Energy Policy 39 (2011) 7217–7223

Contents lists available at SciVerse ScienceDirect

Energy Policy

0301-42

doi:10.1

n Tel.:

E-m

journal homepage: www.elsevier.com/locate/enpol

The rural utility response to Colorado’s electricity mandates

Sean Tierney n

University of North Texas, Department of Geography, 1155 Union Circle, #305279, Denton, TX 76203-5017, USA

a r t i c l e i n f o

Article history:

Received 19 January 2011

Accepted 19 August 2011Available online 3 September 2011

Keywords:

Electricity

RPS

Policy

15/$ - see front matter & 2011 Elsevier Ltd. A

016/j.enpol.2011.08.042

þ1 940 369 5107; fax: þ1 940 369 7550.

ail address: sean.tierney@unt.edu

a b s t r a c t

When Colorado voters passed Amendment 37 in 2004, it became the first state to pass a renewable

portfolio standard at the ballet box, suggesting broad appeal to harness and pay for renewable energy.

While large urban utilities are prepared to make this transition, smaller cities and rural areas, for

various financial and scale issues are severely disadvantaged in trying to incorporate more renewable

energy sources into their electricity mix. This was evident by the state’s support for Amendment 37,

which was passed due to strong support in the Denver metro area—representing nearly half of the

state’s population. Support for the bill was poor in the rest of the state. Nevertheless, in 2007, the state

expanded up Amendment 37 by forcing the utilities in rural communities to diversify their electricity

mix. This study surveyed the managers at the state’s various rural electric cooperatives and municipal

utilities in an effort to gage their attitudes concerning: carbon legislation, conservation and efficiency

programs, and their plans for making the transition away from fossil fuel generation.

& 2011 Elsevier Ltd. All rights reserved.

1. Introduction

Most of the emphasis on curbing greenhouse gas emissionstakes aim at investor owned utilities serving urban areas. Policiesdesigned to improve efficiencies, combat climate change, ormitigate environmental impacts, stand the best chance of successby targeting the largest utilities, serving the densest populationclusters, and usually as publically traded and regulated entities,they provide plenty of data in order to identify best-practices.Municipal utilities (MU) and rural electric cooperatives (REC),which are different from investor owned utilities (IOU) in size,scope, customer type, and geographic market, only serve 25% ofthe country and therefore only limited data exists for theseunregulated utilities. In Colorado, a 2007 state law mandatedthat rural utilities begin the renewable electricity transition. Thisstudy surveyed managers at these utilities to identify whatconservation, efficiency, and green energy policies are in placeas they prepare to meet their obligations. Many of the utilitiesopposed the law, so while they begin adhering to the new rules,resistance to further regulations remains intense.

All utilities want to reduce electricity costs, which has mademixing more expensive renewables into their portfolios a chal-lenge. In the absence of federal leadership (Heiman and Solomon,2004), states have enacted their own energy laws and the mostwidely adopted method for legislating renewables has been theRenewable Portfolio Standards (RPS), which 29 states have passed.Over the last decade, 60% of the additional capacity brought online

ll rights reserved.

has come from states with an RPS (Wiser, 2009). RPS legislationtends to target IOUs because they are better able to bring greenenergy into their portfolios, by capitalizing on economies ofdensity. Some states require MU and REC to meet RPS targetsbut it is usually in the face of significant resistance (Dahlberg,2002). When states do include them in their RPS, the targets aregenerally relaxed because of the burdensome costs on theirsmaller member base, which already face structural and financialoperating challenges (Greer, 2003).

Although efforts are in place to push renewables and efficien-cies, all three utility types have large legacy investments in fossilfuels generation (Table 1). RECs are more carbon intensive in theirelectricity production; RECs are 80% reliant on coal comparedwith 48.5% of national electricity (NRECA, 2009). And while inaggregate MUs mirror the generation profile of the United States,there is greater reliance on coal in the rural MU service terri-tories1 where electricity demand is growing twice as fast as thenational average (Mufson, 2007).

