Filed under: New Energy Economy, renewable energy, solar energy, wind energy
In 1999 Colorado enjoyed some of the lowest electricity rates in the United States and the Mountain West. In 2004, Colorado voters approved Amendment 37, requiring investor owned utilities to provide 10 percent of the electricity sold to end users to come from the preferred sources wind and solar.
Since 2004, the Colorado state legislature has mandated increases in the renewable portfolio standard, more appropriately titled the 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, and they also have higher electric rates than Colorado.
Last year the state legislature passed a 20 percent preferred portfolio standard on Colorado’s rural electric cooperatives.
As the mandate to produce more electricity from wind and solar has increased so have Colorado’s electricity rates.
- In 1999 Colorado’s electric rates were 5.9 cents per Kilowatt hour (kWh) and were the 18th least expensive in the country.
- In the 1990s Colorado’s population increased by 30 percent, electricity demand grew 26 percent, yet real prices fell 25 percent in the same period.
- If electric rates simply kept pace with inflation, Coloradans would have paid 8.4 cents per kWh in 2013 instead of 9.83 cents per kWh.
- In 2000, Colorado’s residential rates were 7.31 per kWh; adjusting for inflation that’s the equivalent of 9.89 cents in 2013. Instead Coloradans now pay 11.91 cents per kWh for residential electricity.
- Colorado’s current electric rate for all sectors is 9.83 cents per kWh, nearly 7 percent higher than the Mountain West average of 9.21 cents per kWh.
- Colorado’s electric rates increased 4.5 percent last year while U.S. electric rates increased only 2.4 percent last year.
- At 11.91 cents per kWh, Colorado has the highest residential rates in the Mountain West.
- Colorado residential electric rates are the 20th highest in the nation, with California, Alaska, and Hawaii being the only western states with higher residential rates.
Most information available at the U.S. Energy Information Administration, Table of “Average Retail Price of Electricity to Ultimate Customer by End-Use Sector.”
Filed under: Archive, Hydraulic Fracturing, Legislation, renewable energy
Current through January 24, 2014
Reform defeated: SB14-035 Renewable Energy Standard Repeal *postponed indefinitely*
Senate Bill 35, introduced by State Sen. Ted Harvey, would have repealed “substantially all of the provision enacted by Senate Bill 13-252″ by returning the renewable portfolio standard to 10 percent from 20 percent for rural cooperative electric associations, among other cuts.
The bill, sent to the State, Veterans and Military Affairs committee was killed Wednesday on a 3-2 party line vote. The SVMA committee has been dubbed the “kill committee” by the minority party, where bills are sent to receive a quick despatch.
Comment: As this bill has been killed, the Independence Institute will examine a similar bill, proposed by State Sen. Ray Scott on Wednesday that would reduce the RPS requirement from 20 percent to 15 percent.
SB14-011 Colorado Energy Research Authority
Among other provisions housekeeping provisions, SB 11 “substitutes ‘clean energy’ for ‘renewable energy’” and authorizes additional monies in the amount of $2 million to create an “energy research cash fund” (ERCF) for the next five fiscal years.
Comment: Substituting “clean” for “renewable” energy is noteworthy. The fiscal note estimates a cost of $2,000,000 annually for the next five years for the ERCF from the state General Fund.
SB14-028 Expand Electric Vehicle Charging Station Grants *Passed Senate second reading with amendments*
SB 14 “expands the existing list of persons and entities that are eligible to receive moneys from the electric vehicle grant fund, administered by the Colorado energy office (CEO), by adding private businesses and nonprofits and allowing the CEO to consider the extent to which grant applicants’ proposed charging locations serve existing vehicles or encourages the acquisition of new vehicles.”
Comment: The bill’s fiscal note estimates that the impact will be “minimal” with grant monies collected under HB13-1110 providing the resource stream. Funding will go to as many stations as possible, but could include fulling funding those installations “in a location that is especially advantageous for support of the electric vehicle market.”
