February 28, 2011

Xcel Energy blasted for burying bill to up small-scale renewable energy projects

Backers of a bill that would have prompted the study of a “feed-in-tariff” program in Colorado to connect renewable energy generators to the grid say the state’s major utilities quietly killed the legislation in committee last week because of their “continuing love affair with fossil fuels.”

HB 1228 (pdf), sponsored by Rep. Judy Solano, D-Brighton, was shot down in the House Agriculture, Livestock, & Natural Resources Committee, mostly because of the no votes of seven Republicans. Publicly owned Xcel Energy, the state’s largest utility, and the Colorado Rural Electric Association – representing most of state’s rural electric co-ops – opposed the bill.

“Xcel’s business model relies too heavily on the building of large central generation facilities that have major inherent liabilities for grid security and environmental impacts,” said consultant Becky English of Denver-based Rebecca English and Associates, who worked with Solano for the past eight months on the bill. “Distributed generation of clean renewable energy is the wave of the future; feed-in tariff is the market-balancing policy mechanism that gets us there.”

Feed-in-tariff (FIT) is being used in parts of Canada and Germany, where it allows individual property owners and businesses to generate power using small-scale solar, wind, biomass or hydro installations and sell that electricity back into the grid at a premium rate that’s absorbed by all ratepayers. FIT is meant to encourage investment in renewables and promote “grid parity” between renewables and fossil fuels.

But Xcel officials successfully argued they’re already on-track to accomplish greater parity through the state’s ambitious renewable energy standard (RES) of 30 percent by 2020 – the second highest in the nation behind only California.

“A feed-in tariff would be duplicative of the Renewable Energy Standard Adjustment (RESA), which is the current charge on customer bills devoted to paying the incremental cost of renewable resources,” said Xcel spokesman Mark Stutz. “A feed-in-tariff is a more expensive, less efficient method for accomplishing what we are already achieving under the current [RES].”

But English and other FIT backers say an RES is merely a goal while feed-in-tariff is an actual policy mechanism that’s proven in other parts of the world to help jurisdictions meet or exceed their renewable energy goals.

“FITs create a bigger market,” said Jim Burness, CEO of SolSource, a Colorado solar installation firm. “Under our recently-departed system, solar was only available to those who either had cash, or great credit. Since FIT payments come from the utility, it allows anyone with a good [renewable energy] resource to participate, thereby exploding the market.”

Burness was referring to Xcel’s highly controversial recent proposal to cut off all new applications to its Solar Rewards program and reduce current rebates from $2.35 a watt to $1.25 a watt. Solar industry advocates say the move could cost more than 2,000 Colorado jobs. The move prompted protests by clean energy advocates in Denver over the weekend.
English says FITs would be one way for Xcel to repair its battered image on the small-scale distributed energy front.

“Xcel’s corporate responsibility reputation is on the ropes due to the company’s continuing love affair with fossil fuels, its abuse of the solar industry, and its ongoing resistance to meaningful amounts of locally produced, clean distributed generation,” English said.

Utility scale wind and solar projects come with one major drawback. The best areas for generating renewable energy on such a large scale tend to be in remote rural areas far from the major cities that need the electricity. That has caused a transmission bottleneck and sparked legal battles over power-line location such as the Trinchera Ranch lawsuit in the San Luis Valley.

Finally, Xcel’s Stutz said “feed-in tariffs face legal issues in the United States that remain to be worked out. The National Renewable Energy Laboratory [NREL in Golden] says that feed-in tariffs will not work in the U.S. without changes to federal law or to existing Federal Energy Regulatory Commission [FERC] precedents.”

But English counters that an NREL official who’s studied FIT policy appeared at last week’s hearing and testified that feed-in-tariff could work under existing laws and FERC rulings.

Regardless, HB 1228 appears dead for now, leaving proponents to weigh their limited legislative options.

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