Filed under: Abound Solar, Archive, CDPHE, Environmental Protection Agency, HB 1365, Legal, Legislation, PUC, renewable energy
The Clean Power Plan’s timeline for compliance may see an extension, and the final rule itself may be revealed next Monday:
The final version of President Obama’s signature climate change policy is expected to extend an earlier timeline for states to significantly cut planet-warming pollution from power plants, according to people familiar with the plan.
If enacted, the climate change plan, the final version of which is expected to be unveiled as early as Monday, could stand as the most significant action ever taken by an American president to curb global warming. But some environmental groups have cautioned that a later deadline for states to comply could make it tougher for the United States to meet Mr. Obama’s climate change pledges on the world stage.
The plan consists of three major environmental regulations, which combined are intended to drastically cut emissions of greenhouse gases. The rules take aim at coal-fired power plants, the largest source of greenhouse emissions, and are intended to spur a transformation of the nation’s power sector from fossil fuels to renewable sources such as wind and solar. Under the rules, the Environmental Protection Agency would require states to draft plans to lower emissions from power plants. The agency is also expected to issue its own model of a state-level plan, to be imposed on states that refuse to draft their own plans.
The final rules would extend the timeline for states and electric utilities to comply, compared with a draft proposal put forth by the E.P.A. in June last year, according to people who are familiar with the plan but who spoke on the condition of anonymity because they were not authorized to speak publicly about it.
The Independence Institute’s backgrounder on the Clean Power Plan and its devastating effects on our energy choice and enormous costs to taxpayers and the economy in general can be found here.
Much of the public land in the Rocky Mountain west is administered not by the states but by the federal government all the way from DC–and the debate over who should ultimately preside over these vast swathes of federal land has seen a resurgence:
Not since the Sagebrush Rebellion in 1979 has the debate over whether it’s time for federal lands to fall to states’ control gained such attention, and the anti-federal-government sentiment and talking points aren’t likely to dissipate as the West heads toward the next presidential election.
The fight stirred in 2012 when the Utah legislature passed the Transfer of Public Lands Act to demand authority over millions of acres of federal land by last New Year’s Eve. It didn’t happen.
Eight states cumulatively considered 30 bills around the issue this year. In March, Republicans in the U.S. Senate passed, without a single Democratic vote, a symbolic resolution in support of transferring or trading land to states. The resolution, though, doesn’t give Congress or any federal agency additional power to make deals.
And in the last Colorado legislative session there were three bills around the subject. Only one passed. House Bill 1225, a bipartisan bill supported by environmental groups, strengthens communities’ position in saying how local federal lands are managed.
Opponents of devolving control of public lands to the states cite the enormous costs of maintaining them, arguing states are not prepared to shoulder the added burden of hundreds of millions of dollars in annual upkeep.
For example, a single wildfire could cripple Colorado, said Governor John Hickenlooper’s advisor:
The federal government also picks up the costs for wildfires on federal lands. But just one massive wildfire in Colorado — a state that can have several in one year — could obliterate the state budget, said John Swartout, a Republican who is Hickenlooper’s top policy adviser on land, wildlife and conservation issues.
“The solution is constructive engagement,” Swartout said. “Are we always going to be happy with all the decisions? No. But we’re going to get a lot farther helping create the final solution.”
More than 1/3 of Colorado is subject to federal jurisdiction. Whether or not the debate develops into a political conflagration or peters out in favor of other issues remains to be seen, but expect energy producers and environmental activists to keep a close eye on how the narrative proceeds.
WildEarth Guardians won’t hesitate to launch a legal battle, as a recent look at the group’s lawsuit filings shows:
Though a relatively small organization with only 26 people on staff, WildEarth Guardians’ litigious nature has established the environmental advocacy group as a dominant voice in the national debate about environmental policy.
From 2010 to present, Guardians have initiated a total of 152 cases in federal district courts and 55 in the Circuit Court of Appeals for a total of 207 cases. In 2010 alone they filed 61 claims — an average of about one per week.
However, Guardians’ pervasiveness in the courts has not gone without criticism.
In a 2012 analysis of WildEarth Guardians’ legal activity, the conservative group Americans for Prosperity claimed that Guardians has been “misusing the judicial system, exploiting poorly-written laws and taking advantage of taxpayers to pursue a narrow, litigation-driven, special interest agenda.”
For Coloradans, especially those in Craig and surrounding areas, lawsuits from the group have drawn the ire of residents and businesses for favoring costly litigation as a first-stop solution:
Lee Boughey, senior manager of corporate communications and public affairs for Tri-State, said in a statement that the courts should not be a first resort.
“Environmental policy, regulations and law should be set by state legislatures and Congress, and based on sound science, a thorough cost-benefit analysis and appropriate timeframes for implementation. These are difficult issues, and it is a far better for all stakeholders to commit to work together to develop sound regulatory policy that take these consideration into account, as opposed to running straight to the courts,” he said.