SB14-082 Renewable Energy Standard Adjustment for Cooperative Electric Associations
SB82: “In the section of the renewable energy standard statute setting aside a specific portion of electric generating capacity that cooperative electric associations must meet through distributed generation, the bill:
• Eliminates the disparity between cooperative electric associations serving fewer than 10,000 meters and those serving 10,000 or more meters;
• Establishes a uniform 0.5% of total retail electricity sales as the target percentage for distributed generation; and
• Allows the 0.5% to be measured collectively among these associations as a group rather than individually.”
Comment: Fiscal note estimates minimal impact.
SB14-103 Phase In High-Efficiency Water Fixture Options
SB103 “prohibits the sale of lavatory faucets, shower heads, flushing urinals, tank-type toilets, and tank-type water closets on and after September 1, 2016, unless they are a watersense-listed plumbing
Comment: No fiscal note. The bill defines a “watersense-listed plumbing fixture” as:
• Tested by an accredited third-party certifying body or laboratory in accordance with the federal environmental protection agency’s WaterSense program;
• Certified by such body or laboratory as meeting the performance and efficiency requirements of the program; and
• Authorized by the program to use its label.
The bill would expand the current requirements for “water-efficient indoor plumbing fixtures” which apply currently to builders of new homes, new state buildings, and new and renovated residential, office, and commercial buildings, but at a much lower and “less stringent” standard than the one defined by WaterSense.
HB14-1012 Advanced Industry Investment Income Tax Credit
HB1012 “repeals the Colorado innovation investment tax credit and replaces it with the advanced industry investment tax credit.” The tax credit would be available through the end of 2017 for “an equity investment in a qualified small business from the advanced industries, which consists of advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, information technology, and infrastructure engineering.” The tax credit would equal 25 percent of the investment and up to 30 percent if the business “is located in a rural area or economically distressed area.” Maximum tax credit would be $50,000 for a single tax credit, and up to $2 million per calendar year, with rollover.
Comment: No fiscal note at the present time.
HB14-1030 Hydroelectric Generation Incentive
HB1030 would “promote the construction and operation of hydroelectric facilities in Colorado” by providing incentives for additional installation and elevating community hydroelectric energy facilities “into the community solar garden statute.”
Comment: The bill’s fiscal note estimates a cost of less than $2,500 per year. The hydroelectric power in question would be targeted at those “small hydropower projects of 30 megawatts or less” sited in “streams, diversion ditches for irrigation, or existing dams.”
HB14-1064 Severance Tax Distribution To A Local Government That Limits Oil And Gas Extraction *postponed indefinitely*
HB1064 “prohibits any local government that has a moratorium or permanent prohibition on the extraction of oil and gas from receiving more direct distributions or grants and loans than the local government received in the fiscal year during which the moratorium or permanent prohibition was enacted.”
Comment: The restriction would be lifted in the following fiscal year if a county or municipality rescinds the moratorium or permanent prohibition. In the meantime, the “moneys that would otherwise have been distributed to the county or municipality are redistributed on a pro rata basis to all other eligible counties and municipalities.” The fiscal note puts a total price tag of approximately $40,000 over the next two fiscal years.
In other words, the bill would properly restore balance between counties and municipalities who choose to limit oil and gas extraction and those that do not, as the localities instituting prohibitions should not benefit from increased activities elsewhere by matching severance tax revenues to activities permitted.
**Bill postponed indefinitely, 7-6 party line vote:
Jonathan Singer, D-Longmont, said. “My community is downstream and downwind from oil and gas operations and we feel the public health impacts of fracking regardless of existing fracking bans.”
Sonnenberg presented his proposal as a measure of fairness, ensuring that cities don’t benefit financially from a practice they’ve banned and that those communities that do allow fracking benefit from more of the severance tax revenue.
“Passing this bill would have directed a higher percentage of severance tax funds to communities that help provide for the energy needs of our state,” said Sonnenberg.
