Review of 2011

Western Renewable Energy

5 January 2012

In 2011, a number of major new wind and solar projects came online in Interwest’s six-state region (Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming). With a nameplate capacity of over 682 megawatts, these new power plants are generating more than just clean, cost-effective electricity for the West: these projects generated hundreds of new jobs, along with new jobs in manufacturing and supply chain operations, along with new local and state tax revenues and economic development. More new projects are in store for 2012 as the wind and solar energy industries tap these energy resources that are abundant in every western state.

However, federal policy uncertainty is clouding future growth prospects in the wind and solar energy industries, underscoring the fact that these relatively newer technologies need the same kind of long-term policy certainty that helped advance the growth of today’s conventional and nuclear energy industries. We head into 2012 with the hope that federal policymakers will remain pro-active in maintaining their bipartisan policy support that has enabled the West to become an international leader in these critically important components of our national energy security and economic future.

 A Quick Review of 2011

New Governors take office in four states

Four new governors took office in Interwest’s six-state region: John Hickenlooper (D) of Colorado, Brian Sandoval (R) of Nevada, Susana Martinez (R) of New Mexico and Matt Mead (R) of Wyoming. Governors Hickenlooper, Sandoval and Mead discussed energy policies in each of their State of the State speeches in January; click on the hyperlinked governor’s name for full text of each speech:

Gov. Hickenlooper: “We have made huge strides with renewable energy and have the potential to grow more and greener jobs…Much attention has been devoted to a debate about energy, the right balance between developing natural gas, coal and renewable energies. But the natural resource that may, in the end, have the greatest impact on Colorado’s economic growth, is water.”

Gov. Sandoval: “Our future lies in business sectors like technology commercialization, bioscience, renewable energy asset development, and defense sector expansion. Innovation will drive tomorrow’s economy, and so it must drive our decision-making as we rebuild our economic development infrastructure…Nevada can strengthen our leadership role in the renewable energy and energy efficiency industries.”

Gov. Mead: “To create jobs, and to grow and diversify our economy, we should build on Wyoming’s natural advantages – our energy, ag, tourism, and great workforce. We should not just extract and export our energy, we should look for value-added projects that use some of our energy here. For example, our superb wind resources partner well with natural gas-fired turbines which fill out the energy stream during lulls in the wind. We should develop both wind and gas-fired turbine projects, where possible. I support current efforts for those working on such projects. And, why not manufacture wind turbine components here, too? Let’s build the items needed to develop our wind resources right here in Wyoming…We must continue to support all our extractive industries…I am skeptical about man-made global warming without more and better science; but I am not skeptical about growing demand by our energy customers for cleaner coal and gas…”

In 2011, Interwest pursued initiatives in state legislatures, regulatory commissions, transmission-planning organizations and in various other key venues at the local, state and regional levels.

Legislative work

Interwest had lobbying teams in four states in 2011: Colorado, Nevada, New Mexico and Wyoming. In Colorado, perhaps the most notable legislation to pass in the 2011 session was SB 45, which empanelled a state task force to examine Colorado’s electric transmission infrastructure and make legislative recommendations on the state’s siting and permitting framework with a particular focus on transmission for renewable energy projects, such as wind and solar energy.

Interwest’s contract attorney Lisa Hickey represented renewable energy interests on this “SB 45 task force,” which also featured representation from leaders of most other key industry and non-governmental sectors in the state. The task force’s final report made three top-level policy recommendations:

  • Increase local government cooperation and collaboration
  • Appeal of PUC Backstop Decisions to the Court of Appeals
  • Open a PUC docket to consider improvements to the backstop process and consider establishing a transmission siting and permitting resource center

Nevada held its every-other-year legislative session in 2011, and the most notable bill emanating from that session was AB 416, which changed the NV Energy Generations programs for distributed solar, wind and hydro rebate programs. The legislation also made power purchase agreements between developers and the utility confidential and allows the utility to apply for rate recovery from installed transmission lines that export energy. This legislation was vetoed by Gov. Brian Sandoval, who expressed concern in his veto message about potential rate impacts of this measure.

Despite Gov. Sandoval’s veto of AB 416, NV Energy vowed to press ahead just the same with its new Renewable Transmission Initiative (RTI), which NV Energy explained is its “process designed to engage renewable energy developers, load-serving entities and others to assess their interest in obtaining transmission service from specific zones in Nevada to other markets, particularly California and the Desert Southwest.”

The highlight of New Mexico’s 60-day legislative session was SB 549, which affected the state’s renewable energy standard’s renewable cost threshold (RCT) by allowing the Albuquerque Bernalillo County Water Utility Authority to expend a maximum of 2.5% of its electricity charges on developing its own renewable energy generation. The bill also requires the customer to retire all renewable energy certificates associated with the energy produced from that expenditure.

Wyoming’s legislative session dealt with several issues of concern to the renewable energy industry, including eminent domain, severability of wind energy rights from surface rights and taxation issues.

The taxation issue proved to be the most difficult, and the matter was referred for further examination during the interim session to the Joint Revenue Committee, which held hearings around the state in the summer and fall. Some of the key topics of discussion surrounding this legislation include sharing of tax revenues with counties as impact payments and allowing sales taxes on renewable energy equipment to be paid over a period of time. Currently, full sales tax is due up-front on a project and a $1/MWh generation tax kicks in after a project has accumulated a three-year generation history.

