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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