Renewables bill fuels big controversy

Rural electric associations, GOP senators, testify against measure
The Colorado Statesman

Legislation to boost the state’s renewable energy standards for certain rural electric utilities is moving through the state Senate this week. But the bill drew howls of protest from the utilities amid concerns it could hike electricity bills for seniors, state facilities and farmers by millions of dollars annually. Friday, the bill was the subject of an eight-hour filibuster, as Senate Republicans tried in vain to garner votes from a few Democrats who might be willing to vote against their Senate President.

The Senate State, Veterans and Military Affairs Committee started the lengthy conversation over Senate Bill 13-252 with a seven hour hearing on April 8, passing the bill on a 3-2 party-line vote. The bill is up for its final Senate vote on April 15, but its passage is far from certain.

SB 252 requires rural electric associations (REAs) to produce 25 percent of their electricity from renewable energy by 2020, up from a previous goal of 10 percent. The REAs defined in SB 252 applies to just two entities: Tri-State Generation & Transmission and its 18 Colorado member co-ops; and Intermountain Rural Electric Association (IREA).

Exempted from the bill are municipal utilities with 40,000 or fewer customers, or co-ops with less than 100,000 meters. Opponents claimed in the April 8 hearing that the short list of excluded utilities includes those in the districts of the bill’s Senate sponsors, Senate President John Morse, D-Colorado Springs, and Sen. Gail Schwartz, D-Snowmass Village.

The legislation outlines specifically how these utilities can get to the 25 percent requirement, incentivizing early action, local energy production, and new energy capture technologies. For instance, it provides for extra-credit for all renewable resources acquired through 2015, helping energy producers get to 25 percent quicker.

The bill also requires at least 1 percent of the total retail sales to come from local small-scale (i.e.; local) projects. The projects could be in small wind, solar, biomass, and geothermal, for example.

SB 252 also adds two new sources to the list of energy resources that quality as renewable energy: coal mine methane; and pyrolysis, the burning, without oxygen, of trash.

REA representatives traveled from all four corners of the state to testify against SB 252 on April 8, despite short notice. SB 252 was introduced on Thursday, April 4 and was in its first hearing the following Monday.

Morse told the committee that SB 252 doesn’t change who is covered under the state’s current renewable energy standards. The bill also states that customers should see rate hikes of no more than 2 percent per year for the additional costs required for renewable resources.

Sen. Ted Harvey, R-Highlands Ranch, led Republican opposition on the State Affairs committee. He questioned how the cutoff of 100,000 meters was picked, or why some co-ops were excluded from the bill. He also asked if Morse had talked to the co-ops impacted by SB 252 before the bill was introduced.

Conversations about increasing renewal standard has been “going on for years

“We’re interested in getting the maximum bang for the buck,” Morse replied. Costs need to be allocated over as big a base as possible, Morse said, and the 100,000 cutoff accomplished that. Morse didn’t directly address whether IREA and Tri-State had been at the table while the bill was being drafted; he said instead that conversations about increasing the renewable energy standard had been going on “for years.” The bill was drafted to accomplish what the state needs for clean air and jobs, he said, adding “the market won’t do it by itself.” He also pointed out that Xcel Energy had done a good job of complying with the standard that applies to investor-owned utilities; Xcel is already nearing its 2020 goal of meeting a 30 percent standard.

Under SB 252, municipal utilities, such as Colorado Springs and Fort Collins, are exempted from the higher standard. Morse said that was because they are located in home rule cities, where the state cannot dictate standards. Schwartz also said the REA in her district is excluded because it buys its energy from Xcel and is already abiding by the standard. But Harvey pointed out that the same applies to the REAs, all of whom buy electricity from Xcel, and he called the rationale “illogical.”

Testimony in favor of SB 252 came largely from renewable energy vendors, who said the bill will boost business.

