Impacts of renewable energy mandate still unclear

To some it’s the “straw that broke the camel’s back,” compelling Weld County Commissioners to threaten to secede from the state of Colorado – possibly taking as many as five other rural counties along. To others it’s a two-buck-a-month investment in the future of powering the state with clean energy resources.

But what the actual fallout will be from a new law compelling rural electric providers, primarily Tri-State Generation and Power, to double the amount of power acquired from renewable energy resources from 10 percent to 20 percent by 2020 is far from determined. To wit, not only is it not all over, especially the shouting, but it has yet to really be determined yet what the shouting is to be about.

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“We haven’t had a chance to meet with our board and decide anything,” said Jim Van Someren, communications manager for Tri-State, which has previously said the new law would cost the company as much as $2 billion to enact. Tri-State provides all of the power to Poudre Valley Rural Electric Association, which serves much of rural Larimer County.

The new law has been controversial since it was introduced in the 2013 Colorado legislative session as Senate Bill 252. Gov. John Hickenlooper, while calling the bill “imperfect” and tasking a legislative committee to take another look at the details, went ahead and signed it into law in early June, leaving much of the specifics regarding how much Larimer County rural ratepayers can expect to pay up in the air. Hickenlooper said the bill will cost rural electric association consumers throughout the state about $2 a month, though costs could increase as much as $40 a month for irrigation.

“We believe that this legislation, while imperfect, is necessary to keep diversifying electric generation and reaping the associated rate, economy and environmental benefits,” the governor stated.

As the law is written, it appears that rural electric bills could rise 2 percent each year, meaning in the end there could be in excess of a 14 percent increase attributed to renewable power generation. Tri-State has also noted that it could adjust rates for the different states it services so that consumers in other states are not paying for the mandate in Colorado.

“We aren’t opposed to creating renewable power,” said Van Someren. “But we weren’t allowed to be at the table for negotiations on this bill.”

While still enjoying about an 18 percent subsidy, the cost of wind energy in Colorado is almost the same as energy that’s generated from coal or natural gas.

Xcel Energy planned to add another 550 megawatts of wind power to its system in June, expanding a 17-farm wind system that already provides 2,177 megawatts of power and, at times, 50 percent of all the power used in the state. The Colorado Public Utilities Commission, however, balked at the proposal.

Under the new law, renewable energy is very strictly defined, omitting hydropower that already accounts for about 12 percent of Tri-State’s energy portfolio. Van Someren said the company was making good strides toward meeting the 10 percent mark previously required by law, but now is worried about having to create the transmission lines and natural gas backup that wind power requires.

Whether or not that will end up costing $2 billion has yet to be seen. “Those were preliminary calculations,” Van Someren said.

Troll across the Internet, of course, and it’s possible to find all sorts of information regarding how much renewable energy mandates are costing ratepayers. Here in Colorado, however, Xcel spokesman Gabriel Romero said that the average consumer bill has only increased by $9 over the last seven years, from $60 to $69, or less than 2 percent a year. Xcel won’t have any trouble meeting its 30 percent renewable energy quota by 2020, and Romero noted that the total amount consumers pay for increased renewable energy production is capped at 2 percent, meaning the average consumer is paying less than $1.50 per month.

“We have bought wind production because it was right on line with the cost of coal and (natural) gas production,” Romero said. “They have been good-quality purchases in any book.”

Xcel was aided by getting into the game early, as many of its wind farms are located near existing transmission lines, reducing cost. The company was also assisted by its Clean Air-Clean Jobs plan, under which a number of aging coal-powered plants were already being converted to natural gas. As backups to wind-generated electricity, natural gas plants can be more easily powered up or down than coal plants.

Part of the answer to Tri-State’s predicament may lie just across Colorado’s northern border, as the state of Wyoming is seeking to shop wind-generated electricity and is studying the economic benefit of building a transmission line to Colorado.

“We may have to go out of state to meet this mandate,” Van Someren said. “But that would be unfortunate; part of the idea behind these mandates is to create the economic benefit of those jobs.”