06 Hearing Exhibit 108_Supplemental Direct Testimony of Joseph T. Schwark_FINAL.pdf

Hearing Exhibit 108, Second Supplemental Direct Testimony of Joseph T. Schwark Proceeding No. 22A-0382ST

NOTICE OF CONFIDENTIALITY

A PORTION OF THIS TESTIMONY AND ATTACHMENTS HAVE BEEN FILED

UNDER SEAL.

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE APPLICATION

OF PUBLIC SERVICE COMPANY OF

COLORADO FOR APPROVAL OF ITS

STEAM REGULATORY AND RESOURCE

PLAN.

) PROCEEDING NO. 22A-0382ST

SECOND SUPPLEMENTAL DIRECT TESTIMONY AND ATTACHMENTS

OF JOSEPH T. SCHWARK

ON

BEHALF OF

PUBLIC SERVICE COMPANY OF COLORADO

NOTICE OF CONFIDENTIALITY

AN ATTACHMENT TO THIS TESTIMONY HAS BEEN FILED UNDER SEAL.

Highly Confidential: Attachment JTS-5HC, Pages 16, 22, 23, 26-28, 37, 38, 41-44, 48-50

May 6, 2024

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE APPLICATION

OF PUBLIC SERVICE COMPANY OF

COLORADO FOR APPROVAL OF ITS

STEAM REGULATORY AND RESOURCE

PLAN.

) PROCEEDING NO. 22A-0382ST

SECOND SUPPLEMENTAL DIRECT TESTIMONY AND ATTACHMENTS OF

JOSEPH T. SCHWARK

TABLE OF CONTENTS

SECTION PAGE

I. INTRODUCTION, QUALIFICATIONS, PURPOSE OF SECOND SUPPLEMENTAL

DIRECT TESTIMONY

II. ADDITIONAL TECHNOLOGIES STUDIES

A. The RMH Denver Heat Pump Study

B. The Salas O’Brien Ambient Loop Study

C. Ambient Loop Business Opportunity for Growth

III. CONCLUSION

LIST OF ATTACHMENTS

Attachment JTS-1 RMH Scope of Work - Heat Pump Study

Attachment JTS-2 Salas O’Brien Scope of Work – Ambient Loop Study

Attachment JTS-3 RMH Scope of Work – Ambient Loop Study

Attachment JTS-4 RMH Denver Heat Pump Study

Attachment JTS-5 Salas O’Brien Ambient Loop Study (Public Version)

Attachment JTS-5HC Highly Confidential, Salas O’Brien Ambient Loop Study

IN THE MATTER OF THE APPLICATION

OF PUBLIC SERVICE COMPANY OF

COLORADO FOR APPROVAL OF ITS

STEAM REGULATORY AND RESOURCE

PLAN.

) PROCEEDING NO. 22A-0382ST

SECOND SUPPLEMENTAL DIRECT TESTIMONY AND ATTACHMENTS OF

JOSEPH T. SCHWARK

I. INTRODUCTION, QUALIFICATIONS, PURPOSE OF SECOND SUPPLEMENTAL 1

DIRECT TESTIMONY 2

PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 3

A. My name is Joseph T. Schwark. My business address is 500 15th St, Denver, 4

Colorado 80202. 5

BY WHOM ARE YOU EMPLOYED AND IN WHAT POSITION? 6

A. I am employed by Public Service Company of Colorado (“Public Service” or the 7

“Company”) as Thermal Energy Sales and Development Specialist. 8

ON WHOSE BEHALF ARE YOU TESTIFYING IN THE PROCEEDING? 9

A. I am testifying on behalf of Public Service. 10

PLEASE SUMMARIZE YOUR RESPONSIBILITIES AND QUALIFICATIONS. 11

A. As Thermal Sales and Development Specialist, I am responsible for overseeing 12 certain aspects of the business operations of the Company’s District Steam 13

System and District Chilled Water System. My responsibilities include monitoring 14 billing and metering activities, responding to customer questions and concerns, 15 and tracking the performance of both the District Chilled Water and District Steam 16 businesses. In my previous role as a steam and chilled water reliability engineer, 17

I developed a detailed technical understanding of the Public Service thermal 1 systems and how they are utilized by our customers. A more detailed description 2 of my qualifications, duties, and responsibilities is set forth in my Statement of 3

Qualifications provided at the end of my testimony. 4

WHAT IS THE PURPOSE OF YOUR SECOND SUPPLEMENTAL DIRECT 5

TESTIMONY IN THIS PROCEEDING? 6

A. The purpose of my testimony is (1) to adopt the direct testimonies of Company 7 witnesses Mr. Tim S. Brown and Mr. Sam B. Lidington that were filed 8 contemporaneously with the Company’s Verified Application in this proceeding on 9

September 1, 2022; (2) to present and explain the Additional Technologies 10

Studies, including the processes followed and the key findings of those studies; 11 and (3) reconfirm the Company’s plan as laid out in its Application and Direct 12

Testimony to continue to operate the Denver District Steam System using its 13 existing four gas-fired boilers, including the necessary maintenance to allow 14

Denver Steam Plant (“DSP”) Units 1 and 2 to continue operating beyond their 15 current depreciation retirement dates of 2025. 16