The group remains adamant, saying, the “legal system is oftentimes the last recourse of justice for interests and peoples that have been marginalized or whose issues haven’t been heard.”
In the case of Colowyo Mine, the marginalized appear to be the local residents, workers, and communities.
A pair of energy-related ballot measures will appear in November in Boulder, including a Climate Action tax:
Boulder officials also want to ask voters to extend the portion of the utility occupation tax on energy bills that replaces Xcel Energy’s franchise fee and provides roughly $4.1 million to the city’s general fund each year. It is not the portion of the tax that funds analysis and legal efforts toward municipalization, which is not on the ballot. The municipal energy utility would also have to pay a similar amount into the general fund, but that utility may not be up and running by 2017, when the tax expires. The proposed ballot measure would extend the tax through 2022.
The Climate Action Plan tax, which funds energy-efficiency programs and solar rebates, will also appear on the ballot. That tax expires in March 2018, and city leaders believe the programs ultimately will be paid for out of utility rates. However, that won’t be possible until the utility is up and running. The proposed ballot measure would extend the tax through March 2023 so that those programs could continue regardless of progress on the municipal utility.
July 16 Colorado Energy Roundup: Sec. Jewell adds Colowyo Mine visit; renewable energy mandate upheld
Filed under: CDPHE, Environmental Protection Agency, Legal, preferred energy, renewable energy
A week after the Department of the Interior declined to move forward with an appeal in the Colowyo Mine case, and facing mounting pressure to visit the northwest portion of Colorado during a scheduled trip to Aspen, Sec. Sally Jewell appears to have conceded to a meeting with county commissioners:
Moffat County Commissioner John Kinkaid said Wednesday that Jewell has added a meeting with northwest Colorado county commissioners to her itinerary Friday following her speech at the Aspen Institute.
“We look forward to meeting Secretary Jewell this Friday evening,” Kinkaid said. “I hope that she will be able to give us some assurances that our miners can keep working.”
He said he expected the meeting to include commissioners from Moffat and Rio Blanco counties, whose communities would bear the brunt of a mine closure. The meeting will take place in Glenwood Springs.
Jewell had come under pressure to visit the area after it was announced that she would deliver remarks Friday at the Aspen Institute, about a three-hour drive from Craig, where residents are alarmed about the future of the mine.
We’ll keep you posted on developments of the planned meeting.
The mandate, which voters passed in 2004 and expanded in 2010, was challenged by the free-market advocacy group Energy and Environment Legal Institute. The group argued that the renewable energy requirements violate the U.S. Constitution.
The lawsuit claimed that the requirement that large utilities such as Xcel Energy get 20 percent of their electricity from renewable sources violates constitutional protections for interstate commerce.
The plaintiffs argued that because electricity can go anywhere on the grid and come from anywhere on the grid, Colorado mandate illegally harms out-of-state companies.
The 10th Circuit Court of Appeals in Denver disagreed. The three-judge panel ruled that the mandate does not wrongly burden out-of-state coal producers. The judges also pointed out that Colorado voters approved the mandate.
The full text of the ruling can be found here.
For those who do not think increased energy costs–whether from increased cost of supply of fuel, onerous regulations, or government picking (more expensive) energy winners–affect lower and middle income families in Colorado, a new examination of the state’s Low-Income Energy Assistance Program (LEAP) reveals how devastating even modest price increases in energy can be:
About 430,000 households in Colorado — 22 percent of all households — are eligible for federal energy assistance.
These households have incomes below 150 percent of the federal poverty level, or about $36,372 for a family of four.
About 13 percent of Colorado households are below the federal poverty line of $24,250 for a family of four.
The federal Low-Income Energy Assistance Program, or LEAP, administered by local agencies, provided $47 million for heating bills during the 2014-15 season.
The article laments that program has a low reach at the present time, with only 19 percent of those eligible receiving outreach.
But the article’s lede is buried–even small, incremental increases have a large and outsized effect on low-income folks given the portion of income they spend on energy:
Xcel, the state’s largest electricity utility, calculates monthly payments based on 3 percent of a household’s income.
Average households pay 2 percent to 3 percent for energy, compared with low-income households, which often pay as much as 50 percent.
“That leaves very little for food, clothing, medicine,” said Pat Boland, Xcel’s manager of customer policy and assistance.
“Once we get them in the door, we want to keep them in the door,” Boland said in a presentation.
According to the article, Black Hills reaches only 10 percent of those eligible within its system. It pays for the assistance by charging other ratepayers, and is considering a rate hike to cover the program, which is currently losing money. That hike, along with three other rate increases since 2008, make Black Hills among the most expensive electricity providers in the state, the Post article said.
Despite a quiet 2015, fracking is still maintaining a low boil on the backburner of the state’s energy debate, and there is every indication that it won’t be simmering any time soon, and Democratic Rep. Jared Polis told the Associated Press that options remain:
Polis said fracking could be on the 2016 ballot if state officials don’t further regulate the industry. He stopped short of saying whether he would organize the effort, but he wants lawmakers and regulators to adopt three proposals that weren’t formally recommended by the task force.
