March 3 Colorado Energy Cheat Sheet: EPA’s McCarthy ‘good news about Gold King’; a Tesla will improve your ‘quality of life’

Environmental Protection Administrator Gina McCarthy: “But, the good news about Gold King is that, you know, it really was a bright color, but the bright color was because the iron was oxidizing. It meant we had actually less problem than how it usually leaks, [laugh] which is pretty constantly, and so it was only a half a day’s release of what generally comes from those mines and goes into those rivers.”

The Daily Caller’s Michael Bastasch had more on the story:

The EPA-caused spill unleashed the equivalent of “9 football fields spread out at one foot deep” for a couple hours, according to a report by University of Arizona researchers.

Mine waste from Gold King was only coming out at a rate of 112 gallons per minute in August 2014. After the spill, wastewater was coming out at a rate of 500 to 700 gallons per minute.

While there have thankfully been no reported short-term health problems from the spill, experts are worried the toxic metals, like arsenic and lead, that leaked from the mine could pose long-term health problems.

“There is a potential for such sediments to be stirred up and metals released during high water events or recreational use,” University of Arizona researchers wrote. “The metals could become concentrated in fish that live in the river and feed on things that grow in the sediments. Metals in the sediments could seep into the groundwater, resulting in impacts to drinking and irrigation water.”

And the question of culpability for the EPA remains, as a House committee finds additional evidence implicating the agency directly:

House Natural Resources Committee Chairman Rob Bishop, R-Utah, cornered Interior Secretary Sally Jewell Tuesday over an email he says contradicts her statements that a toxic mine spill the Environmental Protection Agency caused last year in Colorado was an “accident.”

The mine blowout released 3 million gallons of heavy-metal-tainted water into the Colorado Animas River and the waterways of New Mexico and Utah. Bishop’s committee recently subpoenaed the Interior Department in February to provide it with email communications between Interior and the Army Corps of Engineers.

Much of what they received back was completely redacted, Bishop said. But one email that Interior sent to the panel, unrelated to the subpoena, was revealing.

The email shows “that less than 48 hours after the blowout, your employee in Colorado talks to the EPA official in charge, and then emails all senior leadership at [the Bureau of Land Management], and basically says that EPA was deliberately removing a small portion of the plug to relieve pressure in the mine when the blowout occurred.”

***

ICYMI: Energy Policy Center associate analyst Simon Lomax’s latest column:

It was a rare moment of honesty from an environmental activist: “It is not easy to talk about the kind of massive changes that we need to make; about how we think, about what we eat, where it comes from, how we entertain ourselves, what kind of holidays we take,” said Kumi Naidoo, former executive director of Greenpeace International. “All of these things actually are very painful to talk about.”

Naidoo, who led Greenpeace for six years before departing late last year, made these remarks in mid-February at a climate-change forum in Germany. He was answering the question of an Icelandic official, who wanted to know why governments aren’t doing more to crack down on “meat consumption,” and other economic excesses that produce greenhouse gases. “We have to change the way we consume,” the official concluded at the end of her question.

On the same panel, three seats across from Naidoo, sat U.S. Sen. Sheldon Whitehouse (D-R.I.). As the former Greenpeace activist wrapped up his answer, the American lawmaker saw his climate and energy talking points going up in flames, and tried to get back on message.

“Let me just push back very gently on one point,” Whitehouse said, in comments first reported by The Harry Read Me File. “I don’t want to leave the impression that mankind must suffer in order to make these changes. The changes in consumption can actually be enjoyable and beneficial.”

Then he offered an example: “If you trade in your Mercedes for a Tesla, your quality of life just went up.”

Read it all here.

***

Have not had much on wind energy in a while, and the latest headline is somewhat revealing–wind sources acknowledge their lethal impact on birds, and propose to use technology to shut them down whenever a bird is nearby, making the energy source even more erratic and intermittent, not to mention the wear and tear of stop/start on the turbines themselves:

What if a wind turbine knew to shut down when a bird was too close? That vision is the goal of ongoing research in Golden, and birds themselves are helping to develop a solution.

