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.
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.