One would let local governments impose stricter rules than the Colorado Oil and Gas Conservation Commission, charged with regulating drilling statewide. Another would change the commission’s role from facilitating oil and gas development to simply regulating it. The third would set up a panel to resolve disputes between energy companies and local governments or property owners before they land in court.
It remains to be seen whether or not activists, with or without Polis’s sponsorship, pursue a strategy like they did in 2013, targeting friendly and even tossup municipalities with fracking bans and moratoria, or wait for statewide opportunities in the 2016 Presidential election cycle.
The Bureau of Land Management has closed off nearly 100,000 acres of federal land from future leasing:
The Bureau of Land Management rejected all 19 protests from conservation groups, the oil and gas industry and other interests in approving a new resource management plan for the Colorado River Valley Field Office.
The Colorado River Valley Field Office, in Silt, manages more than 500,000 acres of land and more than 700,000 acres of subsurface federal minerals in Garfield, Mesa, Rio Blanco, Pitkin, Eagle and Routt counties. The agency says the majority of the 147,500 acres with high potential for oil and gas production under the office’s jurisdiction are already leased and will continue producing under the plan.
The plan closes 98,100 acres for future leasing, including in the Garfield Creek State Wildlife Area near New Castle, areas managed for wilderness characteristics, areas of critical environmental concern, municipalities and designated recreation areas.
A second Craig-area coal mine apparently also will have to undergo a remedial federal environmental review process if it hopes to avoid a shutdown based on a recent court order.
The Trapper Mine near Craig is now looking at going through the same kind of review currently underway in the case of the Colowyo Mine between Craig and Meeker following a federal judge’s ruling in May.
U.S. District Court Judge R. Brooke Jackson, in a suit brought by WildEarth Guardians, found that the federal Office of Surface Mining Reclamation and Enforcement illegally approved expansions of the two mines because it failed to provide public notice of the decisions and account for the environmental impacts.
The Trapper Mine faces discrepancies over permitted areas and coverage under filings with Judge Jackson, who did not impose a similar ruling as that issued for the Colowyo Mine.
In a notice filed last week to alert the court about the new information, the Trapper attorneys said they support doing remedial environmental analysis involving the Trapper Mine after the Colowyo review is done.
Bob Postle, manager of the program support division for the OSMRE’s western region, said the notice has “just been filed, and we’re now working through how we’re going to address it.”
Given the discrepancies, it isn’t clear at this moment whether a new or remedial environmental review is necessary, according to Trapper’s legal counsel.
In a meeting with Republican Senator Cory Gardner, western slope businesses and entrepreneurs described facing onerous regulatory burdens imposed by DC bureaucrats:
A Moffat County sheepherder, Delta hardware shop owner and Grand Junction manufacturer all walked into a meeting Friday with U.S. Sen. Cory Gardner, R-Colo., each with much the same punchline in mind.
The common theme: The federal government is reaching too far into their businesses, discouraging them from seeking out new ways of doing business and growing.
Constraining regulations have “taken the creativity out of business,” Jim Kendrick, owner of Delta Hardware, told Gardner. “The move is to make us all do business the same way. That’s stifling growth.”
Gardner met with two dozen western Colorado business and economic leaders at Colorado Mesa University in hopes of finding ways to improve the state’s sputtering rural economy.
“I spend all my time on regulatory compliance and none of it on product development,” one Department of Defense contractor said. That would result in pushing more business to bigger vendors able to hurdle all of the regulatory red tape due to a larger staff.
Growing transmission costs for wind-generated electricity have prompted Xcel Energy to seek approval for rate hikes to smaller utilities using Xcel’s transmission lines to reach their consumers:
Xcel wants the utilities to pay for its costs associated with having supplies of reserve power ready to go in case the wind suddenly dies, said Terri Eaton, Xcel’s director of federal regulatory and compliance efforts.
Currently, those costs are paid by Xcel’s business and residential customers, Eaton said.
If the transmission lines customers can supply their own back-up power supplies, they wouldn’t be charged under the proposed rates, she said.
Readily available, back-up power supplies are critical to keep the transmission grid in balance and avoid blackouts that can occur when a big source of power suddenly disappears, Eaton said.
Xcel’s hikes would hit rural cooperatives and other utilities should the Federal Energy Regulatory Commission approve the rate hike at the beginning of 2015.
But what, exactly, does Eaton mean when she refers to “reserve power ready to go in case the wind suddenly dies”?
“We’ve seen some dramatic wind fall-offs in really short periods of time,” Eaton said.
Xcel has already experienced such falls offs, when “several hundreds of megawatts of wind” drops dramatically — and swiftly — due to changes in the wind, she said.
“Sometimes the wind is just howling, and an hour later the wind has calmed — and it’s in those circumstances that we need to have reserves available to pick up the load,” Eaton said.
In such cases, backup power supplies typically come from natural gas-fueled power plants, she said.
The tariff proposed by Xcel would help cover the costs when the wind “suddenly dies.”
