State's renewable energy standards increased

By Marianne Goodland

Colorado’s success in renewable energy is now pushing the General Assembly to once again ramp up the standards for utilities to generate even more of their electricity from those sources.

This week, the Senate is working on HB 1001, the top legislative priority of Gov. Bill Ritter. The bill increases standards for use of renewable energy that began in 2004. HB 1001 passed the Senate Appropriation Committee Thursday morning and got through the full Senate on second reading Thursday evening. A final vote is scheduled for Friday.

The renewable energy standard was first adopted by voters in 2004 as Amendment 37. It required utilities with at least 40,000 customers to generate or purchase a percentage of their electricity from renewable sources. By 2010, the utilities had to meet a standard of 3 percent; through 2014, a 6 percent standard; and by 2015 and thereafter a 10 percent standard. In addition, at least 4 percent of the electricity had to come from solar technologies. Nine Colorado utilities that serve 80 percent of the state would have to comply with the standard.

Renewable energy sources listed in Amendment 37 include wind; solar; geothermal heat (underground steam or hot water reservoirs); biomass facilities that burn nontoxic plants, methane from landfills, or animal waste; small hydroelectric power stations and hydrogen fuel cells.

Under Amendment 37, utility customers who install solar electricity-generating equipment on their property can earn a rebate from the utility, and any excess electricity generated can be sold to the utility. The amendment also set up a system of tradeable renewable energy credits for utilities that don’t generate the required amount of electricity. Under that system, utilities can purchase “credits” from other utilities that exceed the renewable energy standard.

The amendment also set up a 2 percent surcharge to customer bills as a renewable energy adjustment to cover the costs of developing those sources.

Shortly after taking office in 2007, Gov. Bill Ritter asked the General Assembly to increase the standard, making it the centerpiece of a “New Energy Economy.” In his inaugural address, Ritter said a new energy economy would make Colorado a national or even world leader in renewable energy.

During the 2007 legislative session, the General Assembly passed HB 1281, sponsored by Rep. Jack Pommer, D-Boulder and Sen. Gail Schwartz, D-Snowmass Village, which changed the standard. Under HB 1281, utilities that serve more than 40,000 customers would be required to generate five percent of their retail sales in renewable energy by 2008, 10 percent by 2014; 15 percent by 2015 and 20 percent by 2020.

Under HB 1001, the standard would increase to 30 percent by 2020. The new standard would apply only to investor-owned utilities; cooperative electric associations that vote to exempt themselves from the jurisdiction of the Public Utilities Commission would not have to meet the new standard. Colorado has just two investor-owned utilities: Xcel Energy, which provides electricity to much of Colorado’s Front Range and the northern half of the state; and Black Hills Energy, which provides electricity to customers in Pueblo, Cañon City and Rocky Ford and surrounding areas.

According to the bill sponsors, HB 1001 could give Colorado “the highest clean-energy requirement in the Rocky Mountain West.” Schwartz, a Senate sponsor of HB 1001, also noted in a press release Tuesday that the standards imposed since 2004 have led to the creation of 17,000 jobs statewide in renewable energy and energy research, the fourth-highest concentration in the nation.

Tuesday, HB 1001 was heard by the Senate Local Government and Energy Committee, and the hearing coincided with the release of a report from Environment Colorado that estimated HB 1001 could result in a gain of 23,450 jobs over the next 10 years from new solar energy generation alone. The economic impact could total $4.3 billion, save 6.8 billion gallons of water and avoid emitting 30 million tons of carbon dioxide, “the equivalent of taking nearly 670,000 cars off the road.”

The report noted that 200 solar companies have been formed or have come to Colorado since the voters approved Amendment 37.

But the bill also has its detractors. Sen. Kevin Lundberg, R-Berthoud, whose home is entirely run by renewable energy, said this week HB 1001 could raise electricity bills because wind and solar still need to be backfilled by more traditional energy, like coal and natural gas. He noted that a coal plant that generates electricity in Pueblo had to be built just to backfill wind energy.