ARE YOU SPONSORING ANY ATTACHMENTS AS PART OF YOUR SECOND 17

SUPPLEMENTAL DIRECT TESTIMONY? 18

A. Yes. I am sponsoring the following attachments: 19

Attachment JTS-1 – RMH Scope of Work – Heat Pump Study 20

Attachment JTS-2 – Salas O’Brien Scope of Work – Ambient Loop Study 21

Attachment JTS-3 – RMH Scope of Work – Ambient Loop Study 22

Attachment JTS-4 – RMH Denver Heat Pump Study 1

Attachment JTS-5 – Salas O’Brien Ambient Loop Study (Public Version) 2

Attachment JTS-5HC – Highly Confidential Salas O’Brien Ambient Loop 3 Study 4

WHY IS IT NECESSARY FOR YOU TO ADOPT THE DIRECT TESTIMONIES OF 5

MR. BROWN AND MR. LIDINGTON? 6

A. Since the filing of their direct testimonies on September 1, 2022, Mr. Brown has 7 changed positions within Xcel Energy and Mr. Lidington has left the Company. 8

ARE YOU ADOPTING ALL OF MR. BROWN’S AND MR. LIDINGTON’S DIRECT 9

TESTIMONIES, INCLUDING ALL OF THEIR ATTACHMENTS? 10

A. Yes, I am. 11

BOTH MR. BROWN IN HIS DIRECT TESTIMONY AND YOU ABOVE MENTION 12

THAT YOU HAVE RESPONSIBILITIES OVER THE COMPANY’S CHILLED 13

WATER SYSTEM IN ADDITION TO THE COMPANY’S DISTRICT STEAM 14

SYSTEM. WOULD YOU PLEASE PROVIDE A BRIEF BACKGROUND AND 15

HISTORY OF THE COMPANY’S CHILLED WATER SYSTEM? 16

A. Certainly. In addition to its downtown Denver District Steam System, the Company 17 also owns and operates a downtown Denver Chilled Water System. In 1998, in 18 response to the growing demand for space cooling in downtown Denver, the 19

Company commenced the development and construction of a chilled water 20 system. Specifically, the system includes two large central chiller units located in 21 a building in downtown Denver and a loop network of underground pipes running 22 through the city streets that move cold water from the central chillers to customer 23 buildings, where Btus are received via customer-owned heat exchangers, and then 1 move the return water back to the chillers. The central chilled water facility utilizes 2 two ice tanks with 75,000 ton-hrs of combined thermal storage capacity. The ice 3 tanks are used for both system reliability and to reduce the peak summertime 4 electric demand associated with the chillers. The District Chilled Water System 5 serves just over 40 buildings downtown through about 15,000 feet of distribution 6 piping. Most of the customers receiving District Chilled Water Service are also 7

District Steam Service customers. While the length of distribution piping is only 8

15,000 feet, the District Chilled Water System overlays a significant portion of the 9

District Steam System footprint. District Chilled Water Service is not regulated by 10 the Colorado Public Utilities Commission. 11

II. ADDITIONAL TECHNOLOGIES STUDIES

PLEASE SUMMARIZE WHAT YOU WILL DISCUSS IN THIS SECTION OF 1

YOUR TESTIMONY. 2

A. In this section, I will explain the processes, analyses and key findings underlying 3 the two Additional Technologies Studies as authorized by the Commission in 4

Decision C23-0865-I, mailed April 25, 2023, in this proceeding. Those studies 5 include the “Technical Feasibility of Applying Air and Water Source Heat Pumps 6 to Steam Customer Segments” conducted by RMH Group, Inc., referred to herein 7 as the RMH Denver Heat Pump Study, and the “Denver District Steam and Chilled 8

Water Systems Ambient Temperature Ground Loop Feasibility Study” conducted 9 by Salas O’Brien North, LLC, referred to herein as the Salas O’Brien Ambient Loop 10

Study. 11

WHY DID THE COMPANY COMMISSION THESE STUDIES? 12

A. Company witness Mr. Ryan Matley provides the regulatory background regarding 13 these studies. Suffice it to say, based on the responses of certain intervenors to 14 our Application suggesting the potential for distributed heat pumps and district 15 geo-exchange technologies as a solution for steam customers that would also 16 reduce the carbon dioxide emissions associated with heating and cooling 17 buildings, the Commission requested additional studies on these additional 18 technologies to help it evaluate the Company’s Steam Regulatory and Resource 19

Plan. As documented by Company witness Mr. Matley in his Second 20

Supplemental Testimony, the Company has engaged in a collaborative process 21 with the parties throughout this proceeding, including multiple meetings and check-1 in processes from time to time. As part of this collaborative process, a consensus 2 approach to study these additional technologies was developed, subsequently 3 resulting in a proposed scope of work, timeline and budgeted costs, as well as the 4 identification of engineering consultants—RMH and Salas O’Brien—to complete 5 the studies. It was determined that the Company would provide the consultants 6 customer demand and usage data and that both studies would rely upon and 7 incorporate portions of the Engineering Study, including particularly specific 8 information regarding each customer building reflected in the individual customer 9 assessments. The Commission ultimately authorized the Company to go forward 10 with the Additional Technologies Studies, along with the consultant scopes of work 11 and budget to support those studies. 12

HOW DID THE COMMISSION DESCRIBE THE ADDITIONAL TECHNOLOGIES 13

STUDIES THE COMPANY WAS AUTHORIZED TO CONDUCT? 14

A. In Decision No. C23-0865-I, the Commission stated as follows: 15

Through this Decision, the Commission approves the scopes, 16 budgets and schedules for the two proposed studies that will 17 investigate the technical feasibility and financial viability of 18