The National Renewable Energy Laboratory has been conducting avian research alongside various industry partners to drastically reduce avian deaths by wind turbine collisions.

Colorado has 1,916 operating wind turbines statewide, placing it eighth in the nation for the number of turbines within a state.

Although those wind turbines accounted for only a small percentage of bird deaths annually, Jason Roadman, a technical engineer for NREL said that percentage should be zero.

“Renewable energy is something that I and a lot of people strongly believe in, so we want to make it as low impact as possible,” Roadman said. “The rates of wild bird collisions are fairly low on these solar-wind farms, but they’re not zero. So anything we can do to reduce the footprint of the negative effects of alternative energy, we’ll make every effort toward.”

Leaving the question of turbine resiliency and energy generation fluctuation aside, the admission that such measures are necessary to alleviate the threat to birds, including the heavily protected eagles and other raptors, is quite a step from a few years ago, when wind proponents minimized any such concern and sought takings extensions to prop up one of the industry’s most glaring shortcomings.

***

To say it’s been a rough 18 months for oil and gas would be an understatement, and the effect of the drop in commodities prices is being reflected in new figures from local businesses and communities:

Anadarko Petroleum Corp., one of the biggest oil and gas companies working in Colorado, will have only one drilling rig operating in the state during 2016 — down from an average of seven in 2015.

The Texas company (NYSE: APC), based in The Woodlands, a suburb of Houston, on Tuesday followed its peers by releasing budget figures and plans for 2016 that are a far cry from last year.

Hammered by a bust in oil and gas prices brought on by an international glut in supplies, oil and gas companies have slashed budgets, laid off employees and sold assets in the struggle to survive.

Anadarko, which has operations in the U.S. and around the world, said Tuesday it expects to spend between $2.6 billion and $2.8 billion this year, down nearly 50 percent from its 2015 budget.

About half that money, $1.1 billion, will be spent in the United States, and about half that amount — approximately $500 million — spent in the Colorado’s Denver-Julesburg Basin during 2016, according to the company.

By comparison, Anadarko said a year ago it expected to spend about $1.8 billion on its Colorado operations in 2015.

Cuts like Anadarko’s have already manifested in places heavily involved in natural resource development, like northern Colorado’s Weld County:

Weld County’s economy appears to have entered a hard skid, now confirmed by larger-than-expected downward revisions to the number of people employed in oil and gas and mining statewide.

Preliminary employment counts last month estimated the county gained a net 3,800 payroll jobs between December 2014 and last December.

But revisions based on the Quarterly Census of Employment and Wages for the third quarter from the Colorado Department of Labor and Employment out Wednesday now project the county lost 500 jobs last year.

“It is playing out as we expected. It has just been more delayed than expected,” said Brian Lewandowski, associate director of the business research division at the University of Colorado at Boulder’s Leeds School of Business.

Weld County accounted for about 90 percent of the state’s oil production last year, and oil and gas producers account for about three-quarters of employment in the mining sector, Lewandowski said.

Mining has also been hit hard:

The QCEW revisions show what was initially measured as a modest 3.9 percent year-over-year decline in mining employment is running closer to a 20.7 percent drop.

Viewed another way, the loss of 1,400 mining sector jobs last year is now estimated at closer to 7,500, a nearly fivefold increase.

And while the number crunchers characterize the information as “delayed”–due to being lagging indicators following the commodity prices dropping–the impact was within a year, not a much longer or slowed trend that plays out over time.

A similar downturn has already been seen in severance taxes in the same area, as we noted a month ago in the Cheat Sheet:

Pushing for bans on fracking or other measures to limit responsible natural resource development will only exacerbate problems at the local level, putting education, infrastructure, and other critical services at risk, on top of the drop noted here in the Denver Post due to commodity prices tanking:

Because 97 percent of Platte Valley’s budget comes from taxes paid on mineral production and equipment — a property tax known as ad valorem — McClain said his district could be looking at a budget reduction between $300,000 and nearly $1 million next school year.
How that plays out in terms of potential cuts or program impacts is yet to be seen, he said.
“You’re always concerned about your folks,” McClain said. “You worry about it taking the forward momentum and positivity out.”
It’s not just schools that are suffering. Municipal budgets, local businesses and even hospitals in mineral-rich pockets of Colorado are watching closely to see how long prices remain depressed.