“I am disappointed the Democrats failed to see the importance of providing these communities additional revenue to support the oil and gas industry.”
HB14-1067 Renewable Energy Electric Standard REAs Move to 2025
This renewable reform bill, HB1067, “changes the target date to achieve the renewable component of the energy generation portfolio of retail cooperative electric associations [CEA] serving 100,000 or more customers, and qualifying wholesale utilities” from 2020 to 2025.
Comment: The fiscal note indicates a minimal impact. CEAs required to comply with the 20 percent renewable energy standard by 2020 would need to meet step-change adjustments that increase from 6 percent in 2015-2019 to 20 percent in 2020 would see a five year extension for meeting requirements. Measures available to comply with the requirement include development of “eligible generation facilities,” entering into power purchase agreements with “an eligible energy generation facility,” or purchasing “existing renewable energy credits”–each of which, the fiscal note determined, would involve “additional costs” for the CEA.
The Independence Institute will also examine any additional energy bills introduced this session as they become available. This bill survey, completed on January 10, did not indicate any bills on hydraulic fracturing.
HB14-1113 Electric Renewable Energy Standard Reduction
HB1113 orders the public utilities commission to establish electric resource standards, or minimum percentages of electricity that electric service providers “must generate or cause to be generated from recycled energy and renewable energy resources.” This bill moves the current required minimums from 20 to 15 percent until 2019, and from 30 to 15 percent for 2020 and subsequent years. It also reduces the required minimum for rural electric coops to be reduced from 20 to 15 percent for 2020 and in the years following.
Comment: No fiscal note. This bill looks to challenge provisions from last year’s SB252, while also leveling all required electricity standards to be a flat 15 percent for both investor-owned and rural electric cooperative associations from 2020 and thereafter. Step-increases mandated by earlier bills are voided and returned to a standard 15 percent.
HB14-1138 Renewable Energy Standard Add Hydroelectric to Eligible
HB1138 “amends the definition of ‘renewable energy resources’ that can be used to meet the state’s renewable energy standard to include hydroelectricity and pumped hydroelectricity.”
Comment: Fiscal note indicates minimal impact. The impact on state policy, however, could be quite large. Adding hydroelectric and pumped hydroelectric electricity to be added to the state’s list of eligible energy resources for meeting Colorado’s renewable energy standard “reduces the amount of energy required to be generated from other eligible resources (principally wind),” according to the bill’s fiscal note. This could affect not only state agency and local government electricity rates, but those of ratepayers statewide as well.
HB14-1150 State and Local Government and Federal Land Coordination
HB1150: “The bill creates the division of federal land coordination in the department of local affairs to address federal land decisions in Colorado that affect the state and local governments. The chief coordinator is the head of the division and is required to form a federal land coordination task force to study certain federal land decisions. The department of agriculture, the department of natural resources, the Colorado tourism office, the Colorado energy office, and the office of economic development are required to assist the division at the request of the chief coordinator. Based on task force findings, the chief coordinator may recommend that a local government receive a grant for research and analysis to form a coordinated response to a federal land decision.”
Comment: No fiscal note.
HB14-1159 Biogas System Components Sales and Use Tax Exemption
HB1159: “The bill exempts from state sales and use tax components used in biogas production systems. Local governments that currently impose sales or use tax on such components may either continue to do so or may exempt them from their sales or use taxes.”
Comment: The fiscal notes estimates a reduction in state tax revenues of up to $635,000.
This bill creates a sales and use tax exemption, or carve out, for capturing biogas to be used as a renewable natural gas, or for equipment used to create electricity from the biogas. Biogas “is
a natural by-product that is released as manure, food waste, and other organic compounds
breakdown.” This bill appears targeted to one project in Weld County, the Heartland Biogas Project, a 20 MW “anaerobic digester and renewable natural gas (RNG) facility” set to come online as soon as April 2014.