In 2007, Independent Power Producers (IPP) controlled 89% ofthe renewable nameplate capacity, rural utilities owned virtuallyno renewable generation, and with the exception of some wind,IOUs have also held back. IPPs lock on renewables is partiallyexplained by the induced demand of the RPS, but they are alsoeager to take advantage of the tax incentives that supportrenewable generation. The production tax credit (PTC) is theincentive most widely used and functions by offering a tax credit

1 MUs that serve larger urban populations (Seattle, Los Angeles, Orlando, etc.)

are more likely to behave like IOUs with an diverse generation portfolio, whereas

rural MUs lean more heavily on coal.

Table 1Portfolio of electricity generation in 2007.

Source: EIA (2009b); APPA (2009).

IOU MU REC Federal IPPs Total

Coal 188,806 29,519 24,002 18,233 75,480 336,040

Natural gas 125,553 38,241 20,085 5776 262,397 452,052

Nuclear 41,177 8814 3034 7205 45,535 105,765

Oil 23,241 8595 1242 27 29,289 62,394

Hydro 24,363 20,628 913 41,710 10,385 97,999

Renewables 2618 809 103 2 29,162 32,694

Geothermal 38 220 0 0 2975 3233

Solar 9 2 0 0 491 503

Wind 2081 284 10 2 14,219 16,596

Biomass 489 302 93 0 11,460 12,344

Total 405,758 106,606 49,379 72,953 452,248 1,086,944

Totals reflect nameplate capacity (MW).

2 Four other RECs have meters in Colorado, but are excluded because most of

their business is in neighboring states.3 In 2009, Sangre De Cristo Electric Association produced 107 MWh from

small demonstration facilities. Sangre De Cristo sold more than 100,000 MWh in

2007, making the 107 MWh insignificant.4 Only two MUs exceed 40,000 m (Ft Collins and Colorado Springs); Longmont

should have 40,000 by 2010.

S. Tierney / Energy Policy 39 (2011) 7217–72237218

for every kWh generated. In order to apply the credit IPPs needother income, which explains why many IPPs are subsidiaries oflarge institutions that view electricity generation as a tax strategy(Ishii, 2006; Harper et al., 2007)). IPPs have seen their stature inthe electricity markets grow, but there ascent has had limitedbenefits for rural utilities.

Several factors contribute to the difficulties in decarbonizingthe electricity mix of rural utilities. First, limited RPS mandateshave insulated these utilities from making any transition. Second,as non-profits, the tax-code prevents MUs and RECs from usingthe PTC; and while the federal government has experimentedwith ways to encourage renewable energy by the entitiesexcluded from the PTC, they have been ineffective (Wiser et al.,2007; Mazza, 2008). Third, the large and diversified revenue baseof IOUs is preferred by IPP investors; a proposed project wouldprefer the financial strength, stability, and simplicity of dealingwith one entity that is backstopped by the rate hiking powers of aregulatory agency, rather than many small, primarily residential,and non-profits. Despite the natural marriage that might exist forIPPs to partner with RECs and rural MUs in developing renew-ables (good renewable resources are found in their serviceterritories), wind penetration rates are low; of the 930 nationalRECs, only 150 own or contract for wind (Johnson, 2008). Finally,rural utilities are operated by local residents and are more visiblethan the employees of a behemoth like an IOU, making itpersonally prohibitive to propose higher rates, particularly invulnerable economic communities.

Demand-side management products and services offer analternative approach for rural utilities to peruse efficiencies andyet only a limited number are committed to fund these programs(Wilson et al., 2008). Demand-side management (DSM) specifi-cally, and load-management more generally, are geared towardsmoothing out electricity usage and result in lower electric billsfor customers while removing the need for expensive peakingplants. DSM has a good track record with IOUs, where substantialmanagement and funding exists to follow through on deliveringcost-effective energy saving options. In Colorado, DSM spendinghas increased from $11 million in 2002 to $51 million in 2009, butnearly all of that was done by the state’s IOUs (Dilworth, 2010).

There remains ample opportunity for DSM at rural utilities buttheir small size has prevented any sustained momentum. As aresult, generation and transmission (G&T) operators have pushedDSM to their distribution utilities as they can more effectivelybundle the necessary tools to cost effectively introduce thevarious programs. And because DSM can be more cost-effectivethan new fossil fuel or renewable generation, wholesale electri-city providers have been successful in a handful of states(Freischlag, 2011). But RECs (and their wholesale providers) varyin their geographic size, climate conditions, and customers which

is why individual utilities must retain flexibility in their approachtowards DSM, energy reduction, and energy transition strategies.So this survey-based study is an effort to understand what stepsrural utilities have taken to encourage a reduction in energyconsumption, what they are doing to promote renewables, anddetermine how they would craft future carbon legislation orenergy policy.

