Jan 31 - McClatchy-Tribune Regional News - Michael Davidson The Gazette, Colorado Springs, Colo.

One part of the state's energy industry received a boost Wednesday while some lawmakers asked if new rules will make another part suffer.

Gov. Bill Ritter said the state is creating a $1 million fund to encourage residents to equip homes with solar power. Under the Solar Residential Program, the state will give cities, municipalities and utilities matching grants of up to $25,000 if they give rebates to solar power users.

The program is part of an attempt to offer every home and business a chance to take advantage of the "New Energy Economy," Ritter said.

The governor announced the initiative at a forum that discussed how Colorado's economy could benefit from the state encouraging individuals to use solar technology.

Ritter said offering rebates to new users will help create a market for solar power, and industries will invest in the state to tap into that market. The money for the program will come from the state's Clean Energy Fund, created last year.

"The government should be the catalyst for this change," Ritter said.

Ritter's announcement came as some legislators questioned whether the state is about to hurt the $23 billion oil and gas industry.

Nine Republicans and two Democrats from both houses sent a letter to Ritter's office Tuesday complaining that new rules being drafted to regulate the oil and gas industry would be too cumbersome and discourage companies from drilling new wells.

The revisions are being made to comply with two laws passed last year that require energy companies to consider the effect new projects have on the environment, wildlife and public health.

One of the laws was sponsored by Sen. Jim Isgar, D-Hesperus. He signed onto the letter because he's concerned the new regulations may create too much bureaucracy.

"We don't want to over-regulate to the point that someone who owns that resource can't get it developed," Isgar said.

The House and Senate held a joint committee meeting Wednesday to discuss the rules. Harris Sherman, executive director of the state Department of Natural Resources, testified that the time it takes to apply for a drilling permit may be reduced, and that many of the new requirements could be met at the same time.

Some lawmakers are not sure what their counterparts expected when they supported the legislation last year. Sen. Dan Gibbs, D-Silverthorne, wrote the second bill being discussed Wednesday when he was a House member last year. His bill passed both houses without a single vote against it. Gibbs said he worked closely with the oil and gas industry.

"I worked with them every step of the way, and they knew there was going to be a rulemaking process," Gibbs said.

The Legislature will continue to hold hearings to discuss the rules until they are completed this year, Isgar said.