The intermittency of wind has been widely discussed, and no amount of forecasting or improved efficiency will spin a wind turbine’s blades if the wind isn’t blowing.
In 2012, a study examined wind generation in Illinois at the height of a summer heat wave, when energy demands rise to yearly highs. The author found that just 5 percent of installed wind capacity was available during that outbreak of record temperatures, and at times, “virtually nonexistent.”
Earlier this year, wind energy proponents touted the example provided in Texas–wind had saved the day. But a closer examination of the figures from the Electric Reliability Council of Texas (ERCOT) demonstrated that contrary to claims that wind had bailed out conventional sources of electricity by ensuring grid reliability, wind had actually fallen so substantially that Texas turned to other sources to meet the extra 1,000 megawatts of demand on January 6. Both scheduled and unscheduled plant closure elsewhere had left Texas with a gap during a record cold snap, a gap that wind was unable to fill.
As the Institute for Energy Research wrote in January, only 3.2 percent of the energy needs of the Texas grid operated by ERCOT came from wind, while 83 percent of Texas wind turbines “were unavailable during peak demand.”
ERCOT itself continues to rate its “wind power at 8.7 percent of its installed capacity” for 2014 during the periods of highest demands, which typically occur in mid-to-late summer. For nearly 12,000 megawatts of installed wind capacity, only 990 megawatts are considered reliable for forecasts computed by ERCOT for 2014. That’s like having the equivalent of 12 1,000 megawatt power plants built and only 1 online when summer energy demand spikes.
As a percentage, ERCOT figures wind to provide just 1.3 percent of the total amount of energy it needs this summer, rising to 2.2 percent by 2017 according to its own projections.
As for Colorado, under Senate Bill 252, rural cooperatives must reach 20 percent renewable energy by 2020.
Tri-State Generation and Transmission Association spokesman Lee Boughey acknowledged the rising costs of integrating ever-greater amounts of intermittent energy supplies like wind.
“As more intermittent resources are added in the region, we understand the need to address the higher costs of integrating and balancing power,” Boughey told the Denver Business Journal.
Those costs were highlighted in a March post that examined the integration of wind and other intermittent energy sources to the reliability of the grid operated by Public Service and regulated by the Public Utilities Commission (PUC), under the state’s preferred energy mandate:
The concern over infrastructure costs and the cost to ratepayers, as well as the challenge of incorporating ever-larger amounts of intermittent generation sources like solar and wind, is not a new topic at the PUC.
In June 2012 comments by PUC staff engineer Inez Dominguez indicated that off-peak load and wind generation in particular was “alarming.”
The integration of intermittent sources like wind would overwhelm the system, either with higher costs or decreased reliability. Bringing in wind and curtailing conventional, coal-fired generation during off-peak periods would result “in an economic penalty to the Public Service customers because more expensive wind generation would be supplying their load.”
Cutting off the wind, however, would also penalize ratepayers, as the “take or pay” agreements give wind first priority.
But the Public Service engineer also highlighted reliability concerns. “In its simplest terms as it concerns the customers, reliability deals with keeping the lights on. This reliability issue may occur when the wind suddenly stops blowing and a significant amount of wind generation is lost to the balancing authority,” Dominguez said.
“When this event happens, the balancing authority needs to replace the lost generation quickly enough to keep from tripping off the load. This means that the generation in reserve to cover such an event has to be quick enough in its response to cover the lost generation,” Dominguez continued.
For Colorado ratepayers, this backup generation comes from “gas fired combustion turbine generation reserves” that displace “more economic base load coal fired generation,” only adding to the cost, and “complexity” of the load balancing requirements.
According to Dominguez, these examples suggested a “flag that Public Service may have too much wind generation.”
Filed under: New Energy Economy, preferred energy, renewable energy, solar energy, wind energy
By Amy Oliver Cooke
“Giving society cheap, abundant energy would be the equivalent of giving an idiot child a machine gun,” wrote environmental doomsday prophet Dr. Paul Ehrlich in 1975.
That’s a cruel statement directed at people who simply want electric lights so their children can read at night, a refrigerator to keep food from spoiling, or a heater to keep their homes warm during the winter.
Yet it seems to be the approach of Colorado’s environmental Left. Part of the problem is progressive leaders’ extremely narrow definition of “clean” energy that limits resource choices to more costly and unreliable wind and solar.
In 2004, Colorado voters approved Amendment 37, requiring Xcel Energy and other investor-owned utilities to use preferred sources such as wind and solar for 10 percent of the electricity sold to end users.
Since then the Colorado legislature has mandated increases in the renewable (or preferred) energy standard, from 10 to 20 to the current 30 percent by 2020. Only Maine (40 percent by 2017) and California (33 percent by 2020) have more aggressive mandates. They also have higher electric rates than Colorado.
Last year the state legislature passed SB 252, a 20 percent preferred energy standard on Colorado’s rural electric cooperatives. Now nearly the entire state must pay for a significant percentage of electricity produced predominantly from preferred “clean” sources wind and solar.