2. The Colorado utility, energy, and policy landscape

Within Colorado, there are 53 utilities2 (Table 2). The two IOUsserve 60% of the customers, but Black Hills Energy is only a minorplayer. With 90% of the IOU segment, Xcel Energy is the dominantutility, serving 1.3 million customers and more than $2 billion inrevenue (EIA, 2009b). The 26 RECs have more customers, revenuesand generation than the 29 MUs, but there is a wide range of sizes.The state’s second largest utility is the Colorado Springs MU with208,000 customers, while the smallest utility in the state is the cityof Fleming MU with 200 customers. Intermountain REA is thestate’s largest REC with 135,000 customers (3rd largest in the state),while White River REC is the smallest with about 3000 customers.

None of the RECs generate their own electricity,3 while 18 ofthe 22 buy electricity from Tri-State Generation and Transmission(G&T). Tri-State operates in four states (New Mexico, Wyoming,Nebraska, and Colorado), but more than half of its revenues aregenerated in Colorado. The other four RECs (Grand Valley, HolyCross, Intermountain, and Yampa Valley) buy their electricityfrom Xcel. Except for vertically integrated Colorado Springs, mostof the MUs have contracts with two municipal agencies, PlattRiver Power Authority (PRPA) and Arkansas River Power Author-ity (ARPA) and similar to Tri-State, they are G&Ts governed by aboard from member utilities (GEO, 2008). Given its abundantsupplies in the surrounding Rocky Mountain Region, fossil fuelsdominate the energy mix. Colorado utilities obtained 2/3 of theirelectricity from coal (Fig. 1), led by the rural utilities whereTri-State generates 72% of its electricity from coal (Tri-State G&T,2009), PRPA obtains 73% (PRPA, 2009), and 72% at ARPA (ARPA(Arkansas River Power Authority), 2009). Colorado also exceedsthe national average in natural gas electricity and wind but hasbeen without nuclear power since 1989.

In November 2004, Colorado voters approved Amendment 37becoming the first state to pass an RPS at the ballot box. Themeasure mandated that the state’s two IOUs and MUs servingmore than 40,000 customers4 were to obtain 10% of its electricityfrom renewable sources by 2015. Smaller MUs and all of the RECswere excluded from the provisions in Amendment 37 (A37). Itbecame necessary to go directly to the people because thetraditional legislative mechanisms were blocked by the utilitylobby (Purdy, 2004), led by the Colorado Association of MunicipalUtilities citing an ‘‘incursions into local control of municipalutilities’’ (CAMU, 2009). Among the RECs, there were significantdisagreements. Many were in favor but two RECs, Intermountainand Holy Cross made a large investment in Comanche 3, a new750 MW coal plant opening in 2009, signaling a move away fromrenewables (Williams, 2009).

Within the RECs, disagreements have become louder about anenergy transition. Protecting REC member’s interests is a fiduciary

Table 2Colorado utility breakdown.

Source: EIA (2009b).

Utilities Revenues ($000) Sales (000 MW) Customers

IOU 2 2,266,934 29,935,092 1,421,319

REC 22 1,046,651 11,558,022 586,346

MU 29 614,170 8,878,210 417,591

Total 53 3,927,755 50,371,324 2,425,256

0%

10%

20%

30%

40%

50%

60%

70%

Coal Natural Gas Nuclear Hydro Wind Other

National Colorado

Fig. 1. National and Colorado energy portfolio in 2007.

Source: EIA, 2009b.

Fig. 2. Service area for RECs.

Fig. 3. Service territory for the MUs.