Regulatory work

In the regulatory arena in 2011, Interwest took part in regulatory work in the commissions of Arizona, Colorado, Nevada, New Mexico and Wyoming with the goal of increasing utility acquisition of clean, cost-stable renewable energy resources. In our regulatory work, we sought to highlight how utilities can integrate ever-increasing amounts of wind and solar into their systems by using improved weather forecasting methodologies and assigning accurate integration costs based on transparent, state of the art, peer reviewed studies for the ramping of fossil-fueled power plants, along with greater consideration of balancing area cooperation and consolidation, and intra-hour scheduling, and access to regional balancing resources through markets, among other policies that can increase the use of renewable resources. Interwest promoted accurate wind integration cost analysis, wind prices and avoided cost calculations in Wyoming and Utah activities in coordination with the Renewable Northwest Project (RNP).

Interwest promoted rules governing transmission planning and increased transparency and access to information in Colorado, including consistency in timing of provision of transmission to make it available and predictable to support bids. Interwest took on the challenge of lower-cost natural gas prices by proving the benefit of wind as a hedge against fuel price increases and volatility and by eliminating discriminatory policies which hamper acquisition of increased stable priced renewables. Interwest is developing alternative business models and incentives for utilities to offer wind projects to their large customers to meet governmental and business environmental and cost-reduction goals.

Interwest is a proponent of a proposed Energy Imbalance Market (EIM), which would enable greater and more efficient sharing of electrical balancing resources between the West’s 38 Balancing Areas (BAs). Key features of an EIM include efficient use of balancing resources between participating balancing authorities, optimized use of transmission assets between balancing areas, and the ability to efficiently accommodate Variable Energy Resources (VERs) such as solar and wind resources. We joined with other allied stakeholders in filing comments to the PUC of Nevada in an EIM investigatory docket, and briefed commission staff and are preparing to take part in a similar such docket in the Colorado PUC in 2012.

At the New Mexico Public Regulation Commission, Interwest supported testimony by expert witness Tom Beach of Crossborder Energy on the state’s Reasonable Cost Threshold (RCT), which limits the amount that New Mexico utilities are required to spend each year to procure renewable energy to meet the state’s Renewable Portfolio Standard (RPS). As a result of its RCT calculation, Public Service Company of New Mexico (PNM) proposed not to acquire any new renewable generation in 2012. Tom proposed an approach to the RCT calculation that modifies the PNM proposal in ways that will make PNM’s approach more consistent both with the statutory basis for the RCT and with the approaches that other utilities in New Mexico have used. With the changes proposed by expert witness Beach, PNM would not be limited by the RCT in 2012, and could make incremental purchases of renewables to fully meet its RPS obligations for that year. The New Mexico PRC held a hearing in this case in late October, and briefs have been filed.

Transmission-related work

In the transmission-planning arena, Interwest was represented by Craig Cox on the Scenario Planning Steering Group for WECC’s Regional Transmission Expansion Planning project, a first-time DOE-funded effort for regional transmission planning that started in 2010 and will be completed in 2014.

A first-ever regional WECC transmission plan with over 5,000 miles of new transmission included was published in 2011. Interwest participated in Westconnect’s response to FERC Order 1000, which will recast utility transmission planning to include more attention to stakeholders, regional planning considerations, and cost allocations and recovery.

Interwest monitored the Colorado Coordinated Planning Group and Xcel Energy’s SB07-100 transmission planning and participated in the preparation and release of a detailed legal and policy review supporting transmission advocacy: “Enabling the Widespread Adoption of Wind Energy in the West: the Case for Transmission, Operations and Market Reforms.”

Other activities and organizational developments

Interwest hires first full-time staff member
Interwest was pleased to hire its first full-time staff member, Ryan Schwartz, in June. Ryan is a former high-school math teacher, recently completing a two-year commitment with Teach For America in Denver. Prior to that, Ryan worked on the policy staff of state senator Michael Johnston (D-Denver), with a focus on energy and environmental policy after graduating from Duke University with a degree in Public Policy. Ryan has already begun to contribute significant value to our organization, and we expect his work will become even more important in 2012 as Interwest transitions to new leadership.

Interwest to transition to new leadership in 2012
In late 2011, Interwest executive director Craig Cox announced he would return to the consulting world in 2012. Craig founded Interwest in 2002, and in close collaboration with the West’s leading industry and non-governmental organizations grew it into a successful multi-state trade association over the following decade. Craig will work for Interwest on a consultative basis after leaving his full-time position as executive director and will also work on behalf of other clients in areas relating to clean-energy policy development and outreach activities.

Applications for Interwest’s new executive director will be received through 13 January 2012.

Interwest to launch new website

Interwest will launch a revamped website in 2012 which will provide easier and faster access to updated information for site visitors. Ranging from access to regulatory filings, testimony and other public documents to updated information on wind, solar and geothermal projects across our region, we hope this new site will prove to be helpful and timely.

A brief look ahead at 2012

In 2012, Interwest will continue working in venues throughout the West to advance new markets for renewable energy, along with the transmission capacity that enables these beneficial markets to thrive. We will work with regulators, legislators, utilities, the conservation community, other allied stakeholders and many additional constituencies as we seek to highlight the many benefits of the West’s abundant, affordable and inexhaustible clean energy resources.

Policy certainty at all levels of government remains a critical factor for all energy industries, and Interwest will continue its support in 2012 for state and federal policies that ensure the continued viability and competitiveness of America’s renewable energy industry. We look forward to working constructively with a wide range of parties on policies to ensure that the West’s energy infrastructure enhances America’s national energy security and our economy.

The Interwest Energy Alliance is a trade association representing the nation’s leading renewable energy industry companies, bringing them together with the West’s non-governmental advocacy community to advance new project and transmission development. Interwest’s states of operation are Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming.