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Colorado Energy Legislation 2015: Where Do We Stand at the Session Midpoint?

This past Saturday marked the midpoint of the First Regular Session of the 70th General Assembly of the State of Colorado. Having had 60 days to watch legislators in action, we now have a fairly good idea where the General Assembly is heading in terms of energy legislation. One big caveat to that is the potential for oil and gas legislation. The Governor’s Oil and Gas Task Force just wrapped up its work, and sent nine (out of 36) suggestions to the Governor for consideration. The 21 members could not reach the required 2/3 margin needed to pass the more controversial measures, so what remains are less controversial proposals, such as enhancing the permitting process, including local governments in the siting process earlier, and appropriations for more inspectors. As a result, there are now two schools of thought as to where legislators may go: introduce a slew of legislation that is destined for death in the other chamber, or avoid any legislative fights and prepare for ballot initiatives in 2016.  At this point, the smart money seems to be on ballot fights. Prepare for an onslaught of television commercials.

Aside from oil and gas measures, we’ve seen several bills addressing energy this session. We’ve summarized the proposals that have been introduced, and placed them into three categories: bills that may get to the Governor’s desk, bills that will probably not succeed, and bills that have already met their fate. Please keep in mind that Republicans control the Senate by a one vote margin (18-17), while Democrats control the House 34-31. Generally speaking, if one of these bills is referred to a committee on state, veterans, and military affairs in either house, it is likely that the bill is destined to die.

Bills That (Probably) Will Live:

HB 1121 – Wind Energy Development Agreement Recording – Rep. J. Becker (R) and Sen. Sonnenberg (R)

The bill modifies the statute concerning agreements between surface owners and wind energy developers. Specifically, the bill establishes that until an agreement is recorded with a clerk and recorder’s office, the agreement is not binding on anyone other than the parties to the agreement, and those with notice. That agreement must be recorded in both the grantor and grantee indices, and under the names of all parties. Rights under agreement recorded after July 1, 2012 expire after 15 years, unless the agreement provides otherwise. The bill passed unanimously in both houses.

HB 1132 – Residential Energy Efficiency Improvement Tax Credit – Reps. Coram (R) and K. Becker (D) and (No Senate Sponsor)

The bill creates an income tax credit for qualified energy improvements to the energy efficiency of residential homes. The bill passed the House Transportation and Energy Committee by a vote of (9-4 (two Republicans voted yes)).

Update: the bill passed the House Committee on Finance by a vote of 10-1 after amendments modifying dates in the bill.

HB 1180 – Sales and Use Tax Refund Medical and Clean Technology – Reps. Kraft-Tharp (D) and Wilson (R) and Sens. Heath (D) and Holbert (R)

The bill recreates a sales and use tax refund for clean technology and medical device firms with fewer than 35 employees. Clean technology means products and technology used in renewable energy development and generation on a commercial scale, and products that improve the efficiency of production, extraction, or storage of renewable or traditional energy sources. House Committee on Business Affairs & Labor referred to Finance 11-2.

Update: the bill passed the House Committee on Finance 11-0.

HB 1219 – Enterprise Zone Investment Tax Credit for Renewable Energy – Reps. McCann (D) and J. Becker (R) and Sens. Hodge (D) and Sonnenberg (R)

The bill allows a taxpayer who places a renewable energy investment in service that results in an investment tax credit to elect to receive a refund of 80% of the amount of the credit and forego the remaining 20%. The bill also changes the definition of renewable energy investment to projects that generate electricity from eligible energy resources that an electric utility may use to comply with Colorado’s RES. Assigned to Transportation and Energy, Finance, and Appropriations. House Committee on Transportation and Energy referred to Finance.

HB 1228 – Special Fuel Tax Liquefied Petroleum Gas – Reps. Mitsch Bush (D) and J. Becker (R) and Sen. Scott (R)

The bill makes several changes to how the special fuel excise tax on LPG is imposed, collected, and administered. Specifically, it changes the definition of gallons to a net gallon, limits the imposition of the tax so that it is mostly levied when LPG is placed in a fuel tank, eliminates the 2% allowance for LPG lost in transit, and others. It was assigned to the House Committee on Transportation and Energy and the Committee on Finance. Transportation and Energy referred the bill to Finance.

SB 046 – Renewable Energy Standard Adjustment Rural Electric Association Distributed Generation – Sen. Grantham (R)

The bill extends the 3X multiplier for solar generation for CEAs, and expands its applicability to all retail distributed generation. The bill eliminates the half and half requirement for retail and wholesale distributed generation, but for CEAs only. It also allows CEAs to use generation purchases from community solar gardens to count as retail distributed generation (and therefore get the multiplier). The bill passed the Committee on Agriculture, Natural Resources, and Energy unanimously and was placed on the Senate consent calendar.