Combine that with a 72.3 percent drop in severance tax revenue–down to $77.6 million this year compared with $280 million last fiscal year–and you’ll get, in the words of the Post, “the state’s direct distributions of those proceeds to cities, counties, towns and schools will be reduced from a little more than $40 million in 2015 to just $11.9 million this year.

***

Xcel says the future of solar is bright:

Xcel Energy filed a new renewable energy plan with the Colorado Public Utilities Commission Monday that could more than double its portfolio of solar power in the state over the next three years.

“Our plan is all about our energy future in Colorado, and allowing our customers to choose and pay for the energy sources that they believe are best for them,” David Eves, president of Public Service Co. of Colorado, said in a statement.

The plan would add 421 megawatts of new power from renewable sources, enough for 126,300 homes, over the next three years. The bulk of that amount, 401 megawatts, would come from solar.

Xcel Energy, which currently obtains more than 22 percent of its power from renewable sources, said it is on track to meet or beat the state mandate of 30 percent from renewable sources by 2020.

The solar industry, however, is not impressed with Xcel, saying the utility should do more to encourage distributed generation:

But one leading solar advocate questioned the utility’s sincerity, given that Xcel, in a separate rate case, has asked for cuts to what it pays customers who put solar power onto the grid.

“Xcel’s view of the energy future is not the only one that Coloradans should consider. The public really needs to have a say here,” said Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association.

Xcel currently offers to take on 2 megawatts of additional solar power at the start of each month, but that capacity is reserved within 15 to 20 minutes.

“We don’t think there should be an allocation, a ‘Mother may I have some capacity’ system,’ ” Cantwell said. “The industry is ready to play a much bigger part in Colorado’s energy future.”

Solar remains captive to the need for government mandates, rebates, handouts, and incentives to spur growth beyond the natural market preference of customers desiring to install the preferred energy source. The cost of panels may be declining (again, due in no small part to taxpayer-funded R&D grants, state and federal mandates, and other subsidies), but the cost of a system remains daunting.

If you have any doubt about the extent of government programs to encourage solar and other renewables, take a look of this list compiled by the Department of Energy. It lists 129 programs for Colorado alone.

***

As for the resources necessary for renewables and battery storage, here’s a new report from the Institute for Energy Research, as they show that renewables increase dependency on foreign sources:

One of the common reasons people claim to support wind and solar technologies is to reduce dependence on foreign sources of energy. For example, green energy supporter Jay Faison told the Wall Street Journal “If we expand our clean energy technologies, we’ll create more jobs, reduce our dependence on foreign sources of energy…”[i] The problem is that green energy actually increases reliance on imports instead of reducing imports.

Green energy technologies are dependent on rare earth minerals and lithium for batteries–both of which are primarily imported into the United States. Most of the world’s rare earth minerals are produced in China (85 percent); and that country supplies the United States with most of its rare earth imports (71 percent). The United States only produces 24 percent of the rare earth minerals that it needs.[ii] In 2013, the United States imported 54 percent of the lithium it used, with Chile and Argentina supplying 96 percent of those imports.[iii] Some believe that lithium may be the “new oil”, eclipsing oil as a source for geopolitical and economic power.[iv] Clearly, Tesla, who is building a gigafactory in Nevada to produce lithium-ion batteries for its cars and Powerwall storage device, needs access to low-cost lithium. In contrast to these figures, the United States now imports only 27 percent of the oil it uses domestically.[v]

***

And about that reliability argument:

Green energy is so unreliable and intermittent that it could wreck the power grid, according to industry and government experts.

