State legislature kind to energy measures

Gargi Chakrabarty, Rocky Mountain News

Saturday, May 5, 2007

It's been a banner year so far for energy legislation.

The Democratic-controlled Colorado House and Senate, which wrapped up the legislative session Friday, heard at least 50 bills related to energy development.

And the legislature passed nearly two dozen of them - some aimed at minimizing the impact of oil and gas drilling on the environment, wildlife and human health, and others focused on boosting the generation of power from renewable sources such as sun, wind and plant and animal waste.

A key bill overhauls the Colorado Oil and Gas Conservation Commission, the state agency that regulates the energy industry. The bill expands the commission to include environmental oversights and no longer guarantees industry a majority representation.

"The intent behind this reform measure is to bring balance to the commission itself and a broader mission to what the commission does," said Evan Dreyer, spokesman for Gov. Bill Ritter. "Colorado is experiencing one of the most active energy cycles in its history, and we are going to do everything we can to make sure the public health, environment and wildlife are protected."

"At the same time, we also are going to work hard to ensure the energy industry remains strong and vibrant."

While environmental activists, sportsmen, landowners and others applauded Ritter for supporting the bill, Colorado's $13 billion oil and gas sector is concerned about the bill's ramifications at a time when companies are seeing a cool-down because of weakening energy prices.

The commission approved 1,219 drilling permits from Jan. 1 through March 19. At that pace, the commission estimates it will approve 5,704 permits this year - a 3 percent decrease from 2006's record high of 5,904 permits.

Millions of dollars worth of oil and gas projects have either left the state or been shelved in past months because of the regulatory uncertainty brought on by the bill, said Ken Wonstolen, industry counsel and attorney at the law firm Fulbright & Jaworski.

"The jury's out on that legislation," Wonstolen said. "We don't know who's going to get appointed to the commission board, how it's going to work, if the board will become politicized. Uncertainty is not good for business."

Wonstolen said companies are relieved they could negotiate with the legislature and the Ritter administration on most of the bills, including the commission reform measure, to reach a compromise.

"When you look at the oil and gas bills, each one is a product of compromise," said Rep. Kathleen Curry, D-Gunnison. "Nobody got everything they wanted, and that probably was the best approach in the long run."

The parties negotiated compromises on bills designed to reduce the impact of oil and gas drilling on wildlife habitats, or direct drilling companies to minimize their footprints on land surface and compensate landowners. Bills dealing with those issues had been defeated or withdrawn in previous years.

A renewable-energy bill, described as the cornerstone of Ritter's new energy economy, sailed through and was signed into law in a matter of weeks.

The law requires utilities to get 20 percent of their electricity from renewable sources such as the sun, wind or biomass by 2020 - double the goal of 10 percent by 2015 set by Amendment 37, which voters passed in November 2004. Customers eventually would pay the cost incurred by utilities to comply with the renewable energy standards.

The bill got overwhelming support from lawmakers, environmental activists, utilities and rural electric co-operatives except the Intermountain Rural Electric Association, which said it was concerned about the higher cost of renewable power.

Bills that encourage the construction of new power lines to carry electricity from far-flung wind and solar energy plants or improve energy savings by customers also passed.

But a bill dealing with the impact of oil and gas drilling on human health died, as did a "net metering" bill that would have allowed rural customers to generate their own electricity - using windmills or solar panels - and sell what they don't use back to their utilities.

"The net metering bill was a disappointment," said Will Coyne of Environment Colorado. "But we will come back next year."

Energized legislature

Lawmakers heard an unprecedented 50 or more energy-related bills this session. Five major energy bills passed:

• House Bill 1341: Overhauls the Colorado Oil and Gas Conservation Commission by increasing the board size to nine from seven and reducing industry representation to three from five.

• House Bill 1281: Requires utilities to get 20 percent of their electricity from renewable sources such as the sun, wind or biomass by 2020.

• Senate Bill 100: Allows utilities to propose transmission plans and recover those investments from electric ratepayers expeditiously.

• House Bill 1298: Requires state regulators to minimize impact of oil and gas drilling on wildlife resources.

• House Bill 1037: Directs utilities that deliver electricity and natural gas to launch energy-saving programs, including offering rebates to customers for installing energy-efficient lights, appliances and insulation.

chakrabartyg@RockyMountainNews.com or 303-954-2976