1) distributed air- and ground-source heat pumps and 19

2) conversion of the district steam system into a system that 20 would circulate ambient temperature fluid that would serve as 21 both a source and sink for thermal energy (via distributed heat 22 pumps) to existing steam customers and potentially new 23 customers. 24

* * * 25

One project will investigate the feasibility and economic 26 attractiveness of customer conversions to air- or ground-27 source heat pumps. This project has an estimated duration of 1 18 weeks and a budget of $168,945. The second project, 2 which would evaluate the feasibility and economics of a 3 district ambient temperature fluid circulation system has an 4 estimated duration of 15 weeks and budget of $166,720. 5

IN YOUR OPINION, WERE THE COSTS INCURRED BY THE COMPANY FOR 6

THE ADDITIONAL TECHNOLOGIES STUDIES REASONABLE? 7

A. Yes. I have reviewed the invoices from both RMH Group and Salas O’Brien. The 8 work performed was in line with the scopes of work developed by the Company 9 and parties on a collaborative basis and approved by the Commission. Likewise, 10 the total costs incurred for the Additional Technologies Studies are in line with the 11 budgets presented to and approved by the Commission. 12

WHAT WERE THE SPECIFIC SCOPES OF WORK APPROVED FOR THE TWO 13

ADDITIONAL TECHNOLOGIES STUDIES? 14

A. The scopes of work were included as Attachments 1, 2 and 3 to the Company’s 15

Additional Technologies Report filed on March 29, 2022 (“March 29 Report”). The 16 scope of work for the RMH Denver Heat Pump Study (Attachment 1 to the 17

March 29 report) is included as Attachment JTS-1 to my Second Supplemental 18

Direct Testimony. There are two scopes of work associated with the Ambient Loop 19

Study, one for Salas O’Brien as the lead engineering contractor, and the second 20 for RMH as the consulting engineering contractor. The Salas O’Brien scope of 21 work (Attachment 2 to the March 29 report) is provided as Attachment JTS-2 and 22 the RMH scope of work (Attachment 3 to the March 29 report) is provided as 23

Attachment JTS-3 to my testimony. 24

PLEASE DESCRIBE THE AIR AND WATER SOURCE HEAT PUMP 1

TECHNOLOGIES EVALUATED IN THE RMH DENVER HEAT PUMP STUDY. 2

A. The heat pump study considers the feasibility and economic attractiveness of using 3 building-level air and water source heat pump technology to replace the heating 4 energy currently supplied by the Company’s District Steam System. 5

As a general matter, air source systems move heat from one air stream, 6 typically outside air, to a fluid via the refrigeration cycle. The fluid can then be used 7 as a source of heating as well as cooling for the building. The efficiency of air 8 source systems is highest when the temperature difference, or “lift,” between the 9 air and the conditioned fluid is lowest. Both the heating efficiency and capacity of 10 the air source system decline as the source air temperature decreases, assuming 11 the temperature required for indoor comfort remains the same.1 Air source heat 12 pumps struggle to generate lift greater than 120°F. RMH found that it is not 13 technically feasible to generate water temperatures of between 140°F to 170°F 14 from air at temperatures of 0°F or colder with a single heat pump. As a result, the 15

RMH Denver Heat Pump Study considered the application of a two-stage, or 16 cascade, system to reach the required heating water supply temperatures.2 17

Water source systems move heat from a water source to another fluid via 18 the refrigeration cycle. They can be used to provide heating as well as cooling. 19

As with air source heat pumps, the heating efficiency and capacity are also 20

1 See page 11 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p 15.

2 See page 13 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 17.

dependent on lift. That said, efficiency and capacity do not vary as much as air 1 source heat pumps because the source water temperature is generally more 2 consistent.3 The source water can be provided in several ways. Geo-exchange 3 loops are commonly used as a heating and cooling source, but ambient district 4 systems can also be utilized. Once heating water is generated by the heat pump 5 at a sufficient temperature, it is supplied to the building.4 6

PLEASE DESCRIBE THE AMBIENT TEMPERATURE GROUND LOOP 7

SYSTEM EVALUATED IN THE SALAS O’BRIEN AMBIENT LOOP STUDY. 8

A. As explained above, water source heat pumps require a source of water out from 9 which to pull heat and into which to reject heat. The heat for the source water is 10 often provided by geothermal boreholes; however, in densely populated areas 11 such as downtown Denver where there is little available land not already dedicated 12 to conflicting uses (e.g., existing easements, roadways and sidewalks), standalone 13 geothermal systems might not be feasible. Water source heat pumps can also 14 utilize ambient piping networks as a heat source and sink. 15

Installing a new ambient piping network throughout downtown Denver 16 would be very expensive. Converting existing piping already in the street could 17 result in significant savings. As discussed earlier in my testimony, the Company 18 owns and operates both a District Steam System and a District Chilled Water 19

System in downtown Denver. The District Steam System is a single pipe, once-20

3 See page 19 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 23.

4 See page 20 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 24.

through system. Most of the steam piping is 12 to 14 inches in diameter. The 1

District Chilled Water System is a two-pipe system with 24-inch supply and return 2 mains. 3

Salas O’Brien evaluated the feasibility of converting both the District Steam 4

System into a single pipe ambient loop and the District Chilled Water System into 5 a two-pipe ambient loop. Single-pipe and two-pipe systems can both be used as 6 a source for water source heat pumps, but their system characteristics result in 7 significant differences in operation and comparative advantages and 8 disadvantages. 9