Since producing electricity from wind and solar is more expensive, Colorado’s electric rates have gone up along with the legislature’s mandates.
Not too long ago, our state enjoyed some of the cheapest electricity in the United States. In 2000, Colorado’s residential rates were 7.31 per kWh, equivalent to 9.89 cents in 2013 dollars. Instead, Coloradans now pay 11.91 cents per kWh for residential electricity, the highest rate in the Mountain West. California, Alaska, and Hawaii are the only Western states with higher residential rates.
Colorado’s electric rates are rising significantly faster than in most states. Last year rates across the U.S. increased on average 2.4 percent, compared to a 4.5 percent jump here.
These high rates couldn’t come at a worse time. Just this week the Denver Post reported that Colorado’s labor participation rate has fallen 6 percentage points since 2006, to its lowest level (67.3 percent) since 1976.
In addition, the number of Coloradans obtaining assistance from food stamps continues to mark all-time high numbers, Complete Colorado reports.
The second week of February saw a 42 percent increase in Coloradans asking government for help paying their heating bills, according to 9News.
The state legislature had an opportunity to modestly improve the situation. Rep. Lori Saine’s (R-Weld County) HB 1138 would have expanded the definition of “clean” energy to include hydroelectricity.
Under HB1138 many electric co-ops that serve Colorado’s rural communities could have met or at least come close to meeting SB 252’s increased mandate. Without the expanded definition, some co-ops will need to build additional capacity and expensive transmission lines, or purchase renewable energy credits from other providers. Some of Colorado’s poorest counties will bear the costs.
Despite HB1138’s bipartisan sponsorship, lobbying from the wind and solar industries and their advocates in the environmental non-profit world doomed the bill in committee.
Progressive state lawmakers’ definition of clean energy is also unique. Many states, including those in the eco-friendly Pacific Northwest, the Center for American Progress, the Environmental Protection Agency, and our own Colorado Energy Office all consider hydro to be a clean, renewable source.
Our state’s extremely narrow definition of clean energy begs the question of whether progressive lawmakers simply seek to protect the wind and solar industry at the expense of ratepayers.
A 2012 Independence Institute study showed Xcel Energy ratepayers spent $343 million to comply with the preferred energy mandate, much of which ended up as surplus because supply exceeded demand. That’s $245 per ratepayer, nearly two months of average Colorado electricity bills, for electricity they didn’t use.
Affordable power is not mutually exclusive of clean power. Colorado should expand the definition of clean resources to include clean coal, natural gas, hydroelectric, and nuclear. We also should encourage a least cost principle and let consumers decide.
Anything else is just cruel.
This opinion editorial appeared originally in the Greeley Tribune on February 20, 2014.
Emails Show EPA’s Denver “Listening Tour” Stop A Collaboration Between Agency, Environmentalist Orgs
Emails published this week by the Washington Free Beacon’s Lachlan Markay illustrate a pattern of coordination and cooperation between the Environmental Protection Agency and external environmentalist groups, including the use of at least one agency event to “pressure” an Xcel Energy executive at the Denver stop of a 2013 “listening tour”:
The emails, obtained by the Energy and Environment Legal Institute (EELI) through a Freedom of Information Act lawsuit, could fuel an ongoing controversy over EPA policies that critics say are biased against traditional sources of energy.
Emails show EPA used official events to help environmentalist groups gather signatures for petitions on agency rulemaking, incorporated advance copies of letters drafted by those groups into official statements, and worked with environmentalists to publicly pressure executives of at least one energy company.
In October, the EPA launched an 11-city “listening tour” to gather commentary and input on carbon pollution regulations, and scheduled a stop in Denver. While Colorado houses the EPA Region 8 office, critics then questioned why the tour skipped states like West Virginia, Kentucky, and Colorado’s neighbor to the north, Wyoming–all states that produce more coal, with Wyoming the number one coal producing state in the country.
The documents shed light on part of the deliberation process, with Markay revealing how the “EPA decided on the locations for those hearings after consulting with leading environmentalist groups.”
According to emails written by EPA Region 8 administrator James Martin, the selection of “listening tour” stops had more to do with applying pressure to a related industry–natural gas–and singled out one industry executive in particular, while bypassing “friendlier forums” in California and Washington.
“San Fran and Seattle would be friendlier forums but CA has no coal plants and WA is phasing out its one plant,” Martin wrote. The recipient was Vicki Patton, general counsel at the Environmental Defense Fund (EDF).
“Choosing either may create opportunities for the industry to claim EPA is tilting the playing field,” Martin told Patton. “Denver would not have that problem.”
Martin continued on the choice of Denver. “The gas industry has way more presence here, too. One last point in its favor–it will make Roy Palmer nervous!” wrote Martin.
As Markay points out, Palmer is an executive at Xcel Energy, the state’s largest utility.
Markay also noted that Martin used a personal email address for official EPA business, a claim the EPA had first denied but that the released documents later substantiated.
