Growth in Fraser Valley prompts moratorium on new natural gas connections
Developers in the Fraser and Winter Park areas are facing an unprecedented challenge since Xcel Energy issued a moratorium on new natural gas customers due to capacity issues.
On Tuesday, Xcel representatives told the Winter Park Town Council they are working on a solution to speed up the installation of a 6 inch reinforcement line, which is supposed to solve the capacity issues.
Xcel paused all new applications on May 10 and notified the towns of the moratorium about a month later. The hold is in place for all new customers in the area. Customers with contracts and those who were in the contract process with Xcel won’t be impacted by the moratorium.
The current moratorium timeline is based on the time it will take to install the reinforcement line along a route that runs through U.S. Forest Service land, which requires a lengthy permitting process.
“We have had multiple meetings with some key developers to discuss some alternative routes to the Forest Service,” Xcel Communications Director Kelly Flenniken said. “That would way dramatically decrease our timeline if we’re able to avoid having to go through the Forest Service, but we continue to keep that on the table.”
Should the route go through Forest Service land, it’s likely the moratorium wouldn’t be lifted until late 2022 or sometime in 2023, depending on how long the permit process takes.
If Xcel can work out agreements with other landowners and reroute the pipeline, company officials say the timeline could be accelerated.
“We’re really hopeful that if we come to terms with the developers, we’ll be able to start construction this year,” Flenniken said.
“Our worst case scenario is we can’t move forward with the developers and we need to go with the Forest Service and the moratorium needs to continue into 2022 or 2023,” she added.
According to Flenniken, an open house for developers allowed Xcel representatives to talk about specific projects and construction timelines, but she didn’t go into detail.
In the meantime, an unknown number of projects are on hold or must change plans. A developer with Fraser River Custom Builders said he hadn’t heard back from Xcel about his application and wondered about temporary solutions.
“What are the alternatives for gas?” he asked. “Is propane an option?”
Grand Park Developer Clark Lipscomb suggested he’s considering switching to electric to avoid the delay.
“We have a 204 unit apartment building that (Xcel is) about to get,” Lipscomb said at a June 16 workshop in Winter Park. “It’s designed and it’s going to get to sit. Our community needs housing. I guess I could look at switching it all to electric.”
According to Xcel, growth in Winter Park and Fraser far outpaced the company’s models, leading to the capacity problem. Other mountain communities are not experiencing the same issues with the Fraser Valley currently the only location on a moratorium. It is the first Xcel has issued in at least the last decade.
“What it boils down to is that there were really rapid increases in gas capacity needs that really did supersede and outpace the development models that we had been using internally,” Flenniken said.
Xcel’s Senior Director of Gas Engineering Steve Martz said the need for reinforcement was identified as early as 2015, but it wasn’t forecast to be needed until at least 2025.
“We did identify the need for reinforcement on these lines a couple years ago, but what we did not see or identify is the extraordinary growth you all are seeing,” Martz said. “With the growth rate you guys were experiencing two to three years ago, forecasting that out, we didn’t see the need for this project to be constructed until 2025 or beyond. So with the growth that you’ve seen, which is a factor of five times more than historical, has accelerated this project upward.”
When questioned why the reinforcement wasn’t started earlier, Flenniken cited restrictions in the Colorado Public Utilities Commission regulations that limit proactive capital improvements.
“It makes it hard for us to build on a forecast,” she said. “There were a lot of projects in the pipeline, and we knew that, but they hadn’t crossed over to that place where the Public Utilities Commission is comfortable with us moving forward with investment.”
Martz also said the pipeline had already been upgraded from a four inch to a six inch based on growth estimates through 2030. Additionally, Xcel is now considering whether an eight inch line is needed.
In the near future, solutions such as a temporary compressor station and compressed natural gas trucks may be utilized to meet current demand. Xcel is also communicating with any applicants put on hold during the moratorium.
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