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Gazette Premium Content Governor mulls energy bill that Colorado rural utilities call costly

By Megan Schrader Published: May 15, 2013

Gov. John Hickenlooper must weigh whether to attempt to reduce the state's carbon dioxide emissions and consequently raise utility rates in rural Colorado during a recession and drought as he considers whether to sign Senate Bill 252.

Hickenlooper, a Democrat who got his start as an oil and gas geologist, said last week he is mulling the bill that would require two rural-electric cooperatives to generate 20 percent of their energy from renewable sources such as wind and solar by 2020; the standard is now 10 percent.

"I'm not someone who thinks the world is going to end, that climate change is completely doom and gloom," Hickenlooper told reporters at a post-legislative session news conference last week. "But there are an awful lot of really smart people who are convinced and have compelling evidence that climate is changing and carbon emissions are a part of that."

Scientists announced last week that carbon dioxide levels are the highest they've been in millions of years, coming in at an average daily measurement of 400 parts per million or .04 percent of the earth's air.

And Colorado has seen the largest increase in carbon dioxide emissions of any state over the past decade despite renewable energy standards that have been in place since voters approved Amendment 37 in 2004 and began requiring companies to invest in renewable resources.

Lawmakers have since expanded and increased those renewable requirements to be some of the strictest in the nation. Investor owned utilities - Xcel Energy and Black Hills Energy - are required to use 30 percent renewable resources by 2020. Municipal utilities are at 10 percent.

And if SB252 is signed into law, two of the state's 23 electric cooperatives, which are non-profit companies organized to purchase and distribute electricity to rural and hard to serve areas, would have a 20 percent standard.

The two companies are Intermountain Rural Electric Association and Tri-State Generation and Transmission Association.

From their perspective the new goal, which doubles the standard in the course of six years, is unachievable and will be a dramatic hit to their ratepayers. Both organizations have actively lobbied for a veto.

Tri-State sells electricity to 18 of the 22 cooperatives in Colorado and price increases to meet the new renewable standards would trickle down to those small energy providers even though small cooperatives are exempt from the requirements in the bill.

"The preliminary figure we've come up with is the whole price tag between now and 2020 is $2 billion," said Jim Van Someren, spokesman for Tri-State.

Senate President John Morse, D-Colorado Springs, said his bill would cap rate increases due to the new mandate at a 2 percent utility bill increase. After that threshold is met, the cooperatives are exempt from reaching the 20 percent standard.

"I am dumbfounded that they say that with a straight face because it's a bald-faced lie," Morse said. "We need to shift to renewable energy and the only way to do it, is to require it, because the market will never generate it on its own."

Tri-State owns a massive solar field in New Mexico and wind farms in Colorado, but most of its power comes from coal and gas plants.

"We supported legislation in 2007 which set the renewable energy standards for co-ops in the state at 10 percent," Van Someren. "We were on target, in fact, a little bit ahead of schedule to meet that standard."

Intermountain has more than 140,000 customers in predominately seven counties.

It buys power from hydroelectric dams operated by the Western Area Power Administration, owns a 25.3 percent share of the new Comanche III coal power plant in Pueblo and has a contract with Excel Energy to purchase any remaining electric needs. Hydropower does not count in Colorado as renewable energy, Morse said, because the state doesn't want to promote more ecologically damaging dams.

Pat Mooney, general manager of Intermountain, said the company currently receives enough renewable energy credits from a contract with Excel to account for about 9 percent of its generation. However, he said, there is little-to-no capacity for that to increase in the next six years because it has enough energy to meet current and future demands. Its contract with Excel is such that the company agrees to provide Intermountain with enough electricity to meet demand at any moment in time, but it also prohibits Intermountain from striking contracts with other electric providers.

"You can negotiate anything you want to, but at what price is really the question," Mooney said.

The cooperative isn't in the business of developing power plants, wind turbines or solar fields, Mooney said. It is a wholesale electric purchaser and distributor.

Beyond the cost to his customers, Mooney said he doesn't buy into the renewable energy band-wagon. He said not only is it an expensive and unreliable form of energy, but it forces utilities to operate inefficiently - sometimes operating coal and gas plants at less than optimal levels.

"I'm sure it has its place," Mooney said. "But the fact of the matter is it becomes a problem to manage and you have to have the resources to manage it."

When it comes to the rising levels of carbon dioxide in the atmosphere, Mooney said he is skeptical the 400 parts per million mile-marker reached recently holds the significance attributed to it.

"Plants can't live with fewer than 200 parts per-million and yet we have people saying that with more than 400 parts per million we're all doomed," Mooney said. "I'm struggling with that concept."

Hickenlooper said regardless of whether the earth has reached a critical point for global warming, SB252 could be a good insurance policy for the state.

"In a way that's what this entire renewable energy program is trying to do, is to make sure we have insurance . and we are using less and less carbon emissions," he said.

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Contact Megan Schrader

719-286-0644

Twitter: @CapitolSchrader

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