Among other findings revealed by the internal emails, demonstrating a pattern of cooperation:
Nancy Grantham, director of public affairs for EPA Region 1, which covers New England, asked an organizer for the Sierra Club’s New Hampshire chapter to share the group’s agenda so EPA could adjust its messaging accordingly in an email dated March 12, 2012.
Conventional wisdom would believe that Investor Owned Utilities (IOUs) such as Xcel Energy would have lower electric rates than Rural Electric Associations (REAs) and Municipally Owned Utilities (MOUs) because IOUs have the advantage of population density that allows for maximization of capital investment.
Average residential bill/cost of 700 KWh
Average small commercial bill/cost of 2,000 KWh + 10KW
Average large commercial bill/cost of 45,000 KWh + 130KW
Average industrial bill/cost of 1,900,000 KWh + 3,000KW
These figures beg a couple of questions to which I don’t have definitive answers but do have very strong suspicions:
- Would the IOUs’ bills have compared more favorably before the 30 percent renewable mandate and before the Public Utilities Commission moved away from a least cost principle?
- Is Colorado’s largest IOU Xcel Energy worried that REAs and MOUs provide electricity at lower costs? If not, it should be. As electric rates continue to rise, businesses looking to reduce their costs may move out of Xcel service areas and into an area served by an REA or MOU. It already produces surplus electricity as it is.
According to Xcel Energy’s regulatory filings, the utility spent $275 million in ratepayer subsidies for customer-sited solar panel systems from 2008-2012.*
That breaks down to:
Cost of these solar subsidies for each of Xcel Energy’s 1.4 million Colorado customers.
Percentage of Xcel Energy customers (approximately 9,200) that benefit from lower electricity rates by having subsidized solar panels installed on their property. Although only a fraction of 1 percent of Xcel Energy customers benefit from solar subsidies, 100% of customers pay for the cost of these subsidies.
Cost in Xcel Energy ratepayer subsidies for each of the 3,600 employees that work “throughout the value chain” of Colorado’s solar industry (job numbers are from the Solar Energy Industries Association).
Capital cost per kilowatt capacity of the solar panels subsidized by Xcel Energy ratepayers.** This compares to $2,040/kilowatt for the 750 megawatt Comanche 3 coal-fired power plant in Pueblo,*** and $1,400/kilowatt for a combined cycle natural gas plant.
*See page 1, final column of Xcel Energy, December 2012 RESA budget Report, filed 2 February 2013.
**Capacity of Xcel Energy’s distributed generation solar panel assets—44.9 megawatts—was taken from Section 2.11 of the Technical Appendix to Xcel Energy’s 2011 Electric Resource Plannb (page 341).
***The Comanche 3 cost data is derived from following assumptions: Capital cost–$1.3 billion; and capacity 637 megawatts (85% capacity factor of 750 megawatt nameplate capacity).
Despite close to seven hours of testimony on SB13-252, a bill to raise the renewable energy mandate 150 percent on rural electric co-ops, it is very clear that the bill’s prime sponsors Senate President John Morse (D-Colorado Springs) and Senator Gail Schwartz (D-Snowmass) do not understand their own bill and didn’t bother to consult those who can comprehend the complexity of this legislation. It passed out of committee on a party line vote.
The bill was heard yesterday in the Senate State, Veterans, and Military Affairs Committee. Members include:
- Senator Angela Giron, Chair, (D-Pueblo) and a bill sponsor
- Senator Matt Jones, Vice-Chair, (D-Louisville) and a bill sponsor
- Senator Ted Harvey, (R-Highlands Ranch)
- Senator Evie Hudak (D-Westminster)
- Senator Larry Crowder (R-Alamosa)
What the sponsors say it will do:
- Imposes a mandate on rural electric co-ops forcing them to get 25 percent of the electricity they supply to members from government-selected “renewable” sources, such as wind and solar by 2020.
- Removes the in-state preference for the 1.25 kilowatt-hour multiplier.
- Expands the “renewable” sources to include coal-mine methane and municipal waste.
- Increases the retail rate impact from 1 to 2 percent, which Sen. Giron calls “acceptable.”
What the bill really will do:
- Despite no projected fiscal impact to state government, it will cost co-op members anywhere from $2 billion to 4 billion, more than $8,000 per meter, including those in 10 of Colorado’s poorest counties.
- Removes the in-state multiplier because current law is unconstitutional. The state is being sued over it and doesn’t want to lose, which would force the state to pay attorney’s fees.
- Drive jobs out of the state because of high electricity costs.
- “Blow up the electric co-operative business model.”
- Likely force the state to spend taxpayer money defending this new law in court.
- Devastate rural economies.
- Drive up the cost of business for Colorado’s farmers and ranchers at the same time they are suffering through a devastating drought.
- Force co-ops to try to comply with a law that well could be a “physical impossibility.”
- So many people showed up to testify that the hearing had to moved to a larger room, and still an over-flow room was needed to accommodate the crowd
- Neither Senator Morse nor Schwartz could answer basic questions about the rate cap and indicated the committee would hear from “experts” who could answer questions.