S. Tierney / Energy Policy 39 (2011) 7217–7223 7219

role of a board, elected every few years and since A37, these onceroutine elections have become fractious. Traditionally safe boardseats at some RECs, including Yampa Valley (2009), Holy CrossEnergy (2009), and KC Electric (2009), have seen pro-fossil fuelincumbents fend off challengers with an environmental agenda.The most heavily watched election was at the state’s largest REC,serving many of Denver’s outer suburbs (Williams, 2009). Inter-mountain REA has been the most outspoken critic of A37,investing $366 million in Comanche 3 and funding sciencedenying climate change (New York Times, 2006). Three of theseven board seats were contested in 2009, and although pro-fossilfuel incumbents retained their seats, the debate within andbetween the RECs has intensified.

In 2007,5 Governor Ritter signed House Bill 1281, whichdoubled the requirements on IOUs to 20% by 2020, and extendedthe RPS to RECs, mandating that by 2020, they achieve 10%renewables (DSIRE, 2009). Smaller MUs remained exempt. In2010, Colorado increased the RPS to 30% by 2020, making it oneof the most ambitious in the country. Wind has been embracedfor meeting RPS targets, but solar will also be part of the mix. A‘carve-out’ provision in A37 requires that IOUs generate 4% oftheir target from solar, while rural utilities get a 3–1 benefittowards their RPS mandate for every kWh of solar generation(Haight et al., 2008).

3. Methods and data

The service territory for the MUs and RECs are much different(Figs. 2 and 3). With the exception of Colorado Springs and FortCollins, the MU service area is generally compact. RECs territory isexpansive. Although density data for Colorado IOUs and MUs isnot available, RECs have 7.8 customers per mile, mirroring thenational average (CREA, 2008). As expected, different utilitieshave different perspectives on energy legislation; namely theobvious disparity in customer density. Against this backdrop, this

5 20 Legislative achievements related to climate change were signed into law

in 2007, ranging from tax credits for renewable projects to wind projects for

schools. For complete list, see Colorado Climate Action Plan (2007).

study attempts to explain how the utilities serving varioussegments of rural Colorado are adhering to A37 and preparingfor future energy needs. Because the two IOUs are regulated inter-state organizations, Xcel Energy and Black Hills Energy wereexcluded from this study.

Of the 51 utilities, 45 responded to the survey,6 including 21 ofthe 22 RECs and 24 of the 29 MUs. Questions were emaileddirectly to city managers or utility directors (at the MUs) orgeneral managers (at the REC) and the 35-question survey wasdesigned to see how they were preparing for a new energylandscape. For three reasons, phone contact was made with eachutility’s director/manager prior to sending out the survey. Thefirst was to solicit a qualitative perspective that would beunattainable through the survey instrument, many of which areincluded in the results section. Second, since the survey would beshared with the utilities upon completion, they were asked ifthere were questions they would like to see asked. Two questionswere added: the first on nuclear expansion and the second on if autility planned to exceed the RPS. Finally phone contact was made

6 Full survey instrument is available upon request.

S. Tierney / Energy Policy 39 (2011) 7217–72237220

to request that the general manager fill out the survey rather thanpassing it to someone with less perspective; and that they wouldrespond with the utility’s official position (not personal opinion).This study was conducted in the spring of 2009.

4. Results

To illustrate broad public sentiment concerning energy legisla-tion, consider the geographic imbalance in voter support for A37. Allof the rural counties in eastern Colorado and most in WesternColorado rejected the bill, garnering less than 50% of the vote(Fig. 4). Overall 42 counties rejected the bill compared with 22counties that supported it, but the heavily populated countiesaround Denver favored A37. Of the eight counties with more than100,000 voters, only El Paso (made up mostly of Colorado Spring)did not support the bill. All of the counties adjacent to metro-Denversupported the bill’s passage despite being served by Xcel Energy,which faces the most stringent requirements under the RPS.

Given the problems outlined earlier for rural utilities toincorporate more expensive energy options into their electricitymix, it was not a surprise that A37 failed in most of the areasserved by RECs and MUs, yet several of these communities votedin favor of the RPS. With the exception of Boulder, the six mostsupportive counties (as a percent of the total vote), all passing thebill with 2/3 support or more, are home to major ski resortdestinations (Table 3). The only major ski destination county thatdid not pass A37 was Grand Country, where it narrowly failed.

A map of the state’s median household income shows thewealthier counties are found in ski counties, (as well as metroDenver), while the counties with lower household income are

Fig. 4. Support for Amendment 37 by county.

