Renewables bill signed by Governor

... but Hickenlooper sets up advisory committee that can tweak bill next year
The Colorado Statesman

Governor John Hickenlooper Wednesday signed into law the controversial bill requiring certain rural electric utilities to double their use of renewables by 2020. But unlike the gun control bills signed earlier this year, whether Hickenlooper would sign the bill remained a mystery up until the last day before the deadline.

Senate Bill 13-252 applies to rural electric providers with at least 100,000 meters. That’s just two electric co-operatives: Tri-State Generation & Transmission and its 18 member co-ops in Colorado, and Intermountain Rural Electric Association (IREA).

Under the bill, Tri-State and IREA would be required to increase their use of renewable energy sources from the previous requirement of 10 percent, set in 2007, to 20 percent by 2020.

The bill faced major opposition from the co-ops and from farmers and ranchers in rural areas who fear their electric bills will increase by as much as $11,000 per year. Tri-State claims it will cost them $2 billion to $4 billion to implement in the six-year window they have to meet the goal.

SB 252 sets a 2-percent annual limit on utility bill increases, up from a 1- percent cap set in 2007. If the co-op cannot keep the increases at or below that 2-percent cap, the co-op is allowed to reduce its use of renewables to stay within that limit. The bill doesn’t specify how long that reduction could be used or whether it would be calculated monthly or annually.

Hickenlooper waited until almost the last allowable day to sign SB 252 into law. In between the bill’s final passage on May 1 and the signing, the governor was targeted with visits from rural Coloradans, and a media campaign from opponents of the bill who pleaded with him to veto the bill. Hickenlooper gave little indication on how he would act, although on a KOA radio program last month, he gave strong support for renewables. Supporters, including the Sierra Club and other environmental groups, urged their members to contact the governor to ask for his signature on the bill.

During Wednesday’s signing ceremony, he was surrounded by about two dozen representatives of environmental groups and some of the bill’s sponsors.

The governor issued both a signing statement and an executive order to address some of the concerns he has about SB 252, and after the signing ceremony he spoke to reporters on those concerns.

“I had misgivings and there were challenges around that bill,” Hickenlooper said.

One of those challenges is the 2- percent cap. In meetings after the session was over, co-ops told the governor that they could not achieve the 20-percent standard by 2020 without significant costs. If that’s true, Hickenlooper said, “they don’t have to.”

And that was part of the reason for the executive order.

Executive Order B 2013-003 creates an advisory committee to the director of the Colorado Energy Office (CEO) that will look at SB 252 and figure out if the goals are attainable without significant costs. “The reasons for signing the legislation outweigh the reasons for vetoing the bill, but this bill is imperfect,” the order states. “Some of the concerns raised during the legislative process were not given due consideration,” including feasibility of timetable and consumer protections on the utility bill increases.

The advisory committee will include representatives from Tri-State, IREA and the Colorado Rural Electric Association (CREA); and representatives from the renewable energy industry, the nonprofit environmental advocacy community and a nonprofit expert in electric resource planning.

If the advisory committee decides that the standard cannot be met without significant cost to consumers, they can recommend legislative changes to the General Assembly for the 2014 session. Hickenlooper noted that the bill’s prime sponsors, Senate President John Morse, D-Colorado Springs; and Speaker of the House Mark Ferrandino, D-Denver; had agreed to allow those legislative changes.

Those who supported SB 252 cheered the governor’s efforts to improve the state’s standing on use of renewable energy, and how those renewables will impact Colorado’s water and air quality.

Pete Maysmith, executive director of Conservation Colorado, told The Colorado Statesman that the signing of SB 252 “means more wind, more solar and more jobs. It’s a fantastic day for Colorado… The success story of renewable energy in Colorado keeps marching forward.”

Maysmith said his organization will work with the advisory committee, whether Conservation Colorado is a member or not, and that he looks forward to working with the co-ops and other interested parties to address the concerns raised by Hickenlooper.

Western Resource Advocate’s John Nielsen said the governor’s action “will help protect our air and water, help us in the fight against climate change, and strengthen our economy by diversifying our energy portfolio.” Nielsen and others also pointed out that last week Xcel Energy announced they would expand their use of wind energy. Nielsen said the combination of that effort plus SB 252 puts “Colorado back at the forefront of clean energy leadership.”