HAVE THE ENGINEERING CONSULTANTS ISSUED FINAL REPORTS? 10

A. Yes. RMH issued its report on the Denver Heat Pump Study on December 22, 11

2023. A copy of the RMH Denver Heat Pump Study report is included as 12

Attachment JTS-4 to my Second Supplemental Direct Testimony. Salas O’Brien 13 issued its report on the Ambient Loop Study on December 13, 2023. A copy of the 14

Salas O’Brien Ambient Loop Study report is included as Attachment JTS-4 to my 15

Second Supplemental Direct Testimony. 16

In the remainder of this section, I will separately address the processes 17 followed and key findings of each of the studies individually. 18

A. The RMH Denver Heat Pump Study 1

PLEASE PROVIDE A HIGH-LEVEL SUMMARY OF THE PROCESS 2

FOLLOWED BY RMH IN EVALUATING THE TECHNICAL FEASIBILITY OF AIR 3

AND WATER SOURCE HEAT PUMPS FOR THE COMPANY’S STEAM 4

CUSTOMERS? 5

A. RMH used detailed HVAC information for each steam customer’s building that had 6 been gathered as part of the previous Engineering Study to group the steam 7 customers into several segments, as I will further address below. RMH then 8 developed generic ASHP and WSHP solutions for each building segment. These 9 solutions allowed RMH to determine the most cost-effective way to convert the 10 steam customers onto a heat pump solution. The high-level heat pump solutions 11 also allowed RMH to estimate construction costs, ongoing utility costs, impact to 12 the building’s electrical demand, and the carbon emissions impacts associated 13 with the air and water source heat pump solutions. 14

WHY WAS IT NECESSARY FOR RMH TO GROUP THE STEAM CUSTOMERS 15

INTO SEGMENTS FOR PURPOSES OF THE STUDY? 16

A. The scope of the previous Engineering Study was limited to changes addressing 17 only the energy source within each customer’s building. As we worked with 18 stakeholders to develop the scope of the Additional Technologies Studies, it 19 quickly became clear that to apply heat pump technology additional building 20 characteristics needed to be considered. Doing this would require a much more 21 complex undertaking and it was decided that a building-by-building approach 22 would be too costly and impractical. Instead, RMH leveraged building information 1 gathered during the Engineering Study to segment the customers. This approach 2 was determined to allow for reasonably reliable results without the need and 3 expense of engaging in additional customer-by-customer building evaluations and 4 became part of the consensus approach adopted by the parties. 5

HOW WERE CUSTOMERS SEGMENTED FOR PURPOSES OF THE RMH 6

DENVER HEAT PUMP STUDY? 7

A. The primary factors that were used to determine the segments were building use 8 type, heating system type, and heating fluid temperature. Additional HVAC 9 features were considered, but these primary factors were determined to be the 10 most impactful to the design of a heat pump heating solution.5 11

RMH used these factors to group the customers into three segments: 12 heating water, condenser water, and steam direct. Heating water is by far the 13 largest customer segment, accounting for 92 percent of annual steam 14 consumption. Because so many buildings on the District Steam System have 15 heating water systems, it was important to represent these customers in a segment 16 and develop heat pump solutions for several sub-segments within this large 17 segment. To do this, RMH created three sub-segments: (i) 140°F heating water 18 design achievable; (ii) 140°F heating water with envelope improvements; and (iii) 19

5 See pages 4-7 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp. 8-11.

170°F heating water (no cost-effective path to 140°F).6 These sub-segments have 1 implications for both energy use and electrical demand. 2

The considerable number of buildings with mixed steam and heating water 3 systems were split between heating water and steam direct segments. The 4 majority of customer buildings only have a few steam coils and mostly use district 5 steam service for heating water. These were considered heating water buildings. 6

Other buildings that did not have enough heating water to be worth reusing were 7 considered steam direct buildings.7 8

WHAT ARE SOME OF THE MAIN ASSUMPTIONS MADE BY RMH IN 9

CONDUCTING THE STUDY? 10

A. RMH made several assumptions in determining the appropriate design of the heat 11 pump application for each customer segment. Most critically, the selected heat 12 pump system had to be able to operate within the expected temperature ranges of 13

Denver’s climate. RMH found that currently available commercial air source 14 heating equipment has outdoor temperature cutoffs between 0°F and -4°F, below 15 which the equipment will not operate. Of course, Denver regularly experiences 16 winter temperatures well below -4°F. For the study, RMH assumed that air to water 17 systems with the ability to extract heat from air down to Denver’s extreme annual 18 design conditions will become available in the future. From conversations with 19 equipment suppliers, RMH found that this appears likely as manufacturers respond 20

6 See pages 7-9 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp.11-13.

7 See page 7 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 11.

to increased demand for heat pumps in cold climates.8 However, it is critical to 1 stress that this technology is not currently available. As a result, buildings that 2 convert to air source solutions in the near future will need to install electric 3 resistance backup, which will have a much larger effect on electric demand than 4 calculated in the scope of this study. For the purposes of this study, systems 5 capable of operating in Denver’s extreme conditions were assumed to be 6 acceptable and available. Using the assumption that low ambient air to water heat 7 pumps will become available allows buildings in the heating water customer 8 segment to retain their existing heating water infrastructure. 9

As to the steam direct customer segment, RMH assumed the entire HVAC 10 system would need to be replaced to accommodate the necessary variable 11 refrigerant flow (“VRF”) systems capable of operating in Denver’s climate.9 The 12 results for the “steam direct convert to VRF” segment can also be used as a 13 comparison for what the results of the hot water segment would look like without 14 the assumption that low ambient ASHPs become available. 15

