Legislators likely to take another look at last year’s rural renewable energy standard bill

Bills targeting the energy sector are not likely to be part of an ambitious agenda this legislative session following a hard push by Democrats last year that ended with lackluster success.

With the first few days of the 2014 session in the rearview mirror, only a handful of bills have been proposed that would significantly impact energy development in Colorado.

One bill would increase fines on the oil and gas industry for environmental and health violations.

Another bill would lower the rural renewable energy standard backed by Democrats last year from 20 percent by 2020 to 15 percent. There are also attempts to raise the target date to 2025 and repeal the new standard altogether.

Rep. Ray Scott, R-Grand Junction, is working on the renewable energy standard modification. He says he is still in draft mode.

It is likely to draw the most attention, following a push by Democrats last year to raise the then-10 percent standard on electric cooperatives to 20 percent. Senate Bill 252 kicked off a firestorm of debate, as Democrats were accused of throwing rural Colorado under the bus.

The outcry was fierce. In northern Colorado, 11 counties asked voters whether they would like to secede from the state. The initiative failed after only five counties approved the exploration.

While the 51st state movement was not solely based on SB 252, the measure certainly served as a rallying cry for frustrated rural Coloradans who feel the state legislature maintains a myopic view, unable to see past the Front Range.

Scott, who represents the Western Slope, said the standard is crushing Coloradans in rural Colorado, where economic recovery remains slow.

The measure set a 2-percent annual limit on utility bill increases. But if the co-op is unable to keep the increase to 2 percent, it is allowed to reduce its use of renewables to stay within the limit.

Gov. John Hickenlooper, a Democrat, upon signing the bill earlier this year issued an executive ordecreating an advisory committee to look at SB 252 and figure out if the goals are attainable without significant costs.

Only two co-ops in the state are affected by the mandate: Tri-State Generation and Transmission and Intermountain Rural Electric Association. They are represented on the committee.

If the committee decides that the standard cannot be met without significant costs to ratepayers, it can recommend legislative changes.

Scott says that despite the 2 percent cap, rural Coloradans are seeing their electric bills jump by more than that. He is working on securing bipartisan support for his bill, though he was unable to report any progress in that area.

“What we’re hopeful for is what it’s not going to do,” Scott said of his proposed measure to lower the standard.
“What we’re hearing is that people in western Colorado, that their electric utility bills have already jumped 9 percent… Well, that’s a far cry from what they talked about last year, which was supposedly 2 percent.

“Quite frankly, the data which you see nationwide and worldwide supports the fact that 20 percent is just not attainable and anything above that is even worse,” he continued.

SB 252 increased opportunities to capture vented methane gas from active and inactive coalmines, as well as landfills. And it added new sources to the renewable energy list. But Scott says that without adding hydro to the list, the standard is not achievable.

There may be a separate piece of legislation this year seeking to address adding hydro as a renewable source.

Meanwhile, Rep. Kathleen Conti, R-Littleton, has introduced a measure that would push the 2020 target date to 2025.

And Sen. Ted Harvey, R-Highlands Ranch, has introduced a bill that would completely repeal SB 252, though the measure is likely to be quickly killed by Democrats in the Senate State, Veterans and Military Affairs Committee.

Representatives from both Tri-State and Intermountain told The Colorado Statesman that they are reviewing the proposals.

Josh Liss, spokesman for Intermountain Rural Electric Association, said the measures at first glance appear to “align with our principles of providing reliable energy to our members at a low cost.

“Indeed, the flaws in SB 252 might have been avoided or mitigated if the bill had not been drafted behind closed doors with no cooperative input,” surmised Liss.

“We are hopeful that the General Assembly and governor honor their vows of bipartisan cooperation in adopting sensible approaches to Colorado’s energy future that are mindful of the realities facing working families in rural Colorado and the planning needs of the utilities that serve them,” he added.

“We remain concerned about the mandate placed on Colorado’s consumer-owned, not-for-profit rural electric cooperatives,” Lee Boughey, senior manager of corporate communications and public affairs for Tri-State, told The Statesman in a statement.

“Tri-State responsibly provides electricity to its members through a balanced portfolio that already includes 23 percent hydropower, wind, solar and other renewable resources.

“We will review the implications of any proposed changes in the renewable energy mandate and the impacts to our member electric cooperatives,” Boughey said.

House Speaker Mark Ferrandino, D-Denver, who sponsored SB 252 last year, said he is open to making changes, but only if it can be proven that the mandate is unattainable. He believes that will be a hard case to make given the advisory committee’s sentiment that it is an achievable goal.

“If someone can prove to me the need for a change in the bill I’m always open to talking,” he said. “But… between the governor’s committee that met this summer and the 2 percent rate cap, I think the safeguards are in place to ensure that consumers are protected.”

Ferrandino pointed out that Democrats already compromised on the original bill, having pushed the mandate from 25 percent down to 20 percent.

“They opposed this bill last year, so I’m not shocked that they want to repeal or change it this year,” he said.

Conservation Colorado, which played a role in pushing SB 252 last year, does not believe that any tweaks to the measure are required at this time.

“The advisory committee said the 20 percent number is doable, it’s achievable. So, I don’t see why we move that number,” Pete Maysmith, executive director of Conservation Colorado, said during a conference call with reporters this week.

“If we move that number down we cost jobs and we do less renewable energy in Colorado,” he added. “That’s not what Coloradans want and that’s not what’s good for our economy.”