When the bill was originally introduced in mid-April, Tri-State and IREA executives complained that they had never been at the table when the bill was being drafted. That they are now included in the discussion about whether the law can be implemented was met with derision from many of those who opposed the bill all along.

Tri-State and CREA issued a joint statement on Thursday stating their displeasure with the governor’s decision. The co-ops are “deeply disappointed” that the governor chose to sign SB 252, “which doubles cooperative renewable energy mandates with no additional time for compliance and raises electricity rates for rural Coloradans at a time when they can least afford it.” The groups met with the governor twice to discuss rural community concerns with the bill, and Kent Singer of CREA said that by the time SB 252 arrived at the governor’s desk with its many flaws, the only right decision would have been to veto it. Singer said they had asked Hickenlooper to veto the bill and “convene an inclusive stakeholder process that could have led to a compromise.” Lee Boughey of Tri-State said Thursday the governor signed a flawed bill and then created a panel to fix it. The co-ops were not consulted on the executive order or the advisory committee, according to Boughey. They are now reviewing the executive order to understand its purpose and implications.

The co-ops are not opposed to renewables; Singer said they shared with the governor how they are working toward the existing standard. But he added that the bill brings in new risks and could interfere with renewable projects that were already in the works.

Ken Anderson of Tri-State said the flawed bill is now a “flawed law.” Tri-State and CREA both thanked the legislators and rural Coloradans who worked so hard to oppose SB 252, stating that the opposition “helped give voice to the reasoned concerns of rural Coloradans.”

SB 252 did not gain a single Republican vote in its trip through the General Assembly. Part of that opposition came from Sen. Randy Baumgardner, R-Hot Sulphur Springs. Baumgardner said Wednesday that if the governor had misgivings about the bill, he should not have signed it and called the decision “poor leadership” by the governor.

“It’s a slap in the face of rural Colorado,” Baumgardner told The Statesman. “We sign a piece of legislation into law that we’re not sure is going to work?” he said. As to the advisory committee, Baumgardner said that to assign a committee to look at the law is something that should have been done before the legislation was even drafted.

“It’s poor leadership on his part to even consider this,” he said.

Baumgardner’s views were shared by House Minority Leader Mark Waller, R-Colorado Springs. Waller questioned how the co-ops would handle the 2 percent rate cap and at the same time make significant investments in renewables and back-up generation.

Waller put forth a scenario on how it could, or couldn’t work. The co-ops could invest $50 million or $100 million into new renewable energy sources. In the first year, they could keep the rate increases at or below the 27-percent cap, and perhaps in the second year as well. But what happens when the third year comes and the co-ops find they cannot keep the rate increases below 2- percent.

“What do they do?” Waller asked. “Scrap the entire project? No one has the answers to those questions” and to suggest the co-ops could just cut back or put projects on hold is “way too simplistic” a way to look at it.

Waller also criticized the executive order and advisory committee as being “about 15 minutes too late on where we should be going. It’s what should have been done first. Put together a study and look at it long-term, instead of making up the rules as we go along.”

Throughout Wednesday, a number of groups issued dueling statements either cheering or lambasting the governor for his signature on SB 252.

The Interwest Energy Alliance said the implementation of SB 252, along with Xcel’s recent decision on expanding use of wind energy, “means a complete turnaround for the Colorado market,” according to Executive Director Sarah Propst. The group noted that the renewable industry already employs nearly 10,000 Coloradans with millions of dollars in annual lease and property tax payments that go to rural communities. The investments and jobs from SB 252 will help utilities “deliver price stability with long-term lower-priced renewable power contracts,” the statement added.

SB 252 sponsors, in statements issued Wednesday, said the bill will benefit rural Colorado, dismissing the “war on rural Colorado” claims made by opponents. Morse said that the bill will help “stabilize the cost of electricity in the long run, create jobs and economic activity, and limit greenhouse gas emissions. These are all good things, and I am incredibly pleased to know we have taken another step toward national leadership in the clean energy field.”