WHAT WERE THE KEY FINDINGS OF THE RMH DENVER HEAT PUMP 16

STUDY? 17

A. The key findings of the heat pump study are as follows: 18

Customer conversion costs: The cost to convert customer buildings to both air 19 source and water source solutions is considerable. The cost to convert to 20 an air source solution was estimated at $20-$50 per square foot, depending 21 on building segment. The cost to convert to a water source solution was 22

8 See pages 10-11 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp. 14-15.

9 See page 6 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 10.

estimated at $6.30-$38.40 per square foot, depending on building 1 segment.10 The steam customer cost to convert all buildings to ASHPs was 2 estimated at $599 million. The cost to convert all customers to WSHPs was 3 estimated at $364 million.11 These cost estimates do not include utility 4 electric infrastructure, vault upgrades, and installation of a WSHP heat 5 source. 6

Customer ongoing utility costs: The study found that both air and water source 7 heat pumps will reduce ongoing utility costs when compared to steam 8 service.12 For water source solutions connected to an ambient loop system, 9 there will be an additional cost associated with ambient loop service. This 10 cost will be required to recoup the cost of constructing the system and energy 11 costs for pumping and heating the loop. While these costs are currently 12 unknown, a possible range was estimated to show a fair comparison 13 between the ambient loop and other options.13 14

Customer conversion technical and economic feasibility: The study found that 15 replacing steam with air source solutions without electric resistance backup 16 is currently not technically feasible. Even if air source technology continues 17 to mature as assumed in the study, the economic feasibility of the customer 18 conversions is uncertain. The study found that, before factoring in incentives 19 such as tax credits, grants, or avoided fines, most buildings will not see 20 sufficient return on investment to drive adoption of heat pump solutions.14 21

Customer conversion timeline: The study estimated that a typical customer 22 conversion requires at least 18 months for design, permitting, and 23 construction. Many projects will also require phasing to avoid interrupting 24 heating and domestic hot water systems for long periods of time. Air source 25 systems still require technology improvements to be viable without electric 26 resistance or gas backup, and water source systems require a source water 27 loop to be developed before they can be connected (such as an ambient 28 temperature loop). 15 These factors alone make it difficult until at least 2030, 29 and likely longer to convert all steam customers to heat pump, electric 30 resistance, or natural gas solutions. 31

Electrical demand impacts: The study found that both air and water source heat 32 pump solutions significantly reduce peak electrical demand when compared 33

10 See page 56 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 60.

11 See page 41 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 45.

12 See pages 56-57 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp. 60-61.

13 See page 44 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 48.

14 See page 56 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 60.

15 See page 52 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 56.

to electric resistance heating.16 That said, it is important to note that RMH 1 found that customers who convert to air source solutions prior to anticipated 2 technology advancements will need to install electric resistance backup, 3 which will operate in a manner that negate the air source heat pump demand 4 benefits.17 Water source solutions provide demand reductions when 5 compared to air source and electric resistance solutions; however, replacing 6 steam with water source heat pumps will still result in an increase in electrical 7 demand for the majority of steam customers. Minimizing increases in 8 electrical demand will help avoid costs associated with upgrading electric 9 distribution infrastructure. 10

Carbon emissions impacts: Using forecasted 2030 emission factors, and using 11 the District Steam System as a baseline, the study estimated that air and 12 water source heat pump solutions will reduce carbon emissions by 13

84.3 percent and 86.9 percent, respectively. Both heat pump solutions result 14 in larger carbon reductions than electric resistance heat, which resulted in a 15 carbon emissions reduction of approximately 62 percent compared to steam 16 service.18 17

Customer preference for air source or water source systems: Based on the 18 engineering analysis performed for this study, RMH expects that more steam 19 customers will be interested in converting to water source systems than air 20 source systems. This is primarily an effect of higher air source conversion 21 costs and the lack of air source heat pump solutions able to operate in 22 Denver’s cold climate in the short term.19 23

Customer ability to install stand-alone geothermal systems: The study found 24 that it is not feasible to utilize geothermal heat as a heat source for ground 25 source heat pumps. Given the limited availability of open land in downtown 26 Denver and the difficulty and cost of drilling wells, the study concluded that 27 ground source systems are not a technically or economically feasible 28 option.20 29

Energize Denver implications: The Energize Denver initiative most relevant to 30 steam customers is the requirement for existing buildings to reduce their 31 energy use index to a target or face financial penalties. Both air and water 32 source heat pump solutions will result in significant EUI reductions compared 33

16 See pages 36 and 38 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp. 40 & 42.

17 See page 10 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 14.

18 See page 50 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 54.

19 See page 57 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 61.

20 See page 29 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 33.

to steam, which may give non-compliant buildings a financial incentive to 1 convert to a heat pump solution.21 2

WHAT WERE RMH’S RECOMMENDATIONS FROM THE STUDY? 3

A. Based on the findings of their study, RMH made several recommendations. First, 4

RMH found that the steam customer conversion process will likely take many 5 years, regardless of which solution or mix of solutions is selected. As a result, 6

RMH recommended that the Company plan to maintain steam service for at least 7

10 years and likely longer to support customers that cannot easily transition. 22 8

