Colorado Energy Consumers, which represents large industrial and commercial customers, said in a statement that Xcel Energy and a group of interveners, including Colorado Energy and consumer protection, only agreed to a $78 million settlement with a 20 percent budget buffer in May.

Simply paying an additional $34 million to Xcel Energy would “send a clear and disturbing message that cost containment has no place at the Commission and in this energy transition,” Colorado Energy Consumers said.

But freezing the programs until Xcel Energy’s next Demand Side Management, or DSM, budget in 2025 – as the utility has proposed as an alternative – could negatively impact the market for energy efficiency projects and contractors.

“Denver is concerned that this is already happening, as we have heard from customers and providers that the freeze on EV bids could result in projects being canceled,” the city said in a statement. “A quick resolution is important for Denver.”

Xcel Energy said it had spent more than $74 million of its budget through the end of July — $54.4 million of which was for economic programs and $14.9 million for housing and low-income programs. After deducting spending on education and planning programs, about $18 million remained.

Biggest demand? Mainly marijuana grow houses.

Business programs exceeded their target budgets by 144%, driven by demand from the “indoor agricultural market,” primarily marijuana growing areas.

“Because grow lighting did not decline as expected,” Xcel Energy said, “the Company has prematurely retired the grow lighting bonus to cover the costs impacted by this bonus and to assist us in budget management efficiency.”

The announcement of the termination of the bonus program led to a wave of applications to meet the deadline, which further exacerbated the problem.

“They’ve had a gold rush in the cannabis industry and they’ve screwed it up in the usual way, and the usual way is when they do something wrong they go after the ratepayers and ask for more money,” said Joseph Pereira, deputy director of the Consumer Protection Agency.

But both supporters and opponents of additional funding agreed that Xcel Energy should have better monitored the program.

PUC staff said they “do not believe the public service’s questionable administration of these programs constitutes a compelling reason to justify imposing additional costs on ratepayers.”

In a scenario that amounts to “robbing Peter to pay Paul,” Blank proposed shifting funds from the 2025-26 budget to fill the gap for 2024, which the other commissioners agreed to in principle.

“If we bring this money forward from an existing year, there is a high probability that there will be a deficit in 2026,” said Commissioner Tom Plant. “But this now gives us at least a little time to give the parties involved the opportunity to come together and try to find a mutually acceptable solution.”

The problem for the UCA, said Pereira, is that if negotiations continue, it is implicitly assumed that the budget will be increased. “It only goes in one direction,” he said.

“It doesn’t feel like there’s a really quick solution here,” Commissioner Megan Gilman said at the Sept. 4 meeting, “nor do I think we’re going to get a win-win situation that satisfies the majority of parties.”