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Windletter
Volume 27, Issue 1
January 2008

A Direct Line to the Wind

Texas was first with its competitive renewable energy zones, but when it comes to renewables transmission policy, Colorado 'gets it,' too.

By Craig Cox

When Texas began addressing its electricity transmission constraints in 2005 with the passage of SB 20, industry leaders around the country took notice:  provisions creating "competitive renewable energy zones," as well as one concerning cost recovery for transmission investments to these zones, appeared to be a winning combination for developing new transmission capacity quickly. The legislation, enacted to solve the perennial—and national—chicken-or-the-egg dilemma in which wind power developers won’t build wind farms in areas lacking transmission while transmission providers won’t put up lines to wind-rich areas that currently lack generation facilities, is now generally viewed as a model to solve that conundrum.

Up until fairly recently, Colorado, whose voters endorsed the nation’s first renewable electricity standard (RES) ballot initiative (Amendment 37) in 2004, had been a prime candidate for a Texas-style transmission law along the lines of SB 20, given that transmission constraints have severely hindered wind development in the Mile-High State. Simply passing an RES often isn’t nearly enough for renewable resources to be tapped. Fortunately, what came next was a policy that, if all stakeholders continue to put their best foot forward during the implementation process, will result in much-needed transmission lines getting built that link wind-rich areas with high-population electricity load centers. Like the Texas experience before it, Colorado is marching forward, creating the next iteration of the model for solving the chicken-or-the-egg dilemma as it works to address its own unique challenges. This is the story of how Colorado has been getting it done.

Getting the train rolling
Sound policy, of course, does not come into being by itself. In the 2006 Colorado legislative session, the renewable energy industry worked with legislators, utilities, and other stakeholders to advance a transmission policy mechanism in Colorado. That work led to the Colorado legislature’s passage in 2006 of a law creating a state-empanelled Transmission Task Force. The 15-member body—
representing stakeholders including utilities, other energy industry players, and various others—was charged with analyzing Colorado’s transmission situation and making recommendations to the General Assembly for improving transmission development. The Task Force met in the summer and fall of 2006, and reported its findings to the Colorado General Assembly that November.

One of the task force’s recommendations was that Colorado "identify renewable generation resource development areas that have potential to support competition among renewable energy developers for development of renewable resource generation projects." And for the first time, a state was armed with the experience of another state that it could cite: the task force’s report specifically cited Texas's SB 20 in its recommendation.

Shortly after the task force’s report was submitted to the Colorado General Assembly, many of the same parties who had worked on the legislation creating the body gathered once again. This time, negotiations centered on drafting legislation that would accomplish the same transmission-development goals as Texas’s landmark SB 20—recognizing, of course, the differences between the two states (such as the fact that Colorado, unlike Texas, does not operate its own grid and does not have an independent system operator for its electric system).

A "new energy" governor: momentum builds
These negotiations were helped along by several factors. Most importantly, Bill Ritter (D) was elected governor in the November 2006 election by an overwhelming 57%-40% margin on a platform emphasizing a "new energy economy." Second, Colorado’s largest investor-owned utility, Xcel Energy (which operates in the state under the name Public Service Company of Colorado), expressed its readiness to seek renewables-oriented transmission legislation, particularly in light of the fact that its Texas subsidiary had supported Texas SB 20 and its Minnesota subsidiary had supported an analogous bill (SF 1368 in 2005). Finally, thanks to ongoing outreach by advocates in Colorado, the public was aware —and supportive—of addressing the state’s transmission constraints.

After negotiations with Xcel Energy and a range of other stakeholders, Colorado’s transmission-expansion legislation was ready for introduction. Sponsored by Senator Joan Fitz-Gerald (D-Coal Creek Canyon) and Representative Liane "Buffie" McFadyen (D-Pueblo West), the transmission bill, given the easily recognizable number SB 100, was introduced early in the 2007 legislative session. The bill required investor-owned utilities to identify transmission-constrained "energy resource zones"–the equivalent of Texas’s "competitive renewable energy zones"—and report to the state public utilities commission (PUC) how they intend to address the constraints. These SB 100 "energy resource zone reports" would need to be filed by October 31 of every odd-numbered year. Once the PUC approved the utilities’ plans, the utilities would receive current cost recovery (meaning they could recover costs from customers as soon as they began construction) for their transmission expenses and investments to these zones, thus helping to resolve the "chicken-or-the-egg" problem.