Based on their finding that customers may prefer water source systems to 9 air source systems, and their finding that it is not feasible for individual steam 10 customers to install stand-alone ground source systems, RMH recommended that 11 the Company partner with stakeholders to pilot an ambient district water source 12 system. Conducting a pilot project could assist in validating design and cost 13 assumptions. Once operational, the ambient pilot project would provide data for 14 comparison of the estimated utility costs and electrical demand projections.23 15

RMH noted that the boilers at the Denver Steam Plant (“DSP”) could be 16 used as a bridge to balance any future ambient district system. Utilizing steam 17 assets, such as the Unit #3 boiler at DSP, until their end of life could assist in 18

21 See pages 52-55 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, pp. 56-59.

22 See page 57 of the RMH Denver Heat Pump Study; Hr. Ex. 108, Attachment JTS-4, p. 61.

23 Id.

reducing stranded asset costs, and using the District Steam System to balance an 1 ambient loop could result in significant carbon emission reductions.24 2

WHAT CONCLUSIONS HAS THE COMPANY DRAWN FROM THE RMH 3

DENVER HEAT PUMP STUDY AS PERTINENT TO ITS PROPOSED COURSE 4

UNDER ITS STEAM REGULATORY AND RESOURCE PLAN? 5

A. The results of the heat pump study confirmed the Company’s original finding that 6 the steam customer conversion process will take many years. As a result, the 7

Company will need to extend the lives of one or both the DSP Unit 1 and 2 boilers. 8

The Company will also need to plan on providing steam service for at least through 9

2030 and likely longer to support customers that cannot easily transition. 10

The heat pump study also demonstrated the benefits and challenges 11 associated with converting steam customers to heat pumps. Commercial air 12 source heat pump technology is still developing, and low temperature air source 13 solutions are not currently available. Water source technology requires a heat 14 source, and geo-exchange is not a feasible solution for the large buildings in 15 downtown Denver. That said, implementing heat pump solutions can provide 16 carbon emission benefits, and reduced ongoing utility costs compared to steam 17 and electric resistance heating, as well as reduced electrical demand compared to 18 electric resistance heating. Based on these benefits, heat pump solutions show 19 promise in being a valuable tool to decarbonize the District Steam System. 20

24 Id.

B. The Salas O’Brien Ambient Loop Study 1

PLEASE PROVIDE A HIGH-LEVEL SUMMARY OF THE PROCESS 2

FOLLOWED BY SALAS O’BRIEN IN EVALUATING THE TECHNICAL 3

FEASIBILITY OF CONVERTING THE DENVER DISTRICT STEAM AND 4

DISTRICT CHILLED WATER SYSTEMS INTO AN AMBIENT TEMPERATURE 5

GROUND LOOP? 6

A. In order to determine the technical feasibility of converting the existing District 7

Steam and District Chilled Water Systems into an ambient loop serving all of the 8 existing District Steam Service customers, Salas O’Brien performed the following: 9

A TRNSYS model was created to simulate the existing District Steam and 10 District Chilled Water Systems, including customer heating and cooling loads 11 as well as utility owned thermal infrastructure. 12

Salas O’Brien used the TRNSYS model to analyze the technical feasibility of 13 several different scenarios at a high level. 14

Due to the high cost to install new piping, Salas O’Brien focused on evaluating 15 the extent that the existing chilled water and steam networks could be 16 repurposed as ambient loops. 17

The TRNSYS analysis included a hydraulic simulation to ensure the existing 18 pipes were adequately sized, a thermal analysis to specify the required 19 ground loop heat exchangers, and an analysis of additional heat sources 20 necessary, such as waste heat in the chilled water loop.25 21

25 See pages 5-8 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp. 5-8.

WHAT ARE SOME OF THE MAIN ASSUMPTIONS MADE BY SALAS O’BRIEN 1

IN CONDUCTING THE STUDY? 2

A. In order to evaluate the feasibility of repurposing the steam and chilled water 3 infrastructure as an ambient loop, Salas O’Brien needed to establish several 4 design guidelines. The ambient loop design parameters were specified using best 5 industry practices. For example, the ambient loop inlet temperatures were 6 specified to range between 40°F in the winter and 90°F in the summer, the 7 maximum hydraulic pressure in the system was specified at 150 psig, and the 8 allowable temperature drop between injection points was specified at 10°F. Salas 9

O’Brien coordinated the ambient loop inlet temperatures with RMH’s WSHP 10 design. When evaluating ground loop sources of heating and cooling, Salas 11

O’Brien modeled traditionally drilled, 600-foot-deep boreholes. They did not 12 incorporate directional or offset drilling into their analysis.26 13

WHAT WERE THE KEY FINDINGS OF THE SALAS O’BRIEN AMBIENT LOOP 14

STUDY? 15

A. Salas O’Brien found that it is technically feasible to repurpose a significant portion 16 of the steam and chilled water piping as an ambient loop. In order to serve all of 17 the existing steam customers, the new ambient system would need to be split up 18 into three networks: a steam loop network, a chilled water loop network, and a 19 capital loop network.27 20

26 See pages 8-11 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5. pp. 8-11.

27 See pages 4-8 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp. 4-8

The steam network repurposes the existing steam piping as a single pipe 1 ambient system. While a significant portion of existing steam piping would be re-2 used, over 7,500 feet of new piping would need to be installed. In order to meet 3 design requirements, the steam network would need ten heat injection points 4 capable of providing about 60,366 MMBtu annually. It should be noted that while 5 the Denver Steam Plant can be utilized as one injection point, separate heat 6 sources will need to be installed at the other nine injection points. The steam 7 network would also need a total of five new pumping stations to meet system 8 hydraulic requirements.28 9

