Renewable-Energy Amendment Raises Questions for State Utilities

Renewable-Energy Amendment Raises Questions for State Utilities; Law Mandating Sources of Power Hazy, Xcel Says

Nov 19 - Rocky Mountain News

From fighting the state legislature to relentlessly gathering signatures during the hot summer months, it has been one long struggle to put renewable-energy issues on the ballot.

But on Tuesday, it all seemed worth it. Colorado voters soundly approved Amendment 37, directing utilities to get a portion of their electricity from the sun, wind, plant or animal waste.

Beginning with 3 percent in 2007, utilities must get up to 10 percent of their electricity from renewable sources by 2015. Four percent of the renewables should constitute solar sources. The utilities cannot charge their residential customers more than 50 cents a month to comply with the law.

"Customers can now exercise choice as to the source of their electricity," said state Rep. Lola Spradley, R-Beulah, who sponsored the measure after her earlier bills on the same issues were repeatedly defeated in the state legislature.

But the road will be far from smooth for utilities.

Xcel Energy, the state's largest utility, which vehemently opposed what it called "a poorly written bill," says the law needs some clarification.

"It contains some ambiguous provisions that are of grave concern to us," Xcel spokesman Steve Roalstad said. "It puts a 50-cent monthly cap on residential rates, but is silent on industrial and business rates. Also, the authority of the Public Utilities Commission is not clear."

Roalstad said Xcel will work with the proponents, state legislators and regulators to iron out the issues before it launches new projects.

"We have to determine electric sales in the future, and work backwards to figure out the capacities that have to be installed," Roalstad said.

Xcel is adding 500 megawatts of wind power though 2005, which will satisfy the law's requirements for many years. The company has received 12 bids from private producers totaling 2,000 megawatts, and will make a final selection by the end of this year.

A big concern about the amendment is the cost impact on ratepayers. Xcel says it is not clear who pays if there are cost overruns. But Spradley reiterates that wind power is very cost- competitive, and the law is highly unlikely to mean any cost increase for customers.

As for solar energy, which Xcel says will cost $355 million over 20 years, Spradley said advances in technology will drive the cost down.

"Sixteen other states have done this and we haven't seen any cost overruns," she said. Independent studies have shown there won't be any cost overruns.

"Technology will evolve over time, and given the increasing cost of natural gas- fired and new coal-fired power plants, it's highly unlikely that wind plants will result in cost overruns."

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