Table 3Amendment 37 results by country with a major ski resort.

County Total vote Yes (%) No (%) Major ski resorts

Pitkin 8385 81.6 18.4 Aspen, Snowmass

San Miguel 3671 79.0 21.0 Telluride

Summit 12,950 71.8 28.2 Breckenridge, Keystone,

and Copper

Eagle 17,415 69.7 30.3 Vail, Beaver Creek

Gunnison 7922 66.5 33.5 Crested Butte

La Plata 23,257 62.1 37.9 Durango

Routt 11,024 55.8 44.2 Steamboat

Grand 7208 48.6 51.4 Winter Park

found in eastern and southern Colorado (Fig. 5). Ski counties tendto have higher incomes and therefore an argument could be madethat they can better withstand higher electricity prices (thathigher per capita incomes translate into support for A37 alsoapplies to the counties around Denver). It is more likely howeverthat their support for A37 was directly tied to their tourismdependency, which would be jeopardized in the event of warmerwinters and shorter ski seasons. Given the connections betweentheir business and climate change, one mountain operator, VailResorts, bought renewable energy certificates to offset theircarbon emissions starting in 2006 (Johnson, 2006).

It was initially hypothesized that many of the smaller utilitieswould resist the efforts of the state’s RPS mandates, and this studyasked the utilities how they felt about the RPS requirements. Onlythree of the 45 indicated that the RPS targets were not aggressiveenough, compared with 27, who thought the mandates were tooaggressive; the remaining 15 utilities were comfortable with thetargets. Six utilities expected to exceed the RPS, 19 were evaluat-ing their options and 20 said they planned to go no further thanrequired by the mandates.

Despite mixed attitudes about the RPS, rural utilities wereaggressively incorporating energy reduction strategies prior toHouse Bill 1281 (HB 1281). By about 2:1, rural utilities offeredgreen power programs (GPP), net metering (NM) and subsidizedenergy audits (Fig. 6). Free compact florescent light bulbs (CFL)and rebates for buying energy efficient appliances are some of theother programs offered to reduce energy consumption. Less than

Fig. 5. Median Household Income by county.

0

5

10

15

20

25

30

35

Gre

en P

ower

Pro

gram

s

Sub

sidi

zeen

ergy

aud

its

Net

met

erin

g

Free

CFL

App

lianc

ere

bate

s

ebill

Yes No

Fig. 6. Programs offered to curb energy consumption.

S. Tierney / Energy Policy 39 (2011) 7217–7223 7221

half of the utilities offer electronic billing, and although unrelatedto energy, ebills might serve as sustainability metric; unpacking aconnection between people’s environmental instincts and theiruse of paperless billing is worth future thought. It is noteworthythat in conversations with utility managers, several mentionedhow many of their customers still pay their bills in person.

Of the 29 utilities that offer a GPP, only three had more than5% of their customers signed up. GPP enrollments average about2% nationally, and tend to be higher among customers of IOUs,which is unsurprising since they are better able to incorporatemore expensive renewables into their electricity portfolios (EIA,2009a). The same is true in Colorado, where IOUs have 3.5%enrollment, more than double for both MUs and RECs (Table 4).Although rural utilities said that participation was low because ofhigher energy costs, enrollments continue to grow, primarilybecause customers are demanding both GPP and NM. Whenasked why they have a GPP, 20 introduced the program becauseof customer interest or demands, whereas only five did so inresponse to the RPS, while four chose other reasons. Thesebottom-up approaches, many of which were in place before2007, suggest that rural utilities are proactively pursuing elec-tricity reduction solutions and DSM outside the mandate frame-work. NM participation has also grown, but in light of the overallelectricity profile, the numbers are trivial.

Given the rural vote on A37, it is no surprise that 39 of the 45respondents felt the state legislature is not concerned with theirutility’s problems in meeting the targets (Fig. 7). One componentof meeting the RPS would be customer acceptance or ability topay higher electricity bills; 31 of the 42 utilities that answer thequestion, evenly spread among the MUs and RECs, indicated that

Table 4Colorado customers enrolled in utility sponsored gpp and nm.

Source: EIA (2010).