The bill also got Republican opposition over its certification provision. Under HB 1001, solar electric-generating systems that qualify for the rebate would have to be installed or the installation supervised by an “energy practitioner” certified by the North American Board of Certified Energy Practitioners (NABCEP). In addition, electrical work has to be done by a licensed master or journeyman electrician, which Republicans called a union payback.

HB 1001 passed the House on Feb. 12 on a 38-27 vote, supported by all Democrats and Rep. Kathleen Curry, U-Gunnison and opposed by all the House Republicans. It got no Republican votes from the senate committee Tuesday.

Paula Connelly, an attorney with Xcel Energy, testified Tuesday in support of the version of HB1001 that passed the House. She noted the bill replaces the standard that applied only to solar energy and instead applies it to “distributed generation.” That is defined as small-scale power generation, usually around 3 kilowatts to 10,000 kilowatts, that is located close to the end-user and does not require additional transmission lines or upgrades. Such systems, like wind turbines or solar panels, help avoid black-outs and are scalable to respond to fluctuations in electric power, according to the Governor’s Energy Office.

Connelly explained that within the 20 percent standard, 4 percent of electricity generated must come from solar energy sources. Under HB 1001, the sources now must cover 30 percent of retail electricity sales and 3 percent of that must come from distributed generation. Distributed generation would broaden the sources from only solar to all types of renewable resources, Connelly explained.

Matt Baker, a PUC commissioner, noted that last year, Xcel estimated it would reach 26 percent of its sources from solar by 2015. Under HB 1001, they would get “more bang for the buck,” Baker explained.

The bill carries what Connelly called an “off-ramp,” which would allow the PUC to lower the distributed generation standard if it is not financially feasible. Connelly said that could occur if natural gas prices dropped which sometimes makes renewable resources less cost-effective.

Lundberg questioned both Baker and Connelly about the need for the bill, noting testimony that the costs were not out of reach. “Why do you need this mandate?” Lundberg asked. Baker explained that there isn’t a strong business case for customer-sited distributed generation. “Colorado is becoming a renewable energy hub with wind and solar and these long-term targets can help with economic development,” he said.

The bill drew support from environmental groups, representatives of trade associations associated with solar and wind manufacturers, and Xcel customers like Lesley Glustrom, an alternative energy activist, who noted that some of the most rapid increases in costs to an electric bill come from increasing investments and operations connected to fossil fuels.

Black Hills Energy, represented by Peter Minahan, had concerns about the bill; chiefly a fivefold increase in distributed generation requirements between 2010 and 2011. “We don’t know how we’ll be able to comply with the requirements,” he told the committee.

Several witnesses testified about impacts to natural gas. Tisha Conoly Schuller of the Colorado Oil and Gas Association asked that the committee be mindful of the 31,000 direct jobs contributed by the natural gas industry, and said that any increase in renewables needs to be backed up by natural gas to ensure that air pollution reductions can be achieved successfully. COGA did not take a position on the bill.

Lundberg, who voted against the bill in committee and later on the floor, said he was concerned about increased utility costs. Solar and wind, without the subsidies, will be much more expensive, he said, and will likely exceed the 2 percent per year rate increase limit that utilities can charge for developing renewable resources.

“We don’t push toward the most efficient, productive long-term solution; we force business decisions based on the false premise of tax subsidies and mandates,” he said. In addition, the higher standard may create jobs in renewables but it could cost the state jobs in other energy industries.

The bill passed Local Government on a 4-3 party-line vote. Thursday morning, it was heard by the Senate Appropriations Committee, where it passed 6-1, gaining the support of Sen. Al White, R-Hayden, after Schwartz addressed concerns about the bill’s impact on the coal industry. Schwartz noted that on Tuesday several people testified that coal is the least expensive fuel for energy generation. Schwartz said even with the passage of HB 1001, 70 percent of electrical generation in 2020 will come from fossil fuels. “There’s no threat to coal being a source of electrical generation in the foreseeable future,” she told White, and she also pointed out that 65 percent of electrical generation came from coal in 2008.

