Return to article

Deal puts Colorado Springs Utilities near renewable goal

Every time a state adopts a renewable energy portfolio standard, a dance follows in which power providers, environmentalists and legislators determine who must comply, which resources count and in what quantities. Colorado Springs Utilities faced that challenge after voters passed Amendment 37, and crafted a compromise that honored the spirit of the RPS while protecting ratepayers from increases.

The deal allowed Colorado 's second-largest utility to count electricity from its Tesla Hydro Plant as renewable energy. "We consider hydro renewable energy to be an eligible resource, and we wanted to be able to count that power," said Government Affairs Manager Andrew Colosimo. "It was very important to the community because it saved our ratepayers tens of millions of dollars."

As a bonus, adding Tesla's 28 MW to 4 MW of existing small hydro and wind puts Springs Utilities 70 percent of the way to getting 3 percent of its electricity from renewable energy sources from 2007 to 2010.

Innovative plant gets nod

Initially, Amendment 37 specified that only small hydro plants of 10 MW or less would qualify as renewable energy. Even though hydropower is a renewable resource, many RPSs disqualify it because it is well-established and large projects might require new dams on rivers.

Commissioned in 1997, the Tesla plant at the Air Force Academy produces 28 megawatts, so it seemed to fit the description of a medium-sized powerplant. However, the facility does not get its power from a river. It is located at the mouth of a nearly vertical pipeline Springs Utilities built to carry water from Rampart Reservoir to the city.

"The fact that Tesla runs off a reservoir instead of a river made the environmental community much more receptive to including it," said Colosimo. "This is actually the type of innovative use of resources they want to encourage."

In a compromise, language was added to the bill to allow existing medium-sized hydropower projects of up to 30 MW to count toward the RPS, while new projects must be 10 MW or less. The provision also helped Xcel Energy, which was allowed to count its 15-MW Shoshone hydroelectric station in Glenwood Springs, Colo.

Other changes in the rules clarified eminent domain issues, home rule restrictions, exceptions to compliance and how to deal with newly eligible utilities.

Public involvement builds support for plan

One of the reasons Springs Utilities was able to make the case for Tesla was that it was already in the process of evaluating its resource mix when Amendment 37 made it onto the ballot. "We were updating our electric integrated resource plan to come up with the best mix of renewables, conventional generation and demand side management to meet future demands," said Colosimo.

"Because public participation played such a big role in the process, we knew our EIRP had the community's buy-in," he added.

Springs Utilities customers supported demand side management strategies; a voluntary green power program; a 10-MW, small wind purchase and hydropower. "We raised concerns throughout the Amendment 37 campaign because it didn't count existing hydro," Colosimo recalled. "It was obvious that the provisions needed to be clarified if Springs Utilities was going to opt in."

The bill gave municipal utilities the option to self-certify their compliance with the standard or to let ratepayers vote whether to comply at all. Since Amendment 37 did not have strong support in the city, there was a real possibility that customers would vote against compliance.

More work follows successful negotiation

That gave bill supporters incentive to work with the municipality. The state's major utilities sat down with the Colorado Public Utilities Commission and the environmental community to work out the details of Senate Bill 143, implementing Amendment 37. "It was a very positive process," recalled Colosimo. "We went in with clear objectives, and there was a real willingness by all the parties to negotiate a fair package."

Councilman Richard Skorman, who helped broker the compromise, felt that the extra flexibility helped to persuade the utility board to support compliance with the RPS. "I think this sets the ground firmly for us to comply with this," he observed.

Colosimo credited much of the city's success to Skorman. "Mr. Skorman did an extraordinary job of presenting our efforts to develop an effective resource plan," he said.

The rulemaking process is far from complete, Colosimo added. Self-certification, compliance administration and other cost-recover efforts have yet to be addressed.

For its part, Springs Utilities must figure out the details of establishing a "substantially similar renewable energy standard," submitting a certification statement to PUC and evaluating additional renewable energy options to meet the 2007-2010 goal, and beyond. Two more small hydro projects are in the works, as is a wind purchase and expanding its DSM program. "Developing aggressive demand-side management gets the numbers down," Colosimo said. "Use less electricity, and the proportion that comes from renewables goes up."

And DSM can potentially save customers money in the process, proving that a creative utility can turn the problems of meeting a renewable portfolio standard into opportunity.