The chilled water network repurposes the existing District Chilled Water 10 system as a two-pipe ambient system. The centrally located chilled water plant 11 would be the sole heat injection, rejection, and pumping location. The two, 24-inch 12 chilled water mains are adequately sized to meet the heat loads of the steam 13 customers that are on the chilled water loop. Only about one block of new piping 14 would be needed. Repurposing the District Chilled Water System also provides 15 the ambient loop with the significant year-round heat load currently rejected by the 16

District Chilled Water System. 29 17

The capital steam network would utilize existing steam piping at the Capital 18

Complex as a single pipe ambient loop. While a significant portion of existing 19 steam piping would be re-used, several thousand feet of new piping would need 20

28 See pages 15-21 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp. 15-21.

29 See pages 22-26 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp. 22-26.

to be installed. In order to meet design requirements, the steam network would 1 need two heat injection points capable of providing about 11,102 MMBtu 2 annually.30 3

Salas O’Brien also analyzed several potential heat sources to balance the 4 ambient loop. They found that if the new ambient network is heated and cooled 5 using only ground loop heat exchangers over 3,000 bores would be needed, 6 requiring about 60 acres of land. Salas O’Brien noted that there are two large 7 sewage interceptors in the Denver area. A significant amount of heat is available 8 in the interceptors. That said, even if we assume that 100% of the available heat 9 can be captured, it would only account for about half of the peak heat load of the 10 new ambient loop.31 Finally, Salas O’Brien evaluated the waste heat available in 11 the chilled water loop. The chilled water loop has a significant year-round cooling 12 load that could possibly be used to heat an ambient loop. According to the 13 aggregate thermal load profile developed by Salas O’Brien, the wintertime chilled 14 water cooling load can provide about 16% of the peak ambient heat load. In the 15 summer months, the cooling load on the system would actually exceed the heat 16 load.32 17

30 See pages 27-31 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp. 27-31.

31 See page 32 and Table 7 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, p.32 & Table 7.

32 See pages 12-13 and Figure 4 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, pp.12-13 & Figure 4.

WHAT CONCLUSIONS HAS THE COMPANY DRAWN FROM THE SALAS 1

O’BRIEN AMBIENT LOOP STUDY AS APPLICABLE TO ITS PROPOSED 2

COURSE UNDER ITS STEAM REGULATORY AND RESOURCE PLAN? 3

A. The findings of the Salas O’Brien ambient study show that it is possible to 4 repurpose the District Steam and District Chilled Water infrastructure into an 5 ambient loop.33 That said, the current cost required to overcome the technical 6 hurdles associated with converting the steam piping vastly outweigh the benefits. 7

For example, a single pipe ambient loop requires heat injection and rejection points 8 to be placed strategically throughout the system. Insufficient injection point sizing 9 could result in downstream customers receiving fluid of inadequate temperature. 10

Salas found that 10 injection points would be required throughout the steam loop, 11 which is technically feasible but not practically feasible due to geographical 12 constraints in downtown Denver.34 Each injection point requires space, heating 13 and cooling infrastructure (such as a ground source wellfield) would need to be 14 connected to the injection points, and future customer additions would likely 15 require additional injection points. Salas also found that five pumping stations 16 would be required throughout the loop in order to keep hydraulic pressure within 17 design requirements.35 The pumping stations also require space and power, and 18 would be impacted by any customer additions. The process of converting the 19

33 See page 33 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, p. 33.

34 See page 19 and Table 1 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5, p. 19 & Table 1.

35 See page 20-21 and Figure 9 of the Salas O’Brien Ambient Loop Study; Hr. Ex. 108, Attachment JTS-5,

pp. 20-21 & Figure 9.

steam piping into ambient piping is also very challenging. All of the customers on 1 a section of piping would likely need to convert to WSHPs at the same time the 2 piping is converted from steam to ambient piping. Coordinating and phasing 3 customer conversions to align with the piping conversion would be a very difficult 4 task. 5

The option of converting the chilled water network into a two-pipe ambient 6 network shows more promise. The 24-inch chilled water pipes are adequately 7 sized to support the steam customer heat loads. The two-pipe network allows for 8 centralized heating, cooling, and pumping infrastructure. The existing chilled water 9 plant is well suited for this task as it already provides pumping and cooling to chilled 10 water customers. As with the steam piping, the process of phasing the chilled 11 water piping into ambient piping will be a challenge; however, our consultant 12 pointed out that the current 50°F wintertime chilled water return temperature could 13 possibly be used as a temporary heat source. 14

C. Ambient Loop Business Opportunity for Growth 15

BASED ON THE RESULTS OF THE SALAS O’BRIEN AMBIENT LOOP STUDY, 16

WHAT IS THE COMPANY’S VIEW ON THE FUTURE PROSPECTS FOR AN 17

AMBIENT TEMPERATURE GROUND LOOP SYSTEM IN DOWNTOWN 18

DENVER? 19

A. In a combined sense, the studies produced by RMH and Salas tend to support that 20 there is potential in further exploring business models and opportunities associated 21 with developing in downtown Denver an ambient temperature ground loop. That 22 type of system would be able to assist customer heating and cooling needs as 1 paired with water source heat pumps. The development of an ambient 2 temperature ground loop has shorter-term potential to use portions of the 3

Company’s existing District Steam and District Chilled Water Systems, with longer-4 term potential to expand such a ground loop to further areas of downtown Denver. 5

