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Mixed response to Colorado RPS -- Utilities may opt out of system

The first renewable energy standard (RES) to be approved by voters in the United States is running up against opposition from several utilities that are considering conducting special elections of their own, asking local voters to reject it. At the same time, though, other utilities are moving to add projects to their renewable portfolios.

In November, Colorado voters approved an RES that calls for utilities with more than 40,000 customers to produce 3% of their electricity from renewable sources by 2007, 6% by 2011 and 10% by 2015 (Windpower Monthly, December 2004). Solar must make up 4% of the 10% goal, or 0.04% of total energy sales. However, the initiative, passed by voters in some areas by a slim margin, allows utilities to opt out if a majority of customers vote for an exemption in a special election.

Intermountain Rural Electric Association, the largest rural utility in the state with 122,000 customers in ten counties, is considering opting out because voting records show a majority of their customers voted against the RES. Colorado Springs Utilities customers also apparently rejected the measure, and the utility is weighing options to recommend to the Colorado Springs City Council, which governs the publicly owned utility.

LEGISLATION

The RES must still be voted on by the Colorado General Assembly, which leaves the door open even wider for changes to be made. Legislative action is expected in spring, after which the Public Utilities Commission (PUC) can begin rulemaking.

Andy Whipple, spokesman for the Western Colorado Congress, which supported the measure, said the group hopes to work with utilities and the PUC during the rulemaking process to fine-tune provisions, such as costs assessed to non-residential customers.

Meanwhile, some developers are moving ahead. In late December, a proposal by Invenergy LLC for a 130 MW wind farm in northeastern Colorado received approval from Logan County officials. Invenergy's Doug Carter says the company expects to learn early this month whether it was successful in its proposal to supply Xcel Energy, the largest utility in the state, with the energy produced by the project. Invenergy is exploring sites for an additional five wind farms in the state.

CONCERNS

Xcel already has 250 MW of wind power and plans to add 500 MW by the end of 2005, which would bring the utility in compliance with the amendment through 2010.

However, Xcel's Mark Stutz says the utility has concerns with some provisions of the voter initiative. Specifically, says Stutz, using energy sales as the measuring stick.

"Given the intermittent nature of wind," he says, "that means a higher target," since it takes approximately 2-3 MW of installed capacity to produce 1 MW of delivered power. In addition, energy sales fluctuate somewhat from year to year, making compliance a moving target. "It's possible," says Stutz, "you may float in and out of compliance from year to year." Xcel is also concerned with the solar generation requirement, because, Stutz says, of the high cost of photovoltaic cells.

Finally, the utility is concerned about a provision setting an upper limit of $0.50/month on how much the RES can cost residential ratepayers. About 80% of Xcel's customers are residential, he notes, so the most the utility will be able to collect from them is $6 million per year. In the future, he says that may not be enough for the renewables program.

Xcel will be lobbying lawmakers as the 2005 session gets underway with the hope of clarifying and perhaps modifying some of the provisions. However, says Stutz, with 53% voter approval, lawmakers may find changes hard to justify.

Stutz said that when legislation appeared likely last year, Xcel responded by fast-tracking its request for proposals for 500 MW of new wind power. Seventeen respondents proposed projects totaling 2000 MW. Xcel plans to announce the successful bidders in the first quarter of 2005 and have the projects online by the end of the year.

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