The U.S. Federal Energy Regulatory Commission (FERC) is currently investigating how green energy undermines the reliability of the electrical grid. FERC believe there is a “significant risk” of electricity in the United States becoming unreliable because “wind and solar don’t offer the services the shuttered coal plants provided.” Environmental regulations could make operating coal or natural gas power plant unprofitable, which could compromise the reliability of the entire power grid.

“The intermittency of renewable sources of electricity is already threatening reliability in Britain,” Myron Ebell, director of the Center for Energy and Environment at the libertarian Competitive Enterprise Institute, told The Daily Caller News Foundation. ”This is because there are so many windmills that conventional power plants are being closed as uneconomic and so when the wind doesn’t blow there is not adequate backup power available. To avoid blackouts, the government is now paying large sums to have several hundred big diesel generators on standby. If this sounds crazy, it is.”

February 4 Colorado Energy Cheat Sheet: Local governments face production-related revenue downturn; more red tape sought for resource development; Wyoming’s cautionary tale

Pushing for bans on fracking or other measures to limit responsible natural resource development will only exacerbate problems at the local level, putting education, infrastructure, and other critical services at risk, on top of the drop noted here in the Denver Post due to commodity prices tanking:

Because 97 percent of Platte Valley’s budget comes from taxes paid on mineral production and equipment — a property tax known as ad valorem — McClain said his district could be looking at a budget reduction between $300,000 and nearly $1 million next school year.

How that plays out in terms of potential cuts or program impacts is yet to be seen, he said.

“You’re always concerned about your folks,” McClain said. “You worry about it taking the forward momentum and positivity out.”

It’s not just schools that are suffering. Municipal budgets, local businesses and even hospitals in mineral-rich pockets of Colorado are watching closely to see how long prices remain depressed.

Combine that with a 72.3 percent drop in severance tax revenue–down to $77.6 million this year compared with $280 million last fiscal year–and you’ll get, in the words of the Post, “the state’s direct distributions of those proceeds to cities, counties, towns and schools will be reduced from a little more than $40 million in 2015 to just $11.9 million this year.”

Nearly 75 percent drop, just from falling oil prices. Put on top of that more red tape, or eliminate the practice altogether, and eventually those figures will head toward zero (no production = no tax revenue).

This is what is at stake when it comes to pushing back against the repetitively dubbed “common sense” regulation that threatens a rather large portion of the state’s economy.

***

Speaking of restrictions:

BRIGHTON — Adams County leaders made it clear Wednesday morning that they won’t support a 10-month ban on new oil and gas activity in urban parts of the county after hearing nearly eight hours of testimony that began Tuesday night.

Commissioner Chaz Tedesco said he wasn’t comfortable imposing a moratorium on an industry that has proved critical to Adams County’s economy. He said he supported hiring an attorney that can make sure the county is making the best deals with industry as possible.

“I want to make the right decision with the right information,” Tedesco said.

His colleague, Erik Hansen, said oil and gas workers are not the villains their opponents make them out to be and that the county has a good site-by-site evaluation system already in place.

“You know what? The folks who work in the industry care about their kids too,” he said.

Those families–the workers and the kids–live in the communities. It may be stunning to anti-energy activists, but those developing and producing the energy that drives your car (gas OR electric), heats and cools your home, keeps your iPads and laptops running, and generally produces an incredible standard of living for you might live right next door. *shudder*

Good on Adams County for rejecting hyperbolic, paranoid nonsense.

***

And not to be outdone by the anti-fracking ballot measures proposed at the state level, Colorado legislators are looking to add more red tape, because enough is never enough, and the Colorado Oil and Gas Conservation Commission’s rulemaking last month did not address those concerns, say energy development opponents:

Democrats in the Colorado House, where that party has a majority, are expected to introduce two measures later this session, one making it easier for surface property owners to collect damages from mineral rights owners if their properties are damaged, and a second measure to give local governments more regulatory authority over drilling within their jurisdictions.

House Speaker Dickey Lee Hullinghorst, D-Boulder, said that second idea is something she highly supports.

“I think this bill would be a very reasonable approach,” she said. “I have always felt that’s where you have to get at, the conflict in property rights.”