Anna Giovinetto of RES America, which operates the Cedar Point Wind project near Limon, said that concerns about higher electricity costs are un-founded. “The percentage of renewable energy has not resulted in increased electricity costs,” she told the com-mittee. Giovinetto also pointed out that there is no cap on utility rate increases that could result from the use of fossil fuels, while SB 252 imposes a 2 percent cap on rate hikes from renewables. SB 252 “levels the playing field” and will result in more clean energy jobs, she said. Susan Innis of Vestas told the committee that they also are concerned about costs, and pointed out that their facilities are members of two REAs. The cap on rate increases is crucial to Vestas’ support of SB 252, she said.

“The existing 10 percent renewable energy standard has proven itself not at all the financial disaster cooperatives portrayed during the debate over Amendment 37 in 2004. Moreover, a large part of their current renewable energy was in operation well before the citizen initiative was adopted,” said Jeff Berman, a director since 2005 of Durango based La Plata Electric Association (speaking on his own behalf). “Now that those existing resources are accounted for, it is time the legislature require 25 percent renewable energy from the largest rural cooperatives so they better address emissions from the existing generation fleet.”

Iberdrola Renewables of Cheyenne, Wyoming, owns two of the largest renewable energy generation facilities that supply power to Xcel. Mark Stacy noted that his facilities employ 200 people, bring in $12 million in taxes to the state and allow farmers and ranchers to stay on their land with a new stream of revenue. But prices for wind and solar projects are falling, Stacy said, and SB 252 would “revive the market for renewable energy.”

Former Colorado Public Utilities Commission chair Ron Binz told the committee that Tri-State estimates that SB 252 would cost the company $3 billion are “incredible” and “not believable.” Those are capital costs, Binz said, that would be spread out over 20 to 40 years, not the six years contained in the bill. Binz also noted that when the standard was first implemented, companies like Xcel campaigned against it (the first standard was the result of a successful 2004 ballot initiative). Xcel is now a strong supporter of renewable energy, Binz said. “Wind is saving money,” and Tri-State will be “better off,” particularly when facing new regulations from the Environmental Protection Agency, Binz said.

Opponents of SB 252 included REA representatives, rural seniors and rural elected officials. Norma Lou Murray of Walsenburg said the area is already facing higher water and sewer bills from the closure of the Fort Lyons prison. SB 252 is a mandate on rural co-ops and will be a burden to seniors who already struggle to pay utility bills, she said.

But seniors won’t be the only ones with higher utility bills; REA members pointed out that many state facilities are in rural areas and they will face strongly higher electricity costs.

Joe Pandy of Mountain Parks Electric estimated the schools served by his REA will pay $48,000 more per year. The 2 percent cap is “meaningless” Pandy said, because the Public Utilities Commission has no rate enforcement authority over the co-ops, and SB 252 is silent on enforcement. “This legislation does not have the state’s interests in mind,” Pandy said. Mountain Parks serves Colorado Department of Transportation and Division of Parks and Wildlife facilities, and he estimated their electric bills could go up 20 percent.

If renewables are a good business product, REAs would be the first to take advantage of it, said Richard Wilson of Southeast Colorado Power in LaJunta. “It isn’t there yet and we resent it being shoved down our throats.” Wilson said his REA also serves facilities for the Division of Parks and Wildlife, and he estimated their utility bills would go up by $20,000 to $30,000 per year.

Tri-State President Rick Gordon said that the 44 co-ops in Tri-State are in four states, with 18 in Colorado. The costs are shared by the member owners, not shareholders, as is the case with Xcel. Gordon said that if SB 252 passes, Tri-State will have to build natural gas plants to provide back-up power for the wind turbines. Several witnesses noted that solar and wind power doesn’t operate 24/7, and that they would need to invest in other forms of energy to back up those renewables. Tri-State estimates that SB 252 will cost $2 billion to $4 billion to implement in the time required. “We cannot meet the mandates in the time allotted,” Gordon said. In addition, transmissions costs from SB 252 can only be passed on to Tri-State’s Colorado members, not to members in other states, although the transmission lines do cross state lines.