- All three Moffat County Commissioners showed up to testify against the bill.
- Tri-State Generation, wholesale power supplier owned by co-ops, and every electric co-op that testified stated they were not consulted at all regarding the bill despite their repeated attempts to engage with sponsors once they heard legislation would be coming.
- Bi-partisan opposition
- Partisan support
- Senator Harvey was the best-prepared legislator.
Below are highlights and lowlights of SB252 testimony.
Forced to admit:
Senator Harvey asked Senator Morse if the electric cooperatives were ever consulted regarding SB 252. Morse couldn’t say, “yes,” so he answered with a long-winded “no.”
Former Public Utilities Commission (PUC) Chairman Ron Binz, who resigned under the cloud of an ethics complaint, acknowledged that Xcel Energy may well benefit by selling “renewable energy credits” (RECs) to Colorado’s rural co-ops in order for them to comply with this law.
Senator Ted Harvey asked several supporters of SB 252 if they would support the 150 percent mandate increase if they didn’t benefit directly from the bill. The answer: “No.”
Senator John Morse stated if the “market” wanted a renewable mandate we would have one. But since the market doesn’t, government must force it.
Supporter and former state representative Buffy McFadden, current Pueblo County Commissioner, said she wasn’t sure if renewable energy would “go to market” if government didn’t force it.
“Two percent rate cap” comes under fire:
Senator Harvey asked sponsors to explain the two percent rate cap. They couldn’t.
Under pressure from Senator Ted Harvey, PUC Executive Director Doug Dean struggled to explain the total cost of the Colorado’s renewable energy mandate and the two percent rate cap. Dean finally acknowledged that the two percent rate cap only applies to “incremental costs,” and followed up with “it’s pretty complicated.”
Binz perpetuates the 2 percent rate cap myth. Says in testimony, “as an officer of the state,” the PUC and Xcel do not mislead the public on the cost of renewable energy.
Four hours later, Independence Institute energy policy analyst William Yeatman directly addresses Binz’s misleading characterization of how Xcel recovers the total cost of the renewable energy mandate. Yeatman clarifies using real numbers: two percent of Xcel’s retail electric sales in 2012 was $53 million, which was captured in the Residential Electric Standard Adjustment (RESA). Another $291 million, not subject to the rate cap, was captured through the Electric Commodity Adjustment for a total of $343 million or 13 percent of retail sales.
Senator Harvey asked Yeatman to explain how the PUC allows this. Yeatman responded that the budgetary trick was likely the result of a dichotomy between PUC staff that acknowledges the public may be “laboring under the misapprehension of a two percent rate cap” and the Commissioners who allow it to occur.
Rich Wilson, CEO of Southeast Colorado Power Association, to bill sponsors: “you just blew apart the non-profit electric cooperative model.”
International Brotherhood of Electrical Workers pleads with the committee “don’t pass this bill.”
Kent Singer, Executive Director of Colorado Rural Electric Association (CREA), to bill sponsors and supporters, “even after five hours of testimony, I don’t think you have a clear picture of how this [SB252] works.”
Singer continues, had sponsors come to us, we could have explained it, but they NEVER did.
Singer: two percent rate cap is far more complicated than Ron Binz would lead you to believe.
Dan Hodges, Executive Director of Colorado Association of Municipal Utilities, responding to inquires about why Senator Morse would exclude his own utility owned by the city of Colorado Springs: the state constitution excludes municipal utilities from state regulation because they are owned by their citizens. “it’s unconstitutional” to draw municipals into this…”I don’t think it is appropriate for rural electric cooperatives to be drawn in either” because they are owned by their members.
Binz belittles non-profits cooperatives and their members: “Tri-State [Generation] doesn’t have the state’s interest in mind.” Tri-State is owned by electric cooperatives, which, in turn, are owned by members. Most of those members are rural Coloradans.
Senator Gail Schwartz said her neighbors in Aspen and Snowmass want more options for and access to renewables such as solar panels. My question: Why don’t they just pay for it?
Dave Lock, Senior manager, government relations for Tri-State, addresses Binz, “you can be damn sure Tri-State cares about Colorado.”
Lock responding to Binz’s disbelief about Tri-State’s $2-4billion analysis. “We only had five days,” which included a weekend because we were never allowed at the table.
Moffat County Commissioner Tom Mathers, “I own a bar. I’d like to mandate that everyone drink 25 percent more.”
John Kinkaid of Moffat County “we aren’t contributing to your [Denver’s] brown cloud.”
War on Rural Colorado:
All three Moffat County Commissioners John Kinkaid, Tom Mathers, and Chuck Grobe echoed the theme that SB 252 is an assault on rural ratepayers and equivalent to “war on rural Colorado.”
Norma Lou Murr, a Walsenburg senior citizen on a fixed income, waited patiently for hours to testify. When her turn finally came, she asked the committee “to look very seriously” before raising her electric rates.
