August 14, 2013 10:21 PM UTC

"The War on Rural Colorado" v. "The Innovation Economy"

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• by: MichaelBowman

(Promoted by Colorado Pols)

"We've met the enemy and he is us"   ~Pogo

There is a "War on Rural Colorado" – but it's not being waged by who you think it is.  It's not a war waged by urban Democrats.  It's not a war waged by our Governor.  It's a war waged by entrenched rural interests steeped in 20th-century business models, powered by 19th-century energy resources: coal.  Entrenched interests who cling to a model that, by design, is the enemy of entrepreneurship and innovation.  Entrenched interests who resist a new energy paradigm:  a distributed energy generation model.  It is a war of our own making.

Imagine for one moment the reaction by Colorado Republicans to a mythical headline in the Denver Post: "Colorado Legislature Mandates Construction of Sustainable Electricity Distribution Pilot Project in Rural Colorado".  Queue the clown car:  "War on Rural Colorado". "Out of touch legislature attacks rural values".  Independence Institute dog-whistles at Defcon 2 and another yet-unwarranted attack by Vince Carroll on the folly of a 21st-century energy policy. 

There is a lot of lip service paid to the word "innovation" on the websites of the members of our state and national associations of rural electrics.  This October the Colorado Rural Electric Association (CREA), whose mission is "to enhance and advance the interests of its member electric cooperatives through a united effort" will be hosting an Energy Innovations Summit.   CREA's wholesale supplier of electricity, Tri-State Generation and Transmission, promises us on their website,  "We’re working hard to address the challenges that potentially could threaten affordable electricity.  As a not-for-profit co-op, we’re committed to protecting consumers today and in the future by providing affordable power while investing in innovation – today and for years to come."

If it wasn't for the fact that Tri-State has given it's member coops an average near-10% annual increase in electricity in the period 1995-2012 and is fighting the mother of all battles to construct a coal plant in southwestern Kansas, the narrative might be plausible. Perhaps the definition of "innovation" has a different meaning inside the board rooms of rural electric associations across Colorado than the one found in Webster.

The imagined headline in the Denver Post?  No, it's not exposing a hidden requirement in Senate Bill 252, it's an actual project undertaken by the National Rural Electric Association.  And no, it's not a project being undertaken in the United States.  This display of innovation is happening in Haiti. 

This past week the second meeting of the Senate Bill 252 Advisory Committee met to discuss the obligations of Tri-State Generation and Transmission under the law.  According to a story by Marrianne Goodland of the Colorado Statesman, [and consistent with assertions made in an email distributed by Tri-State during the same time frame], Tri-State concludes they will have to construct or commit to 230 megawatts of clean energy to be in compliance with the law.  They also state they will need to construct or commit to an additional 254 megawatts of natural gas generation as back-up power.  They also add that transmission will need to be built to carry the additional 484 MW to lead centers. 

They do not believe it is feasible to meet compliance in 6.5 years. 

Also, according to the Colorado Statesman article, Intermountain Rural Electric Association indicates they may meet compliance simply by buying Renewable Energy Certificates [REC’s]. 

Now that is real innovation at work. 

Senator Greg Brophy couldn't help himself,  that he wasn't surprised by the discussion on the RECs, saying that he was aware of that option during the session.  He described RECs as "a waste of money and my neighbor's monies".  He further stated that buying RECs would simply be "transferring our money to Xcel shareholders".

The state-senator-turned-gubernatorial-candidate ended with his statement to the Statesman that "he'd be happier if they'd just roll back the legislation".

Yet, another innovative idea.

Perhaps the senator may have missed the fact that Xcel's current 30% renewable obligation has caused billions of dollars in investments in wind farms in eastern Colorado.  Those projects have been built almost exclusively in his senate district.  His constituents are significant co-beneficiaries of the renewable standard.  In fact, this aggressive state standard has arguably caused the most significant transfer of wealth from his urban, liberal constituents that he wants to govern [via their energy bills] to his rural constituents. 