IP-10-2012 (July 2012)
Author: Donovan D. Schafer
PDF of full Issue Paper
Scribd version of full Issue Paper
A ban on fracking would not satisfy those who present general arguments against any kind of development. Acceptance of these arguments would require an outright ban on all oil and gas activities, new wind farm construction, electric transmission construction, residential housing developments, road construction, and the like. Before accepting any argument against fracking as sufficient grounds to restrict or ban its use, one should take that argument to its logical conclusion and consider the full set of repercussions. For if such arguments are granted valid status, they will be used again and again by whichever parties can benefit from shutting down any particular form of development.
by Donovan Schafer
In a recent report, the EPA linked groundwater contamination in Pavillion, Wyoming, to the controversial practice of hydraulic fracturing (”fracking”) used to extract oil and gas. You can almost hear the collective “Hooray!” from anti-fracking advocates. But the actual data in the EPA report make it clear that fracking is safe.
The Wyoming report found contamination in two deep monitoring wells that were drilled specifically to detect contamination. But in addition to these wells, the EPA tested 51 domestic wells and not a single one of these wells showed any signs of contamination that could be linked to fracking.
Strangely, this information is not made clear in the EPA report. Instead, it is buried in the lab data. There are literally thousands of “ND” (Not Detected) entries for every imaginable compound and chemical that the EPA thought it could link to fracking. Yet these results, for all 51 domestic wells, are not discussed or presented anywhere in the EPA’s sensation-seeking report.
While the deep monitoring wells do appear to link fracking to groundwater contamination, they do not link fracking to drinking water contamination. It’s misleading when the EPA report says that an Underground Source of Drinking Water (”USDW”) was contaminated, because the EPA’s definition of USDWs is so ambiguous that the entire 3,000-foot-thick Wind River Formation (the one beneath Pavillion) is lumped into a single USDW, even though it has more than 30 separate freshwater zones.
So was any drinking water contaminated, and is anyone’s health at risk? The results from the 51 domestic wells respond with a resounding “No!”
The fact that none of the domestic wells were affected by fracking is even more impressive when we consider the circumstances and the complex geology of Pavillion. The depths of the domestic wells were separated from the fractured zone by as little as 400 feet, which is incredibly small when compared to operations in Colorado and throughout the country.
Geologically speaking, the ground beneath Pavillion is a mess. Most regions have multiple clay-rich layers that spread uniformly throughout the area and act as impenetrable barriers between fracking and groundwater. Pavillion has none of these layers, and therefore represents a worst case scenario by which we can test the safety of fracking. As the 51 domestic wells show, fracking does indeed pass this test.
No doubt, anti-fracking groups will retort that the EPA found benzene, a carcinogen, in the deepest monitoring well at levels 49 times higher than the EPA limit. But this well was drilled deeper than any domestic well in the entire area, and when the EPA tested for benzene in domestic wells it came up empty handed. Furthermore, the EPA limit on benzene is extreme. The average person absorbs more than 36 times the EPA limit, every day, from sources including candles, incense, and campfires.
Fortunately, here in Colorado, there’s no need to argue about chemical limits, because unlike Pavillion, the fractured zones are separated from groundwater by, not hundreds, but thousands of feet. Take, for instance, the Wattenberg field in Weld County. Oil and gas in this field come from the Niobrara Shale and the Codell Sandstone, both of which are separated from the deepest aquifers by more than 4,000 feet of impermeable rock.
What happened in Pavillion was the first incident ever recorded, in which fracking was shown to have contaminated groundwater. It happened under unique circumstances, in the worst of all geological settings, and resulted in a level of contamination (in a well that nobody uses) comparable to the exposures from everyday life.
Although the EPA seems eager to increase its own power by scaring Americans away from fracking, the facts about Pavillion help us understand why fracking in Colorado is the safest, most environmentally benign way to grow tens of thousands of new jobs in Colorado’s energy economy.
This article was originally published in the Colorado Springs Gazette, December 17, 2011.
