Legislation at the center of a radio and newspaper campaign urging the governor’s veto also eliminates an incentive for using renewable energy generated in Colorado.
A pending federal lawsuit filed in 2011 challenged the constitutionality of the incentive. Senate Bill 252 – if signed by the still-undecided governor – would eliminate that incentive beginning in 2015.
American Tradition Institute, a Washington D.C.-based think tank focused on challenging environmental policy, filed the lawsuit on behalf of a Colorado resident.
At issue is whether green energy generated in Colorado should be worth more than out-of-state power when it comes to meeting renewable energy quotas.
Current law gives electric companies more credit – a 25 percent bonus – for every megawatt hour of renewable energy, like solar or wind, that is generated in Colorado. Those credits go toward meeting the state’s requirement that a certain portion of a company or cooperative’s energy is generated by sources that don’t release carbon monoxide into the environment.
The lawsuit claims the incentive violates the interstate commerce clause by giving an unfair preference to companies operating in Colorado while discriminating against out-of-state electric generators.
“It was clear that everyone knew that those were facial violations – those that are unconstitutional on their face – and the state of Colorado would lose those,” said David Schnare, head of the legal department for American Tradition Institute.
House Speaker Mark Ferrandino, D-Denver, who sponsored the bill in the House said the change was made to address some concerns raised in the lawsuit but he said it would have little impact on the wind or solar industry in Colorado.
“The resources are here,” Ferrandino said. “The wind and the sun are here in Colorado.”
The loss of the incentive will have little impact on the state’s largest energy provider Xcel Energy, Inc.
The company is on track to meet the requirement that by 2020 it generate 30 percent of electricity from renewable sources, said Gabriel Romero spokesman for the company.
Romero said energy generation that comes online before January 2015 will still receive the bonus, and their only project that could be impacted is a wind-energy farm expected to be mostly completed in 2014.
“We basically have all of our wind online,” Romero said.
Other companies that are still striving to meet the renewable energy standards might be more impacted by the legislation if they are scrambling in the last five years to meet the 2020 benchmark.
Falling into that category are the two rural cooperatives for which Senate Bill 252 will more than double the existing standard, giving them six years to reach 20 percent renewable energy instead of the existing 10 percent requirement.
Without the bonus, those companies will have to generate more electricity from renewable sources to meet the requirements than companies that get in-state operations online before 2015.
Romero said regardless of incentives and standards, Xcel Energy continues to invest in renewable energy because it makes good economic sense.
“When you look at Colorado in general we just have tons of sun, great wind and transmission that makes it a viable resource, a competitive generating source,” he said.
Wind and solar energy receive lucrative federal tax credits as well.
Schnare said even if Senate Bill 252 becomes law and the incentive goes away, his lawsuit will continue to pursue a number of other claims against renewable energy requirements.
If the issue goes to trial, it will be a challenge to the state’s renewable energy standard as a whole. Attorney General John Suthers was not available for comment, but the state’s response to the lawsuit refutes the allegations.