The way the state legislative Democrats are handling this legislation is similar to how they handled gun control – leave those most impacted out of the conversation and then completely ignore their concerns during testimony.
Denver area eco-leftists have rural Colorado in their sights.
In a September 2012 letter to state legislative candidates, Colorado Environmental Coalition Executive Director Elise Jones (now Boulder County Commissioner) and Colorado Conservation Voters Executive Director Pete Maysmith implied that dirty air in the Denver metro area may be the result of rural Colorado’s not having a 30 percent renewable mandate:
While our largest utility has a 30% renewable energy target, most rural and municipal energy providers have only made a 10% commitment that is below the national average. Coal-ﬁred power plants and vehicles are contributing to the smog and dirty air in the Denver metro area, and Coloradans statewide continue to be exposed to harmful mercury and other particulate emissions.
Just last week, eco-left progressives in the state legislature introduced SB13-252 to require rural co-ops to comply with a 25 percent mandate by 2020, which is significantly higher than the 10 percent to which they have committed already. And today, Sunday, April 7th, I received this message from the Alliance for a Sustainable Colorado, a Denver-based leftist environmental group:
Did you know that in rural Colorado only 10% of energy is generated by clean energy sources, while other major Colorado utilities are on pace to produce 30% of their electricity from renewable sources before 2020? With abundant wind, plenty of sunshine, and an environment worth protecting, it’s time to recharge renewable energy in Colorado.
The Alliance for Sustainable Colorado is urging the Colorado Legislature to pass Senate Bill 252, which will increase Colorado’s Rural Renewable Energy Standard to 25% by 2020 by large wholesale electric providers who sell to rural electric cooperatives.
It’s important to note that electric cooperatives are very different from investor owned utilities such as Colorado’s largest investor owned utility (IOU) Xcel Energy. In particular:
- Co-ops are private, independent, non-profit electric utilities. While IOUs are for-profit
- Co-ops are owned by the customers they serve. IOUs are owned by shareholders.
- Co-ops are incorporated under the laws of the states in which they operate;
- Co-ops are established to provide at‑cost electric service. IOUs provide electricity with a guaranteed profit margin.
- Co-ops re governed by a board of directors elected from the membership which sets policies and procedures that are implemented by the co-op’s management.
- Co-ops serve an average of 7.4 consumers per mile of line and collect annual revenue of approximately $15,000 per mile of line. While IOUs average 34 customers per mile of line and collect $75,500 per mile.
This bill, if passed, will be wildly expensive for rural Colorado. Perhaps Denver’s eco-left doesn’t understand the cooperative business model, but what is worse is that this eco-left cabal seems to be ginning up outrage directed at rural Colorado.
By Brandon Ratterman
Colorado is having trouble defining hydroelectricity. The Environmental Protection Agency (EPA) considers it to be a renewable resource, and the Colorado Energy Office calculates hydroelectric power’s emission rate as equal to wind and solar. Despite these two distinctions, Colorado’s renewable energy standard defines hydroelectricity as renewable only if the generating facility is newly constructed with a capacity of ten megawatts or less, or constructed before January 2005 with a capacity of thirty megawatts or less.
Colorado has 1169 megawatts (MW) of existing hydroelectric capacity. Of that total, 82 percent is generated at facilities with a capacity over 30 MW—meaning it is not “renewable” unless the facility was built in the past eight years. Unfortunately, most facilities do not meet this requirement
According to the most recently released figures, renewables other than hydro produce 9.8 percent of the total net summer electricity capacity. If the total 1169 MW of existing hydro capacity were considered renewable, hydroelectricity would contribute another 8.5 percent of capacity. Instead, only 4.8 percent of hydroelectric power is considered renewable.
Under the current format Colorado will have to fill renewable portfolio standards largely without the help of hydroelectric generation. Unfortunately, this is increasing the costs of the renewable portfolio standard.
At 11.06 cents per kilowatt-hour, Colorado ranked 21st highest nationally in average residential electricity rates according to the U.S. Energy Information Administration. That may not sound too bad, except that the state is well above the average for all Mountain West states. In fact, Colorado has the second highest rates in the Mountain West, just behind Nevada, which actually saw a decrease last year in its residential electric rates.
Furthermore, Colorado has higher rates than any of its neighboring states. Outside of the East Coast, the only states with higher rates than Colorado are Michigan, Wisconsin, Nevada, California, Alaska and Hawaii.
As was proved in the 2012 snapshot of Colorado’s new energy economy, these high prices are due largely to lawmakers using the RPS to support the wind and solar industries. In 2012 alone Xcel Energy customers paid an extra $343 million for what ended up being mostly surplus electricity.
If high prices are the intent of Colorado’s energy policy, expect those figures to get much worse in the coming years as the state moves closer to the legislative mandate of 30 percent renewable portfolio standard, which is heavily tilted toward wind. However, if self-described environmentalists and the Colorado Energy Office truly care about the environment and economic sustainability then they should embrace hydroelectric power regardless of when it was built, but don’t hold your breath waiting.