New law intensifies renewable energy standards debate

Phil Castle, The Business Times

The debate over renewable energy standards has intensified following the enactment of a controversial state law increasing those standards in Colorado.

Those in favor of the new law argue higher standards have promoted the development of renewable energy industries and along with them investments in new projects and the creation of new jobs, all the while reducing so-called greenhouse gases believed to cause global warming.

Those in opposition to the law say the measure was pushed through the Legislature with little consultation with the electric cooperatives and utilities expected to meet the higher standards and could result in rising utility bills in rural areas of Colorado that have yet to fully recover from recession.

Colorado Gov. John Hickenlooper signed into law Senate Bill 252. The measure doubles the proportion of electricity that must be provided by renewable energy sources to 20 percent for cooperative electric associations serving more than 100,000 meters and utilities that generate and supply power to electric associations. The 2020 deadline remains in effect.

SB 252 most directly affects the Intermountain Rural Electric Association, which serves customers south of Denver, and Tri-State Generation and Transmission Association, a wholesale power supplier based in Westminster that provides electricity to 18 electric associations in Colorado.

The measure also allows associations to add a surcharge of up to 2 percent of monthly utility bills to help pay for projects to meet higher renewable energy standards. The standards will be lowered if they can’t be achieved without rate increases above 2 percent.

The measure is the latest in Colorado establishing and increasing renewable energy standards. In 2004, Colorado voters approved a constitutional amendment setting a 10 percent standard by 2015 for investor-owned utilities. State legislation enacted in 2007 doubled the standard to 20 percent by 2020. Legislation enacted in 2010 increased the standard to 30 percent.

While signing SB 252, Hickenlooper acknowledged the measure was “imperfect.” He also issued an executive order establishing an advisory committee to address the most contentious issues: the feasibility of achieving the 20 percent renewable energy standard by 2020 and the potential costs involved. The committee will include representatives from the Intermountain Rural Electric Association, Tri-State and Colorado Rural Electric Association as well as representatives from the renewable energy industry and environmental advocacy groups.

Legislative changes could be needed, Hickenlooper said.

Grand Valley Power — an electric cooperative that serves about 17,000 customers, most of them in Mesa County — is largely unaffected by the new law because it purchases power from Xcel Energy, a utility with a large portfolio of renewable energy sources.

Bill Byers, public relations manager for Grand Valley Power, said the cooperative already exceeds the 20 percent renewable energy standard.

What’s less clear for Grand Valley Power, Byers said, is a provision of the law requiring cooperatives serving less than 100,000 meters to provide 1 percent of total electric sales from distributed generation — energy generated by facilities located near end users.

About 100 members of Grand Valley Power generate electricity from individual solar energy installations. The cooperative also operates a small solar farm in Grand Junction.

Given the ambiguity in interpreting the law, Byers said it remains unclear whether or not Grand Valley Power will meet the distributed generation standard or offer incentives to promote additional solar installations.

Dan McClendon, general manager of the Delta-Montrose Electric Association, said the specific ramifications of the law for the Montrose-based cooperative aren’t yet certain. They will depend, he said, on the response by Tri-State. The Delta-Montrose Electric Association serves about 32,000 customers

As for distributed generation, a hydroelectric project on the South Canal already accounts for the maximum

5 percent of  electricity DMEA is allowed to generate under its contract with Tri-State, McClendon said.

Zach Beamon, an energy consultant with High Noon Solar in Grand Junction, praised SB 252 for increasing awareness of solar power and other renewable energy sources across a larger area of Colorado.

Utility rebates and federal income tax credits offer incentives in installing solar systems and shorten the time it takes to recover the investment in those systems, Beamon said. Adding in the benefits of lower utility bills, homeowners can recoup their upfront costs in about 10 years.

High Noon Solar offers a 12-year loan program with no down payment and low interest rates that make monthly payments similar to utility bills, he said.

Lou Villaire, co-owner of Atlasta Solar in Grand Junction, said renewable energy standards and tax credits have accomplished what they were designed to do in helping to “kickstart” the development of renewable energy industries, including solar and wind power.

According to an analysis conducted by the Governor’s Wind Energy Coalition, renewable energy standards had led as of 2011 to the generation of a total of more than 33,000 megawatts of electricity from renewable energy sources in 30 states. An additional 103,000 megawatts of electricity from renewable energy sources is projected by 2025. Renewable energy standards also have resulted in substantial investments in new projects, including $2.5 billion in wind power alone, according to the analysis.

A total of 37 states have enacted renewable energy standards or goals, and utilities are meeting about 96 percent of renewable energy goals. Colorado is among several states that remain ahead of schedule, the coalition reported.

As the price of photovoltaic panels continues to drop, solar power will become more competitive with traditional energy sources, Villaire added.

Even as electric cooperatives and Tri-State work to expand generation from renewable sources, they’ve criticized SB 252 for what they argued was little consultation beforehand as well as the potential for increased utility bills. New transmission lines could be required to deliver electricity from renewable sources like wind farms. New power plants could be needed to balance out fluctuating generation from renewable sources.

“Despite our efforts to reach out to proponents, the bill was introduced in the Legislature with no consultation with the state’s cooperatives and was rushed through the process with little time and effort by the legislative leadership to find compromise,” said Kent Singer, executive director of the Colorado Rural Electric Association.

State Sen. Steve King, a Republican from Grand Junction, was among those opposed to the measure. “Senate Bill 252 will directly impact people on fixed incomes in rural areas who are just barely hanging on in this economy. I am very disappointed that Gov. Hickenlooper would sign yet another measure that only gained bipartisan opposition and puts seniors at risk.”

Club 20 — a coalition of businesses, governments and individuals in 22 counties in Western Colorado — joined a lengthy list of business and industry groups opposed to SB 252.

Bonnie Petersen, executive director of Club 20, also voiced concerns about the potential for higher utility bills in rural areas that have yet to recover from the recession. “This is just another burden added on to that.”