“I know rural Colorado offers tremendous potential for increased renewable energy production and new jobs as a result of SB 252,” said bill co-sponsor Sen. Gail Schwartz, D-Snowmass Village. “We have significant underdeveloped renewable resources in wind, solar, biomass, geothermal, hydro and now coal bed methane, that can be harnessed to generate affordable electricity in rural areas.”

Ferrandino called SB 252 a “win-win” for Colorado.

“It will create jobs and spur economic development in rural Colorado, clean our air and reduce our dependence on fossil fuels,” he said.

He added that for every renewable energy job created an estimated 4.8 jobs are created in manufacturing, trucking and service.

In the days leading up to the signing, Rep. Jerry Sonnenberg, R-Sterling, pleaded one more time for the governor to veto the bill. Noting that every major newspaper in the state opposed the bill, Sonnenberg called SB 252 “a poison pill for rural Colorado that raises the cost of providing electricity to rural families and business owners by billions of dollars.”

“The Governor isn’t above accountability. Sitting on his hands and allowing this bill to take effect does not excuse him from his charge as head of state… Anything less than a veto only con-tinues the Democrats’ war on rural Colorado,” Sonnenberg said Tuesday.

After its signing, Sonnenberg told his rural constituents to “hold on to your wallets. Senate Bill 252 will cost the average farm family thousands of dollars in higher energy costs and force rural electric associations to pay billions of dollars to comply with the Democrats’ new energy mandate.

“Forcing higher costs on our state’s farmers and ranchers is wrong. The Governor is picking winners in the energy economy, and forcing the families and business owners who put food on our table and support more than 170,000 jobs in Colorado to pay the price.”

State GOP Chair Ryan Call said it was clear that the governor and Morse were more interested in appeasing “radical environmentalists and the fringe of their Party than doing what’s right for Colorado… Shame on Gov. Hickenlooper and Sen. Morse for putting the demands of their radical environmentalist donors over the needs of Coloradans.”

Colorado Farm Bureau also issued a statement decrying the new law and pointing out that a representative of agriculture should have been included in the makeup of the advisory com-mittee. Don Shawcroft said the law will cost agricultural producers millions of dollars and may put some family farms out of business. That the governor did not include a representative of agriculture, the biggest consumer of energy in rural Colorado, was disconcerting.

“We tried to talk to him about our concerns and how this will affect agriculture, but yet again, he didn’t include us in the ongoing conversation,” Shawcroft said.

Hickenlooper’s decision to finesse the controversy by setting up the advisory committee is “modus operandi,” according to pollster Floyd Ciruli.

Ciruli told The Statesman Wednesday that it is similar to the governor’s efforts on other issues this session, such as the death penalty decision on Nathan Dunlap or bills opposed by business that were also signed into law.

“Part of his strategy is that he calls himself socially liberal [on issues like gun control and civil unions] but I’m a businessman too,” Ciruli said.

That strategy was made more difficult in 2013 because of the Democratic control of the General Assembly, he added. It was hard for the governor to finesse and find compromise this session because the sides “are so strongly entrenched that they either want a bill signed or a veto. Nothing in between will help.”

The potential for political fallout for Hickenlooper exists, going into an election in 2014, but much depends on who the Republicans can put up against him. Ciruli cited a recent poll that showed there was a slight decline in Hickenlooper’s overall favorability numbers. Liberal numbers went up, reflecting the governor’s decisions on gun control and civil unions, but his conservative numbers sharply declined, Ciruli said.

Prior to the 2013 session, Hickenlooper could have run in a Republican primary and won, Ciruli said, with the caveat the Democrats felt he wasn’t liberal enough. But with the decisions made this year, rank-and-file Republicans are ready for an alternative.

“They don’t have confidence that [the governor] will be able to head off a very liberal legislature.”

As to SB 252, Ciruli said that it’s a polarizing and controversial issue, and while Hickenlooper tried to find a middle ground, “I don’t think it will help him.”

Ciruli said it’s one of those ideological issues that applies to those in rural communities and the small power community, all groups that would be great for a Republican candidate. Business elites in Denver will probably stick by Hickenlooper, Ciruli predicted, but rank-and-file Republicans are ready for a good candidate, and if they find one, they will have a race.

Marianne@coloradostatesman.com