Wednesday, February 11, 2015

Colorado Senate Republicans Attack the State's Renewable Portfolio Standard

By Nick Lawton, Staff Attorney

Colorado has joined the fray over the fate of Renewable Portfolio Standards (RPSs). On Thursday, February 5, Republicans in the Colorado Senate passed a bill that would substantially erode renewable energy requirements for both investor-owned utilities (IOUs) and rural electric cooperatives. Although likely to fail in Colorado’s Democrat-led House, the bill offers yet another demonstration of the poor political theater behind the opposition to renewable energy—echoing repeal efforts in West Virginia and several other states.

Colorado was the first state to enact an RPS by popular demand through a ballot initiative in 2004. Initially, the RPS applied only to IOUs and required only 10% of their energy to come from renewable resources by 2020. However, the Colorado legislature has expanded the RPS several times. It first doubled the renewable energy requirement in 2007 and also imposed a 10% renewable energy requirement on rural electric cooperatives. In 2010, the legislature again expanded the requirement for IOUs to the current level of 30%. Finally, in 2013, the legislature doubled the requirement for cooperatives to the current level of 20%. Each amendment left the compliance date of 2020 intact.

Now, Republicans in the Colorado Senate have passed a bill along party lines to reduce renewable energy requirements by 25% for cooperatives and 50% for IOUs. Thus, both cooperatives and utilities would need to obtain only 15% of their energy from renewables by 2020.

As Tessa Cheek at the Colorado Independent has reported, the debate about the RPS has proceeded among predictable party lines. Nominally, Colorado Senate Republicans are aiming to keep electricity rates low, especially for rural communities. Senator Ray Scott (R.-Grand Junction) argues that the RPS burdens consumers, while Senator Tim Neville (R.-Littleton) argues that the RPS has caused Colorado’s electricity rates to swell from among the cheapest to among the most expensive in the West. Colorado’s Democrats disagree. Senator John Kefalas (D.-Fort Collins) notes that renewable energy has led his district to enjoy some of the state’s lowest energy rates. Similarly, Senator Matt Jones (D.-Boulder) argues that “it’s critical to keep [the RPS] because renewables are a job creator and cheaper.” Senator Jones noted that utilities in Colorado have chosen to build wind farms because they are cheaper than fossil fuel-fired power plants.

The bill’s main sponsor, Senator Scott, continues to peddle a fundamentally flawed argument against the RPS. I blogged recently about Senator Scott’s lofty-sounding but vapid argument that ratepayers should not be on the hook for renewable energy, which ignores the fact that ratepayers ultimately fund all utility investments, whether renewable or not. Now, E&E News quotes another misleading argument from Senator Scott: “If it's a great business model, go out and build yourself a nice wind farm [without tax breaks and alternative energy requirements]. Do what everyone else does, come back to the open market and say, 'Hey, I've got power for sale.'" Two fatal flaws plague Senator Scott's sound bite. First, the argument that renewable energy should not receive subsidies ignores the facts. All energy sources have received subsidies, and the subsidies for oil and gas have dwarfed the subsidies for renewables. The following chart of historical average annual subsidies from a report by DBL Investors, a venture capital company, aptly illustrates the point: on an average basis, fossil fuels have received far more money in subsidies each year than renewables have.

Second, and more fundamentally, there is no such thing as an “open market” for electricity in Colorado. Utility purchases of electricity—which of course ratepayers ultimately pay for—are tightly regulated. Utility investments are either regulated by the Public Utilities Commission or through arrangements under the Public Utility Regulatory Policy Act, a federal law. Either way, the choices about how to generate electricity are government choices; the electricity market is not an “open market.” Rescinding or weakening an RPS will not make the electricity market free; such a move would only guarantee that the state's electricity remains dirty. 

As for Colorado’s utilities, Colorado’s rural electric cooperatives do not favor the Republican repeal effort. A recent editorial by Kent Singer, executive director of the Colorado Rural Electric Association, notes that “we are not advocating a reduction of the ‘20 percent by 2020’ requirement.” The cooperatives have proposed their own bill, which would eliminate a distributed generation requirement, but it would not reduce the overall amount of renewable energy required. Meanwhile, IOUs are on track to meet existing requirements. For example, Xcel Energy reports that it is “ahead of compliance in all categories of the RES (Retail DG, Wholesale DG, and non-DG) and will be able to meet the 2014 RES without additional generation acquisitions.”

Because Colorado’s RPS thus seems to be working, the likeliest explanation for the party-line RPS reduction effort is politics. Colorado’s Senate Republicans appear to believe that opposition to renewable energy will help bolster their political fates. This calculation appears consistent with the repeal of West Virginia’s RPS. However, opposing renewable energy remains bad politics. For example, a 2013 nation-wide survey of Republicans revealed that 77% supported renewable energy, and that 70% of those in support of renewables believed we should develop them “immediately.” More locally, a 2014 survey of Colorado’s voters revealed that 76% would be more likely to vote for a candidate who promotes renewable energy. With numbers like those, it would seem that opposition to renewable energy is likely to backfire.

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