2004 2009

Customers gpp nm Customers gpp nm

REC 455,615 5019 30 512,770 7677 1814

MU 346,778 2061 2 368,855 3917 176

IOU 1,162,334 32,309 49 1,227,791 40,949 5142

0

5

10

15

20

MU REC MU REC MU REC

State concerned w / yourproblems on RPS

Customers worried aboutfinancial burden

Your utilitiy shares stateenergy agenda

Yes No

Fig. 7. Utilities responses to state mandates.

Table 5Potential future electricity plans.

Yes

Plan to build generation within three years 12

Explored direct renewable investment 31

Spoken to IPPs about building in your territory 22

What type of technology (# of responses)a Wind (9)

a Some utilities have spoken with IPPs about several techno

a majority of their customers were fearful of a material financialburden in meeting the statewide RPS. Despite this consensus viewon these two questions, 16 utilities felt as though their interestswere in line with the statewide energy agenda. In other words,36% of the utilities felt that elements of the state energy policywould provide some benefit within their service territory. Thisquestion cast a wider net on state energy policy, beyond a narrowfocus on renewables. This more expansive question is an impor-tant differentiator because Colorado is a powerful player in thenatural gas industry. Part of the more favorable response rate forthis question, particularly among the MUs, might be explained bythe aggressive statewide natural gas leasing activity, which hasbrought economic benefits to smaller communities. At the end of2007, there were 33,625 natural gas wells, up from 23,000 justfive years prior, while new drilling permits has tripled to 6100over that same period (Frank, 2007).

In conversations with the managers prior to administering thesurvey, several claimed that they believed the state is interestedin regulating all the utilities (not just the two IOUs), so thatstricter green energy standards could be imposed at a later date.The 10% RPS for RECs and large MUs, as perceived by many ofthese utility managers, was a legislative failure, in that they wereunable to impose more austere requirements on the rural utilities.These managers expressed fears that HB 1281 was simply anopening bid in a broader regulatory agenda; that state legislatorswill pry open this door further with tougher standards in the nearfuture.

Colorado Springs is the only utility in this study that owns agenerating station larger than 25 MW (EIA, 2009b), however thereare signs that more of the rural utilities are seeking to acquiresome portion of new generation activities (Table 5). When askedif they expect to build their own generation in the next threeyears, 23 respondents had no plans, but 12 intended to buildsome generation and the other 10 utilities said that plans werebeing considered. Although Comanche 3 is moving forward, mostutilities expressed enthusiasm for non-fossil fuel options. Twelveutilities have renewable generation construction plans, whiletwo-thirds of the utilities are exploring direct investments ingreen generation. These results reflect a desire for more activecontrol in the composition of their energy portfolio. Half of thesurveyed utilities, evenly split between RECs and MUs, say theyhave spoken with an IPP about locating a project within theirservice territory. According to the survey, the two dominantinvestment technologies discussed by the utilities were wind(mentioned nine times) and solar (mentioned seven times).

The economic and employment benefits were driving thisdialog. In some cases, farmers can earn more money per hectarefrom wind royalty payments on their land than the incomeearned from crop or ranching activities (Mazza, 2001). In fact,promoting the economic benefits of wind turbines on farm- andranch-land was an integral part of the publicity campaign for thepassage of A37 (Smith, 2004). Of the 22 utilities that have spokenwith IPPs about constructing generation in their territory, 14 havehad conversations with ranchers, farmers, or large land holdersabout locating wind generation on their land.

No Maybe

23 10

14

23

, Solar (7), Biomass (3), Geothermal (3), hydro (3)

logies.

05

10152025

Carbon Tax Cap&Trade Not sure, butsupport some

legislation

Oppose Don't know /no opinon

REC MU

Fig. 8. Utility opinions toward carbon legislation.

$0.000

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

$0.140

$0.160

REC MU IOU

2000 2004 2006 2009

Fig. 9. Average retail electricity price per kWh at the three utility types,

2000–2009.

Source: EIA, 2010.