Regardless of those measures, the backers of several proposed ballot measures dealing with fracking are still going ahead with their ideas.

Those proponents, who could not be reached for comment, have said they were not satisfied with new regulations approved by the Colorado Oil and Gas Conservation Commission last week. They said those new rules, the result of a special task force established by Gov. John Hickenlooper as a compromise to keep the proposals off the ballot in 2014, didn’t go far enough.

Rest assured, short of the outright ban, anti-energy folks will not back off even if all of the proposed measures are put into place. New development might be blocked, but continuing extraction would still be a target. They will never be satisfied, until all development is 100 percent eliminated.

Don’t take my word for it:

The Sierra Club Rocky Mountain Chapter would like the entire state of Colorado to be 100% renewable, beginning with Denver. Becky English, the executive committee chair for the Sierra Club, responded to an email about a sustainability summit scheduled for early December in Denver:

I would have liked to share that the Sierra Club national board has declared a goal of powering the electric sector by 100% renewable energy nationwide, and that the Rocky Mountain Chapter has adopted the goal for Colorado. I will approach you offline about how best to work toward this goal in Denver.

And that’s just the Sierra Club–see also here and here.

***

Stakeholder meetings or dog-and-pony shows supporting the Clean Power Plan and the state’s agencies dedicated to enforcing the rule (Colorado Department of Public Health and Environment)–the Gazette certainly has an opinion:

Reality struck when the Colorado Department of Public Health and Environment took the show to Brush, a rural eastern plains town where people work hard to earn a buck.

Four of five panel members were cheerleaders for the president’s plan, which has the full support of Gov. John Hickenlooper. Panelist Kent Singer, an attorney and executive director of the Colorado Rural Electric Association, offered the panel’s only balance. He said public utilities and electric cooperatives are supposed to provide reliable energy at a price households, farms, ranches and businesses can afford. The president’s plan, he worries, would impose hardships.

Audience participants crashed the party to explain how eastern Coloradans have invested in hundreds of wind turbines that won’t count toward the proposed standards, as the plan would disqualify assets built before 2013.

State Sen. Jerry Sonnenberg told state officials he represents 21,000 square miles that host more wind turbines than the rest of the state combined, and most would not qualify. He worries about constituents having to fund investments they already made in vain.

“We can look at the lower middle class, the working poor, the poor and the elderly and see how they would be impacted, and how it would make it even tougher for them,” Sonnenberg said. A farmer who spends $10,000 on energy to irrigate a field would take a big hit, the senator explained, at a time when some crop prices have plunged.

State health officials need to get serious about their presentation for the remaining “All Stakeholder” meetings in Pueblo and Craig. This plan poses serious consequences for those who cannot afford haphazard and experimental efforts to control the climate. We need a balance of experts presenting a variety of views, not another panel stacked with support for a political agenda.

Having attended one of the first CDPHE “stakeholder” events back in September 2015, I can assure the reader that comments in favor of the Clean Power Plan ran about 15 to 1, with plenty of others from industry to rural electric co-ops basically pleading for the agency to implement the rule as mercifully as possible.

It’s clear from the first few events that the stakeholder process is nothing more than a three ring circus for advocates like activists and renewable energy businesses to show up and applaud the agency, giving it a rather unnecessary shot in the arm of confidence. Meanwhile, the folks who actually bear the brunt of the rule itself, whether it’s the ratepayer who pays for the energy and the guaranteed profit for the utilities (all stranded assets like coal plants having to be replaced with more expensive energy alternatives), the taxpayer who is on the hook for subsidizing unaffordable and unreliable energy alternatives, the farmers and investors who were sold a bill of goods in years past of being part of a “New Energy Economy” by previous politicians only to be passed over and not counted as renewables anyway . . . the list goes on and on.