That longer-term potential may require the installation and development of new 6 piping infrastructure, though there also could be opportunities to leverage existing 7 steam piping. 8

The Company generally appreciates the opportunity to allow third-party 9 consultant study development on alternative steam technology feasibility, and in 10 this instance the study findings on the technical feasibility of the development of 11 an ambient temperature ground loop show promise. For that reason, the Company 12 is interested in measured and prudent steps in testing, piloting, and demonstrating 13 the economic and technical feasibility of an ambient temperature ground loop. 14

Company witnesses Ryan Matley and Grace Jones further address the Company’s 15 ongoing development of thermal energy system pilots and how an ambient 16 temperature ground loop is part of our consideration for such pilot development. 17

PLEASE EXPLAIN HOW AN AMBIENT TEMPERATURE GROUND LOOP 18

COULD EXPAND IN DOWNTOWN DENVER OR OTHER PORTIONS IN 19

DENVER. 20

A. In general, an ambient temperature ground loop may have development potential 21 that exceeds that of the existing Denver District Steam System. Unlike the District 22

Steam System, there are broader opportunities to find heat sources to provide the 1 energy source for the ambient temperature ground loop. While I have discussed 2 how geothermal sources may provide that energy source, there is also great 3 potential to harness waste heat sources in a variety of forms. Waste heat sources 4 could include that from existing generation facilities, industrial facilities, data 5 centers, and wastewater. Due to the broadness of the available waste heat 6 sources, a key benefit of an ambient temperature ground loop is the flexibility and 7 diversity of heating sources. The development of an ambient temperature ground 8 loop could expand over time to various areas of Denver, depending on the unique 9 waste heat sources available in different locations. Thus, there are interesting 10 opportunities associated with developing an ambient temperature ground loop. 11

III. CONCLUSION

IN LIGHT OF THE INFORMATION PROVIDED BY THE ADDITIONAL 1

TECHNOLOGIES STUDIES, IS THE COMPANY PROPOSING ANY 2

MODIFICATIONS TO THE STEAM REGULATORY AND RESOURCE PLAN AS 3

PROPOSED IN THE COMPANY’S APPLICATION? 4

A. Not at this time, no. As discussed by Company witnesses Mr. Matley and Ms. 5

Jones, the results of the Additional Technologies Studies and their implications on 6 the future of the steam system have helped reshape the Company’s thinking on 7 how to best assist steam customers in assessing their alternatives to District 8

Steam Service. Nevertheless, considering the technical and economic feasibility 9 of options currently available to our steam customers, the Company has concluded 10 that the most reasonable and economically viable course for the near term through 11 at least 2030 is to continue to operate the District Steam System as it is currently 12 configured, including life-extension activities on the DSP Unit 1 and DSP Unit 2 13 boilers to enable them to continue to operate beyond their current terminal 14 retirement dates of 2025, as originally proposed in its Application. 15

DO YOU SUPPORT THE COMPANY’S REQUEST THAT THE COMMISSION 16

APPROVE THE STEAM REGULATORY AND RESOURCE PLAN FOR THE 17

PERIOD 2024 THROUGH 2030, AS ORIGINALLY PROPOSED IN THE 18

COMPANY’S APPLICATION? 19

A. Yes, I do. 20

DOES THIS CONCLUDE YOUR SECOND SUPPLEMENTAL DIRECT 1

TESTIMONY? 2

A. Yes.3

Statement of Qualifications

Joseph T. Schwark

In 2013, I earned a Bachelor of Engineering degree, Mechanical Specialty from the Colorado School of Mines. I also received my Engineer In-Training certification following successful completion of the Fundamentals of Engineering examination.

From 2013 to 2019, I was employed by Xcel Energy as a reliability engineer at

Pawnee and Rocky Mountain Energy Center. In my role as a reliability engineer, I had various responsibilities including assisting with day-to-day operations, troubleshooting technical issues, planning and coordinating equipment inspections and maintenance, estimating and justifying future capital projects, and managing the welding and boiler inspection programs for the facilities.

From 2020 to October 2022, I worked as the reliability engineer for Xcel’s steam and chilled water systems. This role was similar to my previous position; however, it also included the additional responsibility of maintaining, calibrating, and troubleshooting steam metering equipment. To fulfill this obligation, I physically visited almost every steam customer building, which gave me the opportunity to learn how the buildings downtown use steam. I was also responsible for managing the replacement of a chiller facility in the penthouse of a high-rise in downtown Denver. The project included the development of a phasing plan to transition the building onto the new chillers, construction of a crane on the roof that lifted the new chillers and cooling towers into place, replacement of electrical infrastructure to accommodate the new equipment, and upgrading the building’s fire and refrigerant monitoring systems to comply with new code requirements. Managing this project gave me significant insight into the heating and cooling infrastructure in a typical building downtown, the process of modifying and replacing HVAC infrastructure, and the equipment required to heat and cool buildings not served by the Xcel thermal energy systems.

From October 2022 to the present, I have worked as the business development analyst for Xcel’s steam and chilled water systems. In my current role I am responsible for communication with steam and chilled water customers, monitoring billing activities, calculating chilled water rate adjustments, negotiating amendments to chilled water customer contracts, as well as tracking the revenues and costs associated with both the steam and chilled water businesses. The main drive of my current role is to track and communicate the performance of the steam and chilled water businesses while also developing reliable, low carbon, low-cost thermal energy solutions for the buildings downtown.