John Nielsen, energy program director for Western Resource Advocates, believes the debate has already played out in the legislature and it is time to move on.

“We continue to believe that the 20 percent target for 2020 is very doable,” said Nielsen. “The stakeholder group that got together agreed that that was the case. Our hope is that we can move beyond the legislative process at this time and really start to see that law put into place.”

Oil and gas

Issues around electricity aren’t the only energy topics facing the legislature this year. Oil and gas is likely to come to a head again, though the agenda does not appear to be as ambitious as originally thought.

Democrats vowed at the end of last session to come back this year with more proposals after several bills failed last year.

Those failures included:

• Increasing industry fines;

• Adding inspectors to examine wells;

• Reducing conflicts of interest on the Colorado Oil and Gas Conservation Commission;

• Ending a loophole to the state’s groundwater-testing program;

• Requiring sellers of real estate to disclose any mineral rights associated with the property;

• Imposing a state fee to offset local government costs associated with reviewing drilling applications;

• Studying health data related to oil and gas development; and

• Expediting the review process for oil and gas operators that honor enhanced air and water pollution control standards.

Part of the reason Democrats are pushing a less aggressive agenda this year is because Hickenlooper has proposed rules on air quality that would cut methane emissions. Lawmakers and the environmental world are watching that process closely, with hearings set to begin in February.

Rep. Mike Foote, R-Lafayette, said he would be back again this year with a bill to increase industry fines. What derailed the measure last year was a fight over imposing a mandatory minimum.

Hickenlooper, a former geologist and friend to the oil and gas industry, had dispatched his lobbying team to strip from the proposal a minimum fine of $5,000 per violation per day. The industry itself also lobbied against the proposal.

Without the mandatory minimum, Foote decided to kill his own bill last year, suggesting that without the requirement it had no teeth. He pointed out that the COGCC could impose fines so low that environmental disasters would be considered a cost of doing business.

Despite his concerns from last year, Foote says he will run the measure again without the mandatory minimum. He feels more comfortable after Hickenlooper issued an executive order last May directing the COGCC to review its enforcement program, penalty structure and imposition of fines.

The bill last year would have increased fines from $1,000 per day to $15,000 per day. Hickenlooper and the industry were actually supportive of the increase, but they rejected the mandatory minimum.

Foote is hopeful that he will be able to push for the increased fines without having to impose a mandatory minimum.

“I hope we can have agreement coming out. Who knows at this point what will happen, but we’re trying to get there,” said Foote.

Doug Flanders, spokesman for the Colorado Oil and Gas Association, said his organization remains open to the idea, adding, “There have been many conversations with legislators and we look forward to continuing the discussions regarding a solution for a new fines bill.”

Republicans appear hesitant to rush to any more rules and regulations on the industry. House Minority Leader Brian DelGrosso of Loveland made oil and gas a priority during his opening day remarks on Wednesday.

He suggested that Democrats last year launched “warrantless attacks” against the industry.

“House Republicans will stand firm against any further warrantless attacks on Colorado’s oil and gas industry,” the minority leader said during remarks.

“We all love Colorado’s environment, and we, along with our families, breathe the same air and drink the same water as all Coloradans, but we realize that we must not hamstring our economic potential…” DelGrosso added.

He pointed out that the industry provides over $1.5 billion in public revenue to the state and employs over 100,000 Coloradans.

“This industry is the lifeblood of many areas of our state,” said DelGrosso.

Foote shrugged off DelGrosso’s accusations, suggesting, “I’m not planning on doing any unwarranted attacks.

“But like all of us, we have to stand up for what our constituents want, and in my district, I’ve got two cities that have banned fracking, and so obviously it’s a big concern,” Foote added.

Voters in five municipalities have banned hydraulic fracturing, including Lafayette, Longmont, Boulder, Fort Collins and Broomfield.

COGA has sued to overturn the bans in Longmont, Fort Collins and Lafayette. Meanwhile, the state has sued Longmont separately over enacting rules and regulations beyond those of the state.

Several lawsuits are also ongoing in Broomfield in an effort to decertify the election after allegations of elections administration errors surfaced. Most recently, Broomfield elections officials acknowledged that an estimated 80 ballots from the November election were unaccounted for, though officials say the ballots were mostly “spoiled.”

With the fracking question having passed by only 20 votes in Broomfield following a mandatory recount, the lawsuits could determine its fate.

But no matter what, the state is still facing a local control dilemma when it comes to oil and gas. Lawmakers this year may try to address the issue through legislation, or by referring a measure to voters, though those talks do not appear to be gaining much momentum in the early stages.

Citizens have also proposed a ballot initiative that would place oil and gas regulations in the hands of local governments. But they must still seek title approval by the secretary of state in order to collect signatures to place the measure on the November ballot.

Foote said that he is not personally going to run legislation addressing the local control issue, but he would like to see something happen.

“Local control is really one of those that’s a big issue with my constituents and with others as well,” he said. “We have local control for virtually everything else, except for oil and gas.”

Flanders said his organization would wait to see proposals, but that COGA remains skeptical.

“It’s hard to speculate without seeing any draft language or concepts,” he said. “But any bill needs to ensure that private property mineral rights are respected. Plus, we have never believed that a ban on oil and gas activity is prudent nor a path to compromise.”

— Peter@coloradostatesman.com

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