Though the word "renewable" was not included in the phrase "energy resource zones" (as a result of the legislative negotiations), the intent was clear: given that the only large-scale transmission-constrained energy resources are location- dependent wind and solar resources, the purpose of the legislation was to ensure that sufficient transmission be built to the state’s renewable resource-rich areas even before the first projects were actually built.

SB 100 proceeded rapidly through the legislative process in both the Senate and the House, encountering very little opposition from legislators of either party. Over 20 bills related to the “new energy economy” were passed in the legislative session, and SB 100 was the first of them to reach the desk of the governor, who signed it into law.

Even then, though, the state’s all-out embrace of renewables was not over. Shortly after the passage of SB 100, the legislature passed another key “new energy economy” bill and sent it to Governor Ritter for his signature. HB 1281 doubled the state’s renewable electricity standard to 20% by 2020; further, this latest RES legislation included a renewables requirement for the state’s rural electric cooperatives (10% by 2020).

Together, SB 100 (transmission expansion) and HB 1281 formed the cornerstones of the "new energy economy" in 2007, making Governor Ritter's campaign pledges a reality. The two bills were signed into law on March 27, 2007, in a ceremony at the National Renewable Energy Laboratory’s National Wind Technology Center near Boulder. "Voters set the stage in 2004 with the passage of Amendment 37," said Ritter, speaking at the event. "Today, we amplify that commitment by doubling our renewable energy standard through House Bill 1281 and by making it easier to load wind power onto the electric grid through Senate Bill 100."

Rolling up the sleeves
When it comes to policy, it’s often the hard work of advocates, industry players, and others that gets things done, with stakeholders working through seemingly small details that actually have significant implications. In the case of SB 100, implementation work had begun even before the bill’s final signature into law. Wind industry representatives were meeting with Xcel Energy’s transmission planners as early as February to discuss proactive implementation strategies. Once the bill became law on March 27, an open stakeholder process began, and Xcel Energy held three open meetings—in April, May and July—to elicit comments on implementation.

At the first meeting in April, Xcel asked for written stakeholder comments, as well as identification of locations where new projects were likely to be developed. Xcel explained that these locations, together with other data (such as existing interconnection requests, information from previous bids and publicly available data) would inform its first SB 100 energy resource zone report due in October. Its other stakeholder meetings in May and July provided updates on the utility’s progress on the development of its energy resource zones.

Xcel officially filed its SB 100 energy resource zones report on the required date of October 31, 2007. Consistent with its public comments dating back to the first stakeholder meeting in April, Xcel’s report divided the state into four large zones, with wind-rich eastern Colorado comprising three. The fourth zone included the solar-rich San Luis Valley in southern Colorado. Several parties, including the Interwest Energy Alliance, intervened on Xcel’s certificate of public convenience and necessity application for its proposed Pawnee-Smoky Hill transmission project because it appeared that the application could become the primary docket for review of the SB 100 issue. As of the writing of this article, the docket had been referred to an administrative law judge for a hearing.

On the SB 100 docket itself, seven parties filed comments in December, and several parties filed reply comments this month. Representing wind, solar, consumer, environmental, and other interests, many of the comments called for a more aggressive approach to developing transmission in Colorado’s eastern plains and the San Luis Valley. The Interwest Energy Alliance called for use of more-detailed wind and solar resource maps developed by a legislature-created state task force, noting that the task force’s maps showed the state’s developable renewable resources with great specificity and identified an estimated wind capacity of 96 gigawatts in eight specific “Generation Development Areas” throughout eastern Colorado.

In reply comments, Interwest reiterated its call to use the task force maps, and supported a recommendation by the state Office of Consumer Counsel to hold hearings on the implementation of the SB 100 report in order to clarify the PUC’s statutory authority to review and amend the reports. As of the writing of this article, the PUC was reviewing the comments and reply comments, and had not taken further action on the issue. The Interwest Energy Alliance’s SB 100 implementation page (see sidebar, "Links of Interest") is updated as new developments occur.

Since this is the first implementation cycle of the new law, it is important to set a good precedent for future implementation cycles. The development of a robust market for new renewable energy development, and the facilitation of a regional export market, depend on proper implementation, along with greater statewide coordination between all transmission owners, including rural cooperatives, municipal utilities, and federal entities. SB 100 is a critical component in building a vibrant, region-wide market for wind energy in Colorado and through the West. Further, just as Texas’s SB 20 began to pave the way and served as a model for the rest of the country, Colorado’s SB 100 is another milestone along the path toward states creating sound transmission policy that fosters renewables development.

Craig Cox is executive director of the Interwest Energy Alliance. Cox is a recent recipient of the Governor's Excellence in Renewable Energy Award in Colorado.

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