Who does he think is amortizing and maintaining those billions in investments that are in most cases the single largest taxpayer in these rural counties?   The man is either a mental midget or a disingenuous ideologue.  Or both.

Let's do some math:  If we spread the 230 megawatt clean-energy obligation across all of Colorado's 22 rural electrics, that obligation would amount to just a little over 10 megawatts of obligation for each service territory  [not all 22 rural electrics are large enough to be obligated to the new rule].  Spread that obligation amongst the 18 coops that are under the obligation and it would require each coop [if the obligation was evenly distributed] to just over 12 megawatts. Or, look at it another way:  in 2005 then-Governor Bill Owens' Energy Office funded a distributed generation study on Highline Electric Association, headquartered in Holyoke, CO.  That study found nearly 120 megawatts of system capacity on their existing system if it was deployed in a distributed fashion.  Think about that: an existing study that concludes that just one of the 22 Colorado rural electrics has an existing capacity to meet 50% of their estimated obligation.  Without building a single power line. 

While our national association is strutting its goods in Haiti, I'd prefer we demonstrate innovation in Holyoke. 

Let's kick the idea of "innovation" up a notch: Tri-State's summer peak is a product of immense irrigation load, predominantly in the northeastern corner of Colorado.  This are is also home to vast reserves of natural gas that is becoming increasingly 'trapped'.  Let's imagine meeting that summer-time peak with trapped gas in the eastern counties; a series of small-scale "peakers" from 5-to-20 megawatts distributed across the grid, bouying the local conventional gas fields and local employment.  And it would have an added bonus:  in the off-peak season, September through May, those same small, efficient installations can firm and shape wind exports from the region. 

And how would these installs be funded, you ask?  Tri-State and every rural coop has access today to billions of dollars at the Rural Utilities Service (RUS): the federal agency that has historically funded coal plants and transmission projects for every rural electric association across America.  In fact, there has been an appropriation by Congress to RUS of $8 billion annually, specifically targeted for projects like the one described above.  And, with the proposed rule changes at RUS that will be announced next month, Tri-State will have the ability to make these ultra-low rate loans available to their coops, coop members, farmers, ranchers, benefit corporations and entrepreneurs served by rural electrics.  A rule change meant to empower entrepreneurship and innovation in rural America.  Tri-State doesn't have to spend a dime to meet compliance; all they need to do is commit to the power generation from these projects – the same business model that they have employed with the Duke Energy-Kit Carson County Wind Farm and effectively the template they propose to use to construct the Sunflower Coal Plant in Holcomb, KS.

Except in this case, the economic benefits will flow to local projects and rural entrepreneurs.

An Innovation Economy?  SB-252, coupled with a strategic commitment by Tri-State to empower their local cooperatives and individual members with grid access and federal loan programs can spark a rural renaissance in rural areas on both sides of the Rocky Mountain divide.  The argument for a stronger commitment to renewables, beyond 20%, is a more compelling argument than Senator Brophy's position to "roll back the legislation".  Perhaps the Senator missed the recent news in our home county that next years assessed valuation will drop by $43 million.  This, in a county that is swimming in trapped, natural gas resources and drowning in Class 5 wind resources.  I might offer that connecting the dots between the obligations under SB-252 and undeveloped rural resources shouldn't be that hard.

Governor Hickenlooper, SB-252 is sound, state policy.  It's an important cog in your vision for an "Innovation Economy"  in Colorado.  By signing the legislation you provided more authentic leadership on building a framework for rural opportunities than we've seen since the build out of the rural electric system under FDR's "New Deal".  Transitioning from a centralized, coal-based rural utility to a decentralized, diverse-fuel portfolio is no less controversial than the introduction of Uber into today's regulated, taxi-cab sector.  These transitions will occur – it's a question of who is going to lead the transition.  The 2013 legislature gives us the blueprint. The Obama administration will soon be giving rural Americans access to the same low-cost financing that has been enjoyed by Tri-State for decades. 

Don't look back, we're not going that way.