The CDPHE process is really illustrative of quite a few economic concepts, from crony capitalism to captive regulation, concentrated benefits vs. dispersed costs, and government intrusion in the free market to pick energy winners and losers. In this case, the winners repeatedly show up and applaud. The potential losers are taken out of the process, and must rely on lawsuits like the multi-state challenge joined by Attorney General Cynthia Coffman, or the much more distant hope of an administrative change in policy due to a shift in the political climate at the Federal level.

***

Turning to updates on the Gold King Mine spill:

DENVER – Southwest Colorado feels forgotten in the aftermath of the Gold King Mine spill, state lawmakers heard Wednesday.

Rep. Don Coram, R-Montrose, expressed the sentiment to a House committee just before the panel killed his legislation that would have allowed the state to file lawsuits against the federal government on behalf of individuals impacted by the spill.

Coram was especially irked by the fact that the measure was assigned to the House State, Veterans and Military Affairs Committee, a committee sometimes used by the majority party to kill legislation deemed unpopular by leadership. Democrats control the House.

The bill died on a 5-4 party-line vote.

“If this (Gold King spill) had happened in a metropolitan area, we would be doing something. But the fact is, in rural Southwest Colorado, we … have the opinion that the Front Range does not care who suffers in rural Colorado,” Coram told the committee.

And while state efforts to provide relief failed, Congressional inquiries into the EPA-caused spill continue apace, with calls for transparency and clarification over the role of the EPA in a report from the Department of the Interior that was supposed to be impartial and independent:

A key report on the Gold King Mine disaster, which poisoned drinking water for three states and the Navajo Nation, is now being questioned by congressional committee and subcommittee chairmen.

New evidence may “contradict” Environmental Protection Agency Administrator (EPA) Gina McCarthy’s “repeated assertions” to the Senate Committee on Environment and Public Works (EPW) “that EPA had reviewed only a [Department of the Interior] press release and had no role in DOI’s independent review” of the Gold King Mine blowout, according to a Wednesday letter to McCarthy.

“Please clarify … that DOI did not have a conflict of interest, that its review would be independent and that EPA officials had no involvement in DOI’s review,” committee Chairman Jim Inhofe and Superfund, Waste Management and Regulatory Oversight Subcommittee Chairman M. Michael Rounds wrote.

The DOI report detailed that the EPA-caused Gold King Mine spill, which sent three million gallons of wastewater into Colorado’s Animas River, was preventable. The report stated, however, events at the site before and after the incident were beyond the investigation’s scope – even though such details were sought by the EPW committee.

We’ll keep an eye on this development.

***

News from our Wyoming neighbors, a cautionary tale of how the current administration’s push to kill coal will likely kill local communities too:

President Barack Obama’s administration has ordered a three-year moratorium on sales of federal coal reserves, and it’s putting a rare mood on folks in Gillette, a ranching-turned-energy town of 32,000: pessimism.

“Most of the time it comes back. This time, I don’t know,” said Bobbie Garcia, watching her daughter summit a two-story climbing structure at the town’s $53 million recreation center largely built with coal money.

Until recently, the Powder River Basin of Wyoming and Montana remained a rare bright spot for the industry. Even as Appalachian mines shut down and cheap natural gas started crowding out coal as a power plant fuel, economies of scale kept the region rumbling.

Massive strip mines sprawled across tens of thousands of acres, much of it in the Thunder Basin National Grassland, produce roughly 40 percent of the nation’s supply of the fuel.

For Gillette and other communities, that means more than 7,000 mining industry jobs. And not just fly-by-night, roughneck gigs, but the sort that sustain families year after year, pointed out Michael Von Flatern, a state senator who has lived in Gillette since the early 1970s.

The sort of jobs that are likely irreplaceable. Also, it’s no easy task replacing 40 percent of the country’s coal, considering that 23 percent of U.S. energy production still comes from that resource. Compare that to 0.5 percent for solar and 2 percent for wind, according to the Energy Information Administration through 2014 (the last full year).

If you want to know what’s headed for Colorado, look north. Or ask the folks in Moffat County about the Colowyo Mine situation from last year.