Today I posted the first annual “Energy Policy: Top 5 Worst Governors” list. Click here, to see for yourself who’s the worst. (Hint: He coined the term “New Energy Economy.”)
The putative mission of HB 1365 is for Colorado to address “reasonably foreseeable” federal air quality regulations in a holistic fashion, which is supposedly more cost-effective than a piece-meal approach. When it rolled out the legislation, the Ritter administration told the PUC that there were eleven “current and foreseeable air quality requirements (see slides 13 and 14).” As is explained here, this was a gross misrepresentation; in fact, there were in fact only two such regulations in the federal pipeline: “regional haze” and ozone.
Make that one. Yesterday, the EPA again delayed a decision on whether to tighten the National Ambient Air Quality Standard for ozone. A rulemaking was expected this month, but the EPA said it needs more time to ensure that they are relying on the best science possible, and it suggested that it won’t act until July. This is the third time that the EPA has delayed this determination since HB 1365 was enacted.
The prevailing interpretation of the delay is that President Obama is tacking right economically in the wake of last month’s shellacking at the polls. As such, it is almost inconceivable that the EPA won’t kick the ozone can further down the road, at least through the next election cycle, unless the President decides against running for reelection in 2012.
Primer on the Many Implementation Plans that the PUC Is Considering
Primer on HB 1365
Timeline of Implementation Plans
Study on the Dubious Foundations of HB 1365
Archive of HB 1365 Posts
Oped Last Week in Denver Daily News: Ritter’s Phantom Carbon Tax
As of this post [10:08 AM], the PUC has yet to post a written copy of the Department of Public Health and Environment’s determination whether Xcel’s two new fuel switching plans meet “reasonably foreseeable” federal and state air regulations. Yesterday, Chairman Ron Binz said that the CDPHE’s filing was due last evening at 5 PM. If the CDPHE finds that the two fuel switching plans do not meet “readily foreseeable” air quality regulations, then they must be discarded. The CDPHE ruling will likely be the first topic of discussion at the hearing this morning.
After the PUC considers the CDPHE determination, Chairman Binz has promised to revisit his “tentative” decision to allow Xcel to put forth an accelerated version of its preferred plan, despite strong opposition from the PUC Staff. The two fuel switching plans and the accelerated version of the preferred plan were proposed by the utility last week.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute
by William Yeatman and Amy Oliver Cooke
Ratepayers can’t see it on their bill, and they won’t hear about it from Governor Bill Ritter. But a central component of his New Energy Economy is a big, hidden energy tax that makes customers pay for the controversial theory of global warming.
In order to make Ritter’s New Energy Economy appear affordable, the Public Utilities Commission (PUC) allows Xcel Energy to incorporate at least a $20-per-ton carbon tax into the economic models the utility uses to make resource acquisition decisions. The tax is used in the models, and the models dictate spending.
Ritter’s carbon tax is the worst kind of virtual reality because it leaps from the computers to your wallet. Ratepayers cannot see the tax because it is cloaked in the impossibly arcane processes of the PUC.
by Amy Oliver Cooke and William Yeatman
The Colorado Public Utilities Commission (PUC), Xcel Energy, and Governor Bill Ritter colluded to fast track the misnamed Clean Air Clean Jobs Act (HB 1365), which effectively mandates coal-fired power plants to switch to natural gas. The trio essentially duped lawmakers into hasty passage of this bill. They warned legislators that the federal Environmental Protection Agency (EPA) would crack down on Colorado coal power with the Clean Air Act. But that was really a bogeyman meant to frighten lawmakers. While it is true that President Barack Obama’s EPA is hostile to coal-generated energy, the governor and the PUC grossly exaggerated the regulatory threat in order to advance their agenda, and Xcel went along with the ruse.
After rushing the bill’s passage under false pretenses, the trio rushed its implementation to avoid consideration of less costly alternatives that easily could meet the EPA’s Clean Air Act guidelines. Xcel makes a nice profit, while Governor Ritter and the PUC satisfy their anti-coal agenda, and ratepayers pay the price.
