“The War on Rural Colorado” v. “The Innovation Economy”

(Promoted by Colorado Pols)

"We've met the enemy and he is us"   ~Pogo

There is a "War on Rural Colorado" – but it's not being waged by who you think it is.  It's not a war waged by urban Democrats.  It's not a war waged by our Governor.  It's a war waged by entrenched rural interests steeped in 20th-century business models, powered by 19th-century energy resources: coal.  Entrenched interests who cling to a model that, by design, is the enemy of entrepreneurship and innovation.  Entrenched interests who resist a new energy paradigm:  a distributed energy generation model.  It is a war of our own making.

Imagine for one moment the reaction by Colorado Republicans to a mythical headline in the Denver Post: "Colorado Legislature Mandates Construction of Sustainable Electricity Distribution Pilot Project in Rural Colorado".  Queue the clown car:  "War on Rural Colorado". "Out of touch legislature attacks rural values".  Independence Institute dog-whistles at Defcon 2 and another yet-unwarranted attack by Vince Carroll on the folly of a 21st-century energy policy. 

There is a lot of lip service paid to the word "innovation" on the websites of the members of our state and national associations of rural electrics.  This October the Colorado Rural Electric Association (CREA), whose mission is "to enhance and advance the interests of its member electric cooperatives through a united effort" will be hosting an Energy Innovations Summit.   CREA's wholesale supplier of electricity, Tri-State Generation and Transmission, promises us on their website,  "We’re working hard to address the challenges that potentially could threaten affordable electricity.  As a not-for-profit co-op, we’re committed to protecting consumers today and in the future by providing affordable power while investing in innovation – today and for years to come."

If it wasn't for the fact that Tri-State has given it's member coops an average near-10% annual increase in electricity in the period 1995-2012 and is fighting the mother of all battles to construct a coal plant in southwestern Kansas, the narrative might be plausible. Perhaps the definition of "innovation" has a different meaning inside the board rooms of rural electric associations across Colorado than the one found in Webster.

The imagined headline in the Denver Post?  No, it's not exposing a hidden requirement in Senate Bill 252, it's an actual project undertaken by the National Rural Electric Association.  And no, it's not a project being undertaken in the United States.  This display of innovation is happening in Haiti

This past week the second meeting of the Senate Bill 252 Advisory Committee met to discuss the obligations of Tri-State Generation and Transmission under the law.  According to a story by Marrianne Goodland of the Colorado Statesman, [and consistent with assertions made in an email distributed by Tri-State during the same time frame], Tri-State concludes they will have to construct or commit to 230 megawatts of clean energy to be in compliance with the law.  They also state they will need to construct or commit to an additional 254 megawatts of natural gas generation as back-up power.  They also add that transmission will need to be built to carry the additional 484 MW to lead centers. 

They do not believe it is feasible to meet compliance in 6.5 years. 

Also, according to the Colorado Statesman article, Intermountain Rural Electric Association indicates they may meet compliance simply by buying Renewable Energy Certificates [REC’s]. 

Now that is real innovation at work. 

Senator Greg Brophy couldn't help himself,  that he wasn't surprised by the discussion on the RECs, saying that he was aware of that option during the session.  He described RECs as "a waste of money and my neighbor's monies".  He further stated that buying RECs would simply be "transferring our money to Xcel shareholders".

The state-senator-turned-gubernatorial-candidate ended with his statement to the Statesman that "he'd be happier if they'd just roll back the legislation".

Yet, another innovative idea.

Perhaps the senator may have missed the fact that Xcel's current 30% renewable obligation has caused billions of dollars in investments in wind farms in eastern Colorado.  Those projects have been built almost exclusively in his senate district.  His constituents are significant co-beneficiaries of the renewable standard.  In fact, this aggressive state standard has arguably caused the most significant transfer of wealth from his urban, liberal constituents that he wants to govern [via their energy bills] to his rural constituents. 

Who does he think is amortizing and maintaining those billions in investments that are in most cases the single largest taxpayer in these rural counties?   The man is either a mental midget or a disingenuous ideologue.  Or both.

Let's do some math:  If we spread the 230 megawatt clean-energy obligation across all of Colorado's 22 rural electrics, that obligation would amount to just a little over 10 megawatts of obligation for each service territory  [not all 22 rural electrics are large enough to be obligated to the new rule].  Spread that obligation amongst the 18 coops that are under the obligation and it would require each coop [if the obligation was evenly distributed] to just over 12 megawatts. Or, look at it another way:  in 2005 then-Governor Bill Owens' Energy Office funded a distributed generation study on Highline Electric Association, headquartered in Holyoke, CO.  That study found nearly 120 megawatts of system capacity on their existing system if it was deployed in a distributed fashion.  Think about that: an existing study that concludes that just one of the 22 Colorado rural electrics has an existing capacity to meet 50% of their estimated obligation.  Without building a single power line. 

While our national association is strutting its goods in Haiti, I'd prefer we demonstrate innovation in Holyoke

Let's kick the idea of "innovation" up a notch: Tri-State's summer peak is a product of immense irrigation load, predominantly in the northeastern corner of Colorado.  This are is also home to vast reserves of natural gas that is becoming increasingly 'trapped'.  Let's imagine meeting that summer-time peak with trapped gas in the eastern counties; a series of small-scale "peakers" from 5-to-20 megawatts distributed across the grid, bouying the local conventional gas fields and local employment.  And it would have an added bonus:  in the off-peak season, September through May, those same small, efficient installations can firm and shape wind exports from the region. 

And how would these installs be funded, you ask?  Tri-State and every rural coop has access today to billions of dollars at the Rural Utilities Service (RUS): the federal agency that has historically funded coal plants and transmission projects for every rural electric association across America.  In fact, there has been an appropriation by Congress to RUS of $8 billion annually, specifically targeted for projects like the one described above.  And, with the proposed rule changes at RUS that will be announced next month, Tri-State will have the ability to make these ultra-low rate loans available to their coops, coop members, farmers, ranchers, benefit corporations and entrepreneurs served by rural electrics.  A rule change meant to empower entrepreneurship and innovation in rural America.  Tri-State doesn't have to spend a dime to meet compliance; all they need to do is commit to the power generation from these projects – the same business model that they have employed with the Duke Energy-Kit Carson County Wind Farm and effectively the template they propose to use to construct the Sunflower Coal Plant in Holcomb, KS.

Except in this case, the economic benefits will flow to local projects and rural entrepreneurs.

An Innovation Economy?  SB-252, coupled with a strategic commitment by Tri-State to empower their local cooperatives and individual members with grid access and federal loan programs can spark a rural renaissance in rural areas on both sides of the Rocky Mountain divide.  The argument for a stronger commitment to renewables, beyond 20%, is a more compelling argument than Senator Brophy's position to "roll back the legislation".  Perhaps the Senator missed the recent news in our home county that next years assessed valuation will drop by $43 million.  This, in a county that is swimming in trapped, natural gas resources and drowning in Class 5 wind resources.  I might offer that connecting the dots between the obligations under SB-252 and undeveloped rural resources shouldn't be that hard.

Governor Hickenlooper, SB-252 is sound, state policy.  It's an important cog in your vision for an "Innovation Economy"  in Colorado.  By signing the legislation you provided more authentic leadership on building a framework for rural opportunities than we've seen since the build out of the rural electric system under FDR's "New Deal".  Transitioning from a centralized, coal-based rural utility to a decentralized, diverse-fuel portfolio is no less controversial than the introduction of Uber into today's regulated, taxi-cab sector.  These transitions will occur – it's a question of who is going to lead the transition.  The 2013 legislature gives us the blueprint. The Obama administration will soon be giving rural Americans access to the same low-cost financing that has been enjoyed by Tri-State for decades. 

Don't look back, we're not going that way.

33 Community Comments, Facebook Comments

  1. Duke CoxDuke Cox says:

     

    As always, a well-researched and compelling piece. I have just one small correction.

     

    The man is either a mental midget or a disingenuous ideologue.

    These two are not mutually exclusive…..smiley

  2. ClubTwitty says:

    Great diary. But I think you mean 'DefCon 2' http://en.wikipedia.org/wiki/DEFCON

  3. MichaelBowmanMichaelBowman says:

    Here's a map of the county-by-county votes on our original 10% renewable standard in 2004. So, we have urban residents who support green energy. Which would require the construction of wind farms in rural Colorado. Wind farms that would become the single largest taxpayer in each county where they are built. Seems like a good idea, right? I mean, it's state policy driving innovation – and creating a bridge between urban utility customers and rural residents. The urban folks get clean, stable-priced electricity – and the rural folks get jobs and a new tax base. What's not to like? Well, apparently that scenario was one that wasn't acceptable. In an all-out media blitz to kill the amendment, our state rural electric association flooded it's members with anti-37 propaganda. The bad news? Every rural county voted "No". The good news? The populated counties on the front range voted "Yes". It's a lesson on how the growing front range has, and will increasingly continue, to determine state-wide ballots. A lesson that shouldn't be lost on certain Republican gubernatorial wannabees who think clean energy standards should "just be rolled back."

    Michael Bowman's photo.

  4. VoyageurVoyageur says:

    Nice piece, Michael.   Now if we can only stop Weld County from launching an anschuss at my beloved Phillips County to help build their nhew swtate of Dumphuckistan, we will be on the road to progress in rural Colorado.

  5. MichaelBowmanMichaelBowman says:

    The irony of the rural electric discussion is that they were started by Roosevelt as a WPA program to provide electricity to rural America, not unlike the new push to electify the states with newer and ultimately cheaper technology.  They exist because of a mandate.  And decades of taxpayer-subidized programs.  We owe a debt of gratitude to the American public…now it's time to take the distribution network we've invested in and start providing solutions to contemporary American challenges. 

    In the United States, rural electrics only represent 10% of all kilowatt hours consumed, yet they serve over 80% of the nations geography.  Every major renewalbe energy resource is within rural electric territories.  We have  natural advantage in the development of these assets:  both the presence of the energy resources – and access to billions of dollars in ultra-low cost financing. 

    The Tea Party is teaming with the Sierra Club to promote the idea of a new energy revolution.  Promoting real prosperity for Americans.  Not the fake kind promoted by AFP and their corporate hand-maidens.

    Now THAT is an innovative idea.

  6. BlueCatBlueCat says:

    Great piece but apparently your English teacher would have been forced to take it down to a C.wink

  7. Awen says:

    Mr. Bowman: I could not help but notice that in the discussion of the SB 252 committee you are quoting verbatim from The Colorado Statesman article published on Monday. I wrote that article and would appreciate it if you would correct your diary to reflect the source for your information. This includes the comments by Sen. Greg Brophy, who made those comments to me and me alone.

    PS: I sincerely doubt that IREA plans to use RECs alone to meet the 20 percent standard; they've told me as much.

    Marianne Goodland

    The Colorado Statesman

    • MichaelBowmanMichaelBowman says:

      Hi Marianne – no, I'm not quoting the Statesman.  I am quoting from an email Tri-State distributed after the meeitng.  Everything I put in my diary is a 'cut and paste' from that source. 

      • MichaelBowmanMichaelBowman says:

        PS:  if the quotes in the Tri-State email are drawn from your article, the Tri-State email does not reflect that, not does it mention your name in the email anywhere.

        • ClubTwitty says:

          What? Scott McInnis is working for TriState?

          • MichaelBowmanMichaelBowman says:

            LOL.  I'm shocked.  The Tri-State newsletter reads as though it's transcribed by someone in their communications department that was simply reporting public statements at the meeting.  The way the email is constructed I can assure you its intent is to make those who read it believe that IREA is using the threat of RECs and that Senator Brophy wishes the legislation was 'rolled back'.  I understand the Senators precarious position.  He's fought the good fight against these standards for 10 years.  Standards that have brought billions in investment into his district.  Now he has to run a statewide race, in a state that has broad support for renewable energy,  and convince those he'd like to govern that he supports a diverse energy portfolio.  And my 'support', I mean real support.  Not lip service. 

        • MichaelBowmanMichaelBowman says:

          PPS:  if indeed you are the source, and I have no doubt that you are if you say you are, I have no problem with attribution.  The email that I received doesn't mention you – so it certainly isn't anything intentional. MB

          • Awen says:

            http://www.coloradostatesman.com/content/994311-advisory-committee-says-sb-252-feasible-but%3F

            Nonetheless, since you've now been informed that Tri-State had liberally borrowed (plaigarized) from the Statesman story, I would appreciate it if you would attribute the Statesman as the source for the information regarding the SB 252 commitee. I will deal with Tri-State on this.

            This past week the second meeting of the Senate Bill 252 Advisory Committee met to discuss the obligations of Tri-State Generation and Transmission under the law.  According to an email from Tri-State post-meeting, they believe they will have to construct or commit to 230 megawatts of clean energy to be in compliance.  They also state they will need to construct or commit to an additional 254 megawatts of natural gas generation as back-up power.  They also add that transmission will need to be built to carry the additional 484 MW to lead centers.  They do not believe it is feasible to meet compliance in 6.5 years. 

            Intermountain Rural Electric Association indicates they may meet compliance simply by buying Renewable Energy Certificates [REC's]. 

            Now that is real innovation at work. 

            Senator Greg Brophy couldn't help himself, stating that he wasn't surprised by the discussion on the REC's, saying that he was aware of that option during the session.  He described REC's as "a waste of money and my neighbor's monies".  He further stated that buying REC's would simply be "transferring our money to Xcel shareholders".

            The state-senator-turned-gubernatorial-candidate ended with the statement that "he'd be happier if they'd just roll back the legislation".

            – See more at: http://coloradopols.com/diary/47656/the-war-on-rural-colorado-v-the-innovation-economy-2#more-47656

            This past week the second meeting of the Senate Bill 252 Advisory Committee met to discuss the obligations of Tri-State Generation and Transmission under