January 27 Colorado Energy Cheat Sheet: COGCC rulemaking pleases no one; anti-fracking measures disastrous for Colorado economy; pushing back against Clean Power Plan

Even small changes to oil and gas regulations can have deep and damaging effects on Colorado’s economy, according to researchers at the University of Colorado:

A statewide, 2,000-foot buffer zone between drilling rigs and homes, schools and businesses would take a hammer to Colorado’s oil and gas industry, already reeling from low commodity prices, as well as the state’s wider economy, according to a new study from University of Colorado Boulder’s Leeds School of Business.

Such a setback requirement “could result in slower economic growth” for Colorado’s economy as well as state revenue, according to the study released Wednesday.

The study said its forecast on the effects of a 2,000-foot setback included:

Production of oil and gas statewide could drop between 25 percent and 50 percent;
A $6 billion to $11 billion drop in Colorado’s gross domestic product;
A loss of 33,000 and 62,000 jobs between 2015 and 2030;
Loss of $214 million to $428 million in per year in tax revenues from oil and gas companies.

Given that the Colorado Oil and Gas Conservation Commission just concluded a round of rulemaking based on the Governor’s Oil and Gas Task Force recommendations from 2015, new and more onerous regulations like the setback examined by CU researchers or the more dangerous proposed fracking bans and various setback ballot measures could have catastrophic consequences on top of the recent commodity downturns impacting the state.

Anti-energy activists have intimated that even more proposals could be in the offing for 2016:

Larimer County resident Katherine Hall, who testified in favor of local control, said she would not be surprised if a citizen-initiated measure ended up on November’s ballot.

“The final outcome of the rule making does not go far enough to ease the concerns of Colorado citizens,” Hall said.

Remember when this blog said the Oil and Gas Task Force was merely kicking the can down the road?

We’ve made our way down that road, and the can is about ready to explode.

In the near term, the COGCC rules could go into effect in as few as 6 to 8 weeks, subject to review by the legislature and the Attorney General:

Compton said the months of rulemakings were “the most difficult” that he’s been through — a string that included the 2008 wholesale overhaul of Colorado’s oil and gas regulations.

The commissioners voted 5-4 to define “large” oil and gas facilities, the threshold that triggers the communication process between energy companies and local governments, as eight new wells and storage tanks that can hold up to 4,000 barrels of oil and natural gas liquids. The commissioners restricted the rule to large facilities in “urban” areas, defined as 22 buildings within 1,000 feet of the wellsite, rejecting request from some quarters to take the rule statewide.

But the rules appear to exceed the recommendations, and create ambiguities that will only incur more procedural red tape:

The process approved by the COGCC will triple, from 90 days to 270 days, the amount of time needed to get a hearing on a large project before the oil and gas commissioners, said Tracee Bentley, the executive director of the Colorado Petroleum Council, an arm of the American Petroleum Institute.

The final rules also said facilities should be “as far as possible” from existing buildings, a phrase Bentley called “vague and confusing” that would cost energy companies time and money to comply with.

The commissioners also rejected a request that existing surface-use agreements between energy companies and landowners be grandfathered, and allowed to avoid the notification and consultation process.

“We feel the industry brought reasonable solutions to the table that were largely ignored, and the rules still go beyond the recommendations of the task force,” said Dan Haley, president and CEO of the Colorado Oil & Gas Association.

Bringing reasonable solutions and constructive dialogue should be expected of the industry, but the same can’t be said for the forces calling for the end of natural resource development altogether:

Activists addressing a state oil and gas rulemaking hearing this week levied a barrage of accusations and insults toward state officials and even renewed calls to eliminate Colorado’s state agency responsible for regulating oil and gas development.

Speaking at the Colorado Oil and Gas Conservation Commission (COGCC) hearing, Lauren Swain, representing national climate activist group 350.org, largely ignored the fact that the rulemaking was supposed to be the focus of the hearing and instead used her time to complain about the agency. From Swain’s testimony:

“With this new proposed rule, the COGCC has proven once again that it can no longer be considered a legitimate state agency because the COGCC continues to facilitate the pace of hazardous polluting oil and gas drilling and fracking operations near homes and schools subjecting communities to the risks of toxic emissions, spills and explosions.”