“It feels like urban Colorado against the rural areas”

Three Moffat County commissioners came to Denver to testify against SB 252. “It feels like urban Colorado against the rural areas,” said John Kinkaid. “It’s a direct assault on the ratepayers in rural Colorado,” added Tom Mathers. “If it’s a good bill, why is it moving so fast? Let’s take our time and do it right.”

Colorado Farm Bureau, Colorado Corn Growers and the Rocky Mountain Agribusiness Association also spoke against the bill. “This will be the death knell for agribusiness,” said Chip Marks, who runs a farm supply co-op in Eaton. “Please consider the economic health of rural Colorado.”

The fiscal note for SB 252 claims it will not cost the state any money, but that wasn’t believable for Harvey, who asked that the bill go to the Appropriations Committee because of the potential for higher utility bills for state facilities. Harvey’s request was rejected by the committee.

SB 252 was amended to clarify the 2 percent cap. If increases exceed the 2 percent cap, the co-op can reduce its renewable energy standard to meet that 2 percent cap. However, the amendment doesn’t say how that would happen, or how often those adjustments could be made. And several REA witnesses testified that they already have excess capacity, meaning they don’t need to purchase more energy.

SB 252 went to second reading debate in the Senate on Friday, featuring an eight-hour filibuster from Republicans and near-silence from Democrats.

Morse told the Senate that Coloradans “cherish the outdoor and their environment,” and the state implemented the renewable energy standard through the 2004 ballot initiative when elected officials ignored previous requests. He said Tri-State’s opposition puts their consumers at “grave risk” of electricity cost increases due to higher prices for fossil fuels. “Customers will be left holding the bag as the rest of the nation transitions to cleaner energy,” Morse said. Most of the state’s utilities are already voluntarily increasing their renewable commitments, because they know it is good for jobs, customers and the utilities’ bottom line, he added.

Rep. Steve King, R-Grand Junction, was the lead-off man for the Republican filibuster efforts Friday. “This is a leap to family insolvency… this is environmental bullying,” King said. He noted that state-owned facilities pay $5.6 million per year for electricity to the rural co-ops, and SB 252 will increase their electric bills. “Where’s the fiscal note?” he asked repeatedly. And why wasn’t Tri-State and IREA invited to the table when the bill was being drafted? he asked. “Just because you have the power to do something doesn’t mean you should do it,” referring to the Democratic majority in both chambers and the governor’s mansion.

Republicans also attempted, but failed, to gut the bill through several strike-below amendments that would strip out almost everything except for the new resources: coal mine methane and pyrolysis. “If you want to continue to hurt agriculture, vote this amendment away. But this will definitely hurt agriculture,” said Sen. Larry Crowder, R-Alamosa.

“I think it’s time for a reality check,” said Schwartz. “This is an extraordinary opportunity for rural Colorado.” She noted that coal has increased in cost by 100 percent in the last decade, yet coal production is up in Colorado and SB 252 will not hurt that. Citing the success of Xcel in reaching its targets without huge cost increases, Schwartz said the $4 billion estimate from Tri-State comes from overreliance on coal, “mismanagement and poor resource planning.” Schwartz, Morse and Sen. Matt Jones, D-Louisville, who sits on the State Affairs committee, were the only Democrats to defend the bill during that Friday debate.

Addressing the billion-dollar costs claimed by Tri-State, Morse said that Xcel had managed to meet its renewable targets by spending about $500 million; Tri-State should be able to meet the new target for the same price or perhaps for less. However, Republicans argued that the $500 million figure didn’t factor in federal subsidies that had bought down those costs.

After six hours of debate, Democrats acceded to Republican requests for a new fiscal note. However, the Republicans were disappointed with the result; the new fiscal note addressed only the impact on local governments and said utility bills would increase by about 1 percent. “This fiscal note’s a joke,” said King.

A division vote following the second reading debate indicated two Democrats may side with Republicans, giving the bill a one-vote margin as it heads for the April 15 vote. Supporters said SB 252 has the backing of Gov. John Hickenlooper; the bill was endorsed by the Governor’s Energy Office.