Thursday, March 17, 2011

Amendment 37 retrospective

Colorado's rural San Luis Valley has become the epicenter of a growing debate over the state's renewable energy future.  Much has been written about billionaire Louis Bacon's opposition to Xcel Energy's high-voltage transmission line proposal, intended to siphon gigawatts of solar energy out of the San Luis Valley to the state's "urban demand centers".

But little has been said of the growing numbers of San Luis Valley locals who are self described, Yes In My Back Yard (YIMBY) supporters of distributed renewable energy generation in their back yards, their neighbors back yards and crop circle corners and every other suitable location in the vast human-altered environment. 

Coloradans came together in 2004 to pass Amendment 37, the nations first voter-approved Renewable Energy Standard (RES).   Since then, the legislature has twice amended the RES.  First to allow utilities to increase ratepayer costs to 2% annually, (from the original $.50/mo., but see below), and then to raise the RES to 30% by 2020.

The original intent of the Renewable Energy Standard was, "to save consumers and businesses money, attract new business and jobs, promote development of rural economies, minimize water use for electricity generation, diversify Colorado's energy resources, reduce the impact of volatile fuel prices, and improve the natural environment of the state".  

In the 6 years since its adoption, has the RES voter mandate been fulfilled so far?

In its interactive website, Who's Got the Power?, the Union of Concerned Scientists concludes that, "Unfortunately, we're letting utilities decide for us where our money should be spent - and they're not making smart or clean decisions". "They're sending our money out of state, buying dirty coal, and shipping off our clean energy resources overseas."

There is also evidence that utilities are using the RES to grow a bigger energy pie (click on "SLV Dog and Pony") and to justify lucrative but unnecessary new transmission. Because the RES has no replacement requirement, utility companies view renewable energy as an add-on that allows them to expand combined fossil and renewable energy markets.

Contrary to what Amendment 37 voters called for, the cost of energy in Colorado has also increased steadily, and at a much faster rate than the national average. According to the Denver Post, the bulk of this increase can be attributed directly to
the $1.4 billion Comanche 3 coal-fired power plant outside Pueblo.  But as Xcel Energy CEO Kelly warns, ratepayers should expect future rate increases to pay for new renewable energy infrastructure.

Recent testimony by
Richard Mignogna, the Public Utility Commission renewable energy expert, reveals that Xcel Energy is abusing the RES to reap profits from rate payers well beyond the 2% allowable cap.  According to Mignogna, "The Company has far exceeded its available budget under the RESA and is projected to end 2011 with a deficit of approximately $97 million. While PSCo typically argues that it is only charging customers the two percent allowed by the statute, that argument is disingenuous. As we now know, the Company has been loaning money to the RESA, earning its rate of return on the funds advanced, so that it can acquire more RECs than it needs only to sell them into California so that it can then claim a percentage of those proceeds" [emphasis added].

Furthermore, Xcel is pushing massive central-station solar power plants that will provide relatively little benefit to rural communities when compared to small to medium scale, locally-owned distributed generation.  People in the San Luis Valley largely expect absentee-owned centralized power stations to destroy the environment and siphon profits out of their rural communities.   

But the RES seems poorly designed to promote locally-owned renewable energy development, especially in rural communities that lack investment capital.

These trends point to some serious failings of the Renewable Energy Standard.  Rather than reducing costs, the RES is costing Coloradans more while fueling more dirty energy use, not less.  If implemented, impacts from new transmission and massive industrial solar development are likely to ruin, rather than "improve the natural environment of the state", as intended.

At the same time Xcel and other utility companies have drastically reduced funding for local solar generation, the primary source of green jobs, that threatens to bring Colorado's burgeoning renewable energy economy crashing down.

As I've written elsewhere, the Feed-in Tariff (FiT) (or Clean Local Energy Accessible Now or CLEAN contract), is the primary policy tool used around the world for spurring rapid renewable energy development cost-effectively, while creating a stable green jobs economy that benefits a broad cross section of the economy including rural communities.

The key has been the adoption of policies that
guarantee access and investment security to ALL renewable energy investors, big and small.   Opening renewable energy market to millions of interested residential and small business investors will result in more, across the board economic benefits, less environmental impacts and a more democratic energy sector.

In just a few short years, Germany installed more than half the world's solar generation (8 GW in 2010 alone) from hundreds of thousands of small, distributed solar PV systems and created tens of thousands of quality green jobs in the process.

Ontario, Canada launched North America's first FiT in 2009 and has now set the stage for closing all its coal-fired power plants by 2014. Not only that, but its domestic content requirement is expected to generate 43,000 new jobs and dozens of new manufacturing plants to support the 5,000 MW of new clean energy.  If adopted, California's new FiT is expected to generate $2 billion in additional tax revenue and $50 billion in new investment, while adding an average of 50,000 new jobs a year for a decade.

The FiT/CLEAN originated in the US during the first energy crisis of the 1970's.  But following consolidation of the utility industry in the 1990's, the US is now one of the few developed nations of the world that doesn't have one.  

In Colorado, passage of the Community Solar Gardens Act in 2010 was hailed as a great victory for community power advocates.   Even so, Solar Gardens are only allowed to generate 20% over the average subscribers energy use and a cumulative total of 6 MW in the first two years.  Whether Solar Gardens will be allowed to proliferate beyond this small scale, remains to be seen.   

Efforts to develop local clean energy in the rural San Luis Valley have consistently run into barriers from Xcel Energy. Despite the uphill battle, interest in distributed renewable energy generation remains high.  In Saguache County alone, no less than 9 separate initiatives to bring affordable, clean energy to local communities are underway.

Until there's a state-wide political counter weight to utility opposition to proven policies like CLEAN, the success of these initiatives will be hard fought and energy democracy little more than a dream.