But Swain took her testimony even farther by lobbying for disbanding the agency in favor of creating a new agency that would “swiftly” transition the state to 100 percent renewables using the Solutions Project at Stanford as a guide. From Swain:

“The COGCC must be replaced with one or more agencies charged with one, facilitating to protect Coloradans from the harmful impact of oil and gas production and two, to aid and foster Colorado’s swift transition to one hundred percent renewable energy production and consumption using the Solutions Project developed at Stanford University as a guide.”

Up next was testimony from an activist who has previously accused the oil and gas industry of having a “personality disorder” and of being “socially deviant.” This time, Amanda Harper called oil and gas producers a “short sighted, selfish and sociopathic industry.”

Not a lot of balance or reasonable tone, it seems.

Colorado Governor John Hickenlooper offered his comments at an event that saw journalists kicked out and required an open records request to seek audio of the Democrat’s comments–and while he questioned the leverage of the anti-energy groups to get the proposed measures on the 2016 ballot, he surreptitiously argued that the COGCC rules discussed above had, in his opinion as well, gone further than his own Oil and Gas Task Force had recommended:

“I haven’t heard of any funding source for any of them,” Hickenlooper began. “Like the normal, large funders of those initiatives, you know, I haven’t heard of. So, maybe they’ll get on the ballot, but without a lot of money, I don’t think they’re going to do well. I can guarantee you there’ll be money spent showing that, the, the problems associated with any of those initiatives.” (Forum Q & A – 17:05)

Moments later, he added, “Again, we’re going further even than the commission recommended, and in certain cases, to try and give local, local municipal elected officials more, a greater role.”

Further.

We’ll see how that plays out.

***

The Environmental Protection Agency’s Clean Power Plan received a stay of its own last week when the DC circuit refused to grant a stay of the rule, forcing 26 states to appeal the case to the US Supreme Court.

Meanwhile at the Colorado legislature, Sen. John Cooke (R-Greeley) has championed measures designed to keep the implementation of the Clean Power Plan at arms’ length, allowing lawsuits to be completed before the state moves forward, something Coloradans clearly support:

Two weeks into the 2016 legislative session, Sen. John Cooke, a Republican from the heart of the Front Range oil and gas patch in Greeley, has introduced two bills that take aim at the plan, which requires power plants to cut carbon emissions by 32 percent from 2005 levels by 2030, largely by shutting down or converting coal-fired plants to alternative fuel sources.

One of Cooke’s bills couldn’t be more timely. After several state attorneys general, including Colorado’s Cynthia Coffman, failed to win a stay of the plan from a federal court Thursday, Cooke’s Senate Bill 46 jumps into the ring like a tag-team wrestler, working from another angle to stall implementation of the Obama administration plan.

“Well, it wasn’t really a surprise that the court in D.C. struck down the stay request,” Cooke told The Colorado Statesman. “Unfortunately, the bill is more relevant now.”

The “Preserve State Clean Power Plan Options Act” aims to “slow down the implementation process” in part by suspending it “until all [related] lawsuits are done,” Cooke told members of three rural Colorado advocacy groups, including some representing coal mining areas, who were visiting the Capitol Friday.

In effect, Colorado wouldn’t need a stay from a court because it would have passed a stay for itself, written by Cooke.

Cooke’s other bill, SB 61 or “Ratepayer Protection Act,” would require the Colorado Department of Public Health and Environment to pay for costs generated as a result of Clean Power Plan implementation.

***

NEWS ROUNDUP:
Silverton punts on Superfund designation

How the EPA handled Flint, MI water contamination, vs. Animas River spill

Plunging oil prices means lower severance tax revenue in Colorado

Lower gas prices? Let’s raise taxes!

Anti-energy activists oppose coal development on the Western Slope. News at 11.

Trading: Coal extraction for sage grouse habitat

Legislative Preview: 2014 Energy Bills

January 24, 2014 by michael · Comments Off
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
fixture.”

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.