SB 063 – Alternative Energy for Schools Grant Program – Sen. Donovan (D)

The bill takes the existing wind for schools grant program and broadens it to include other types of electricity generated from renewable sources. The bill was referred to the Appropriations Committee by the Senate Agriculture, Natural Resources, and Energy Committee by a vote of 7-1.

Bills That (Probably) Won’t

HB 1210 – General Assembly Approval for Environmental Rules – Rep. Dore (R)

The bill requires that the Air Quality Control Commission, the Water Quality Control Commission, and the Solid and Hazardous Waste Commission submit a report to the General Assembly detailing all new and amended rules that are required by new or amended regulations proposed or adopted by the EPA. The rules subject to this requirement pertain to the federal Clean Air Act, Water Pollution Control Act, Solid Waste Disposal Act, and Resource Conservation and Recovery Act of 1976. A rule in the report would have to be approved by legislation passed by the General Assembly prior to submission. The bill is awaiting hearing in the House Committee on State, Veterans, and Military Affairs.

HB 1236 – Tax Credit for Improving Energy Efficiency – Rep. Winter (D)

The bill creates an income tax credit for energy efficiency improvements made to multi-family and commercial buildings. Transportation and Energy referred the bill to Finance by a vote of 8-5.

HB 1250 – Explore Performance-based Utility Regulation – Rep. Tyler (D) and Sen. Jones (D)

The bill declares that certain factors, such as efficiency of generation, long-term economic stability, and environmental factors, among others, should be considered when establishing rates and policies for investor-owned utilities. It directs the Public Utilities Commission to open an investigatory proceeding to explore alternative utility revenue models, and report its findings next fall. It was assigned to the Committee on Transportation and Energy.

Bills That (Definitely) Didn’t

HB 1118 – Hydroelectric Power – Rep. Brown (R)

The bill amends the definition of renewable energy for purposes of meeting the Renewable Energy Standard to include hydroelectricity and pumped hydroelectricity. The bill was postponed indefinitely in the House Committee on State, Veterans, and Military Affairs.

SB 009 – Public Building Woody Biomass Energy Grant Program – Sen. Jones (D) and Rep. Hamner (D)

The bill creates a grant program in the Department of Natural Resources to encourage the use of woody biomass as a fuel source for public buildings. The Senate Committee on Agriculture, Natural Resources, and Energy postponed indefinitely.

SB 044 – Renewable Energy Standard Reduction – Sen. Scott (R) and Rep. Thurlow (R)

The bill reduces the Renewable Energy Standard for Investor Owned Utilities to 15%, starting in 2015.  It reduces the standard for Cooperative Electric Associations to 15% in 2020.  Municipally-Owned Utilities are unaffected, as are the requirements for distributed generation. The bill passed the Senate 18-17, and was introduced in the House on 2/10. It was assigned to the Committee on State, Veterans, and Military Affairs.

SB 092 – Multi-agency Review of Stage Carbon Emission Plan – Sen. Cooke (R)

Currently, the Colorado Department of Public Health and Environment is expected to submit a state implementation plan (SIP) to the U.S. EPA, which will detail how electric utilities will reduce carbon emissions to meet federal Clean Air Act standards. This bill prohibits CDPHE from submitting the plan until the Public Utilities Commission conducts a hearing to determine the impact on customer utility rates, the PUC and CDPHE issue a joint report detailing the impact on rates, employment, and the state’s competitiveness, and the General Assembly adopts the SIP through a resolution approved by 2/3 in both houses. Lastly, the bill specifies that no SIP can be approved if it increase the average annual retail rate for customers by more than two percent, or would result in unreasonable reliability risks. The bill was postponed indefinitely at the sponsor’s request, but there are rumors of a second iteration on its way.

SB 120 – Electric Grid Modernization Plans – Sen. Jones (D) and Rep. Winter (D)

The bill requires both IOUs to submit a draft grid modernization plan to the PUC that would describe how the utility would make measurable progress toward grid modernization objectives at the distribution level in the next 10 years. Specifically, the plan would detail how the IOU would optimize demand-side management and supply-side management, increase grid reliability by improving integration capabilities for distributed resources, and achieve advanced metering infrastructure functionality within 5 years. All CEAs and MOUs would be required to submit a similar document to their respective board of directors for review and approval. All plans would be submitted to the Colorado Energy Office to be posted online, with the office reviewing progress annually. The bill was postponed indefinitely on 2/12 by the Senate Committee on Agriculture, Natural Resources, and Energy. The vote was party line (5-4).

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Associate

Mr. Raemdonck is an associate in the firm’s Regulatory and Government Practice group. His practice is focused on representing the government affairs of clients across a wide range of industries, including energy, real estate, religious institutions and healthcare.

Mr. Raemdonck serves as a lobbyist for firm clients, which includes legislative monitoring and analysis, advocating client positions before decision-makers, and advising on both political and legal strategies.

Prior to joining the firm, Mr. Raemdonck worked as...

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