Read Colorado’s Clean Air Clean Jobs Act Will Accomplish Neither here.
Preview of October 26 PUC Hearing: A New Plan
Yesterday at 5pm, Xcel filed a new plan to meet HB 1365. The utility’s original plan had been rejected by the PUC because it would have switched fuels at a 351 megawatt Denver coal plant, known as Cherokee 4, in 2022–five years after a 2017 deadline set in HB 1365. Last night, the new plan had yet to be posted online, and I inferred that Xcel’s new plan would simply accelerate the timetable of its old one. That is, I thought that Xcel would move forward the date of the Cherokee 4 fuel conversion to 2017, so as to comply with HB 1365’s deadline.
Evidently, I was wrong. Although the new plan still has yet to be posted online (as of 10 AM eastern), news accounts today (here and here) suggest that Xcel will keep the Cherokee 4 coal plant, instead of replacing it with natural gas generation. In order to meet HB 1365’s requirement to reduce nitrogen oxides emissions at least 70%, Xcel will install Cherokee 4 with a technology known as selective catalytic reduction (SCR), and the coal plant would not retire until 2027.
SCR is the gold standard of NOx pollution control, but it is very expensive. Initial capital costs generally exceed $100 million. In its initial filing, Xcel indicated that space constraints at Cherokee 4 made construction even more expensive, so expensive that a SCR installation would be cost-prohibitive (see discussion of “constructability” below). This assertion was challenged by an economic study commissioned by the PUC staff and performed by the Harris Group Inc. According to the study, “[Xcel's estimation of] SCR retrofit costs for Cherokee 3 and Cherokee 4 are three to four times higher than we would expect based on other SCR retrofits with which we are familiar.” Upon reanalysis, Xcel seems to have lowered its cost expectations of installing the pollution control.
Winners of New Plan
- Colorado Mining Association: Cherokee 4 gets its coal from the Uintah basin in northwest Colorado (although its delivery agreement for Uintah coal ends in 2013, and Wyoming coal from the Powder River basin will challenge Colorado coal for the renewal of the Cherokee 4 contract).
Losers of New Plan
- Xcel: Generally speaking, the more Xcel spends, the more it makes. So losing the right to build a new natural gas plant means that the utility will lose out on profits.
- Independent Power Producers: Independent electricity generators are still shut out. (see last night’s review for more on IPP’s conflict with Xcel.
Why I Think That the PUC Will Reject Xcel’s New Plan
Matt Futch, Utilities Program Manager of the Colorado Governor’s Energy Office, submitted written testimony stating that his office “supports this plan [Xcel’s original preferred plan] with one primary exception: retire Cherokee 4 by end of calendar year 2017.” Mr. Futch argued that such a step was necessary to meet Governor Bill Ritter’s “Colorado Climate Action Plan” to reduce the state’s greenhouse gas emissions 20% below 2005 levels by 2020. That is, retiring Cherokee 4 is an essential component of the Governor’s climate plan. Because an iteration of Xcel’s initial HB 1365 proposal (“Plan 6”) includes fuel switching at Cherokee 4 by 2017, the PUC would have the authority that Xcel choose that course of action. And to date, the PUC has proven a reliable ally of the Governor.
Word of the Day: “Constructability”
“Constructability” is Xcel’s catch-all phrase to describe the space constraints at the Cherokee 4 (see PUC staff witness Sharon Podein September 17 direct testimony). Put simply, due to “constructability,” it is difficult to build anything at the site. Existing transmission infrastructure in Denver emanates from the Cherokee location (hom2 to four power plants, Cheroke 1-4), so it is a necessary component of any plan that Xcel would propose to meet HB 1365.
The upshot is that “constructability” gives Xcel a fudge factor that it can use to skew the results of any cost benefit analysis in its favor.