During second reading debate Thursday Sen. Greg Brophy, R-Wray, brought up new concerns about the bill’s impact on other energy sources, such as hydroelectric. He said he feared the bill would skew resources toward development of solar and wind and away from hydroelectric projects, which he said would benefit farmers. Senate Minority Leader Josh Penry, R-Grand Junction, said the bill had had “the foul aroma of special interests,” and introduced an amendment, later defeated, to strike the section dealing with electricians. “It’s just common sense” to have licensed electricians working on these projects, to ensure they are done safely, replied Sen. Morgan Carroll, D-Aurora. Schwartz and Sen. Bruce Whitehead, D-Hesperus, pointed out the requirement is designed to protect consumers. Schwartz said the number of solar installations is projected to increase from 5,000 to 100,000 and the state will need more people certified to do the work, and training for that certification is available at any community college.

Mitchell denounced for distractions

The debate on the Penry amendment was briefly interrupted when Sen. Shawn Mitchell, R-Broomfield, called Whitehead “senator one-year.” Mitchell was gaveled out of order by Sen. Betty Boyd, D-Lakewood, who chaired the second reading debate. After a brief recess, several Democrats rose to condemn Mitchell for his remarks, even calling for him to be censured. “It’s a pattern with you!” said Sen. Moe Keller, D-Wheat Ridge, reminding the Senate that Mitchell had called Senate President Brandon Shaffer a “coward” during debate on the tax exemption bills last month. And Sen. Linda Newell, D-Littleton, invoked Senate rule 16(d)(2) to request that Mitchell’s remarks be included in the Senate Journal, part of the process for censure. Mitchell defended his remarks about Shaffer, but said his comments about Whitehead were frivolous and not intended to mock the man or his name. Senate Majority Leader John Morse, D-Colorado Springs, brought that discussion to an end by adjourning the senate for lunch so senators could cool off. Penry later issued a statement, which said the Senate needed to take a “deep breath” and not put Mitchell on trial or censure him. Noting Mitchell was appropriately gaveled for his remarks, Penry’s statement said the Senate chamber is “a political arena, where important debates about controversial issues take place. So let’s not allow the imperatives of Senatorial decorum to deteriorate into a political correct culture where word-policing and whining become [the] norm.”

“This proposal may as well be called Colorado’s own ‘cap and tax’ bill because it is going to strangle our state’s economy and our pocketbooks,” said Sen. Bill Cadman, R-Colorado Springs, afterwards. “Economic growth does not come from political mandates; it comes from increases in productivity.”

Republicans also railed against the bill for a provision requiring solar installation employees obtain labor union certification. “With unemployment hitting record numbers, it is astounding that Democrats would want to lock out a significant number of Coloradans from these positions,” said Penry in a release. “The union carve out in this proposal is reminiscent of the sweetheart deal Nebraska Sen. Ben Nelson secured for his state in the national health care bill.”

“As utilities struggle to keep up with the mandate, their added costs are going to inevitably be passed along to consumers,” said Sen. Scott Renfroe, R-Greeley.

Renfroe offered an amendment to HB 1001 that would have exempted households with income at or below the federal poverty level from higher energy bills incurred by the renewable energy mandates. Democrats defeated the proposal. “This vote against poor, at-risk families just proves that Democrats are bent on implementing their radical agenda, despite the strain it will put on the budgets of some of our most vulnerable populations,” Renfroe said.

The debate over HB 1001 went on in the Senate for the entire day, with Democrats turning back more than a dozen Republican efforts to amend the bill. Toward the end of the debate, Republican senators were pleading for compromise from their Democratic counterparts, to no avail.