S. Tierney / Energy Policy 39 (2011) 7217–72237222

As for the debate over pending carbon legislation, 23 of therural utilities oppose any carbon regulation. Of the seven utilitiesthat support legislation, none favor cap-and-trade while 15 of theutilities interestingly did not have any opinion (Fig. 8). Mean-while, their position on nuclear generation appears to be equallyagreeable, with 28 utilities supporting it, and only two (bothMUs) saying they oppose building new nuclear generation; theremaining 15 utilities did not have formal position. Expecting therural utilities would oppose carbon legislation, a follow-up ques-tion was posed that asked about what would be the best first stepto reduce carbon emissions. Twenty utilities said that programs toimprove efficiencies like building codes and home weatherization,while 13 utilities thought that load management technologiesincluding smart-grids and advanced meters would be best. Twoutilities felt that carbon legislation should be the first step, whileone said nothing needed to be done. Nine did not have an opinion.

5. Discussion and conclusion

HB 1281 laid out milestones for rural utilities to achieverenewable penetration rates and stage one requires that 1% ofretail electricity sales must come from green supplies by 2010. Ithas been three years, since the bill extended responsibility ofadding renewables to all of the state’s utilities, and the earlyresults are promising. RECs are dependent on the investmentdecisions at Tri-State G&T and in 2009, Tri-State contracted forelectricity from a new wind farm in Southern Colorado (Jaffe,2009); as a result, all RECs (except Intermountain) have exceededtheir requirements under HB 1281. Despite falling outside legisla-tion, half of the MUs have incorporated renewables into theirelectricity mix, which conforms to their perception that they toowill soon face mandates. Colorado Springs and Fort Collins are thetwo legislatively bound MUs and they have met their obligationsfor 2010 with renewable energy certificates and generationrespectively. While wind remains the most cost-effective tech-nology option, more than 18,000 MWh of solar generation hasbeen integrated since 2008, making Colorado the state with thethird most installed capacity, trailing only California and NewJersey (SEIA, 2008). Once again, Tri-State has responded to itsmembers demands, by announcing a 30 MW solar project inNortheastern New Mexico, among the largest in the country(Tri-State G&T, 2010).

Renewables contributed 6% of the electricity statewide in2009, up from less than 1% when A37 was passed. Vieweddifferently, since 2004 the rise in Colorado’s total electricitydemand of 2.7 million MWh has been met by the three millionMWh increase in electricity from renewables. Furthermore, since2000, retail electricity prices have fallen for all utility consumers(Fig. 9). Part of the price drop can be explained by the increasedrole of cheaper natural gas, which has doubled its share of theelectricity profile to 27% (from 13% in 2000), but fears that a A37would be economically harmful have not materialized in the earlyyears of the transition. Time will tell if this trend can continue asrenewables make up a larger percentage of the total electricityportfolio.

Driven by urban sprawl, many of the coops are now assumingthe responsibility for electrifying exurban and even distant sub-urban communities that encroach on these one-time remotelocales. Furthermore, according to the Department of Agriculture,the migration patterns of baby boomers will have a materialimpact on non-urban and more isolated areas that offer lowerhousing costs and high natural amenities (Cromartie and Nelson,2009). By 2020, the rural population of people between the agesof 55–75 will increase by 30%. The changing role of electricproviders in rural areas will pose a series of questions for theenergy industry and policy makers as the country attempts totransition away from fossil fuels.

Survey responses show that rural utilities are eager to cut theirreliance on coal and find a way to incorporate renewables intotheir electricity supplies. They have embraced conservation andefficiency measures, GPP, and sought contractual arrangementswith renewable energy providers; many of these steps predatedthe RPS. But rural utilities remain suspicious of mandates and areworried about the financial burden on their customers. Shouldnew state or national legislation call for a more aggressive energychange, it would reinforce the views among these rural commu-nities that their voices are not being considered in the politicalprocess. The recent surge in natural gas discoveries may serve asboth an energy and trust-building strategy, for policies could bewritten that mandate a longer-term transition to renewablescoupled with a near-term focus on locally procured natural gas.As this study showed, the support among MUs in eastern Color-ado for the state energy agenda suggests that rural communitiesmight be amendable to this type of compromise.

Ideas of and cooperation from rural communities will be animportant component of any medium- and long-term attempt toalter our electricity sector so the energy transition must also beabout bridging the urban/rural distrust. As Colorado moves tostake out a leadership position in the new energy economy,soliciting the participation and ideas of rural communities willbe vital, and this study suggests that certain obstacles must stillbe overcome.

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