Thursday, April 18, 2013

KC Electric Opposes SB 252

All Hands on Deck!  We Need to Quickly Stop SB 13-252

By Timothy J. Power
General Manager
KC Electric Association

Why are special interests in Denver collaborating with primarily urban legislators to ram through legislation to tell us how to live in rural Colorado? Senate Bill 13-252 imposes draconian renewable energy mandates on Colorado’s electric cooperatives (including KC Electric) that will raise their members’ electric rates.

It is sponsored by Senate President John Morse (D-Colorado Springs), Senator Gail Schwartz (D-Snowmass), Speaker of the House Mark Ferrandino (D-Denver) and Representative Crisanta Duran (D-Denver). The bill was introduced April 3 and had its first committee hearing April 8, only five days later. In contrast, SB 13-001, a much less controversial bill on tax credits for working families, was introduced January 9 and had its first hearing three months later.


This gave the electric co-ops no time to review the bill, which was written behind closed doors by special interests and legislators, or to thoroughly understand all of its affects and costs for members. Keep in mind, electric cooperatives supported a bill in 2007 to impose a 10 percent renewable energy standard on ourselves. This bill was not imposed lightly — cooperatives worked with legislators, the Governor’s office, renewable advocates and environmentalists to craft workable legislation that achieved goals we all agreed on.

But this bill is now being rushed through the legislative process without the benefit of an open and honest dialogue. Instead of being referred to the Senate Energy Committee, which has some familiarity with energy issues and electric cooperatives, it was sent to the Senate State Affairs Committee. This is the committee handpicked by Senator Morse to approve controversial bills at his direction.

SB 252 directs Tri-State Generation and Transmission to generate 25 percent of the electricity it sells in Colorado from defined renewable resources. It adds two new sources to the approved list, methane captured from coal mines, and electricity generated from landfill waste using a process known as pyrolysis. While it is a good idea to utilize these new technologies, neither of those new resources have a significant availability in Colorado at this time. The bill also requires cooperatives to achieve at least 1% of their retail sales from expensive distributed generation.

The bill sponsors say Tri-State needs to have similar renewable requirements as Xcel (30% by 2020).  That sounds fair on the surface, but when you look at how the utilities are made up, you realize it’s far from fair.  Xcel is a vertically integrated utility.  It generates electricity and distributes that power to the end user.  Xcel serves roughly 40 meters for every mile of line. Tri-State, on the other hand, is not vertically integrated.  It generates power and sells it to coops.  The coops distribute it to the end user. 

And the coop end users are predominately rural.  In KC Electric’s case, we serve about 2 meters for every mile of line.  So, for Xcel and KC to serve 1,000 meters, Xcel will only need to build 25 miles of line (25 miles X 40 meters/miles = 1,000 meters) while KC will need to build 500 miles!  Who do you think has higher expenses per customer?  Costs incurred by Tri-State will be exorbitant and a portion of those costs will be billed to KC.  KC will need to raise rates significantly to just break even.  It already costs KC much more just to provide service to the average customer than it does Xcel.  This legislation will only make that disparity worse.

Defenders of the bill claim that rural consumers shouldn’t be concerned about higher electricity costs because there is a rate cap to protect them. However, President Morse couldn’t accurately explain how the cap works in the hearing and later amended the bill to clarify that it would actually compound over the six years the cooperatives have to comply. In fact, even he acknowledged the increase will be well over the 2 percent he stated at the beginning of the hearing.

Given the very short time frame it had, Tri-State ran the requirements of the bill through some standard industry models to estimate rate impacts. It estimates the bill will cost rural consumers $8,000 per meter on average. How do they arrive at this figure? Tri-State will have to buy or build new renewable resources. It will have to also retire existing coal plants early that still have years of useful life. Why? Because at this point Tri-State has more than enough generation resources to meet its members demands.

Tri-State will be paying twice for the same amount of generation. But wait, it gets better. Because renewable resources are intermittent, meaning they only produce when the wind blows or the sun shines, Tri-State will have to purchase or build additional gas generation to back up the new renewables. So, in effect Tri-State will be paying three times for the same amount of electric capacity.
Under the bill, Tri-State must pass these costs to only their Colorado member systems, because the bill prevents the expenses from being divided among all 44 of Tri-State’s member owners, which includes cooperatives in New Mexico, Wyoming and Nebraska. Tri-State estimates the total cost of SB 252 to be between $2.9 billion and $4 billion (with a B)!

All of this was done without consulting with the rural cooperatives that have to implement this mandate or the rural consumers required to pay for it. Why not consult with our consumers and directors? One member of Senate leadership recently told NPR that she had more important thing to do than consider the needs of rural special interests.

As a co-op director from the Eastern plains said during the hearing, “no bill should be passed without a thorough understanding of its consequences to all parties involved.” Both the substance of SB 252 and the questionable “back-room-deal” manner in which it was introduced are reasons enough to oppose it.

We strongly urge our readers to contact the Colorado State Senators and Representatives to stop this bill from going into effect.  Most, if not all, of the rural senators and representatives are against the bill.  The legislators to contact are those that serve the Denver and mountain areas.  You can find their contact information online at http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/DirectorySen?openframeset

Please act quickly to help us stop this before all of Eastern Colorado is hit with major power bills in the years to come.

2 comments:

  1. "Affected REA's were approached since 2010 to participate in the bill drafting; their response was to turn their backs until they realized about a month ago they could not defeat the bill."
    Mike Foote

    ReplyDelete
  2. "Setting the renewable energy standard in rural Colorado"
    "Senate Bill 252 is a practical extension to our states rich history in setting renewable energy standards since 2004. The coalition of political leadership, business and environmental interests supporting this bill understand these benefits through the lens of past successes. And with the recent announcement by Secretary of Agriculture Tom Vilsack to expand funding opportunities for rural cooperatives that commit to a renewable future, rural Colorado is well-suited to leverage its vast natural resources into long-term opportunities for the rural residents of our state."
    Let’s not miss this opportunity to lead."
    Michael Bowman
    http://blogs.denverpost.com/opinion/2013/04/29/setting-the-renewable-energy-standard-in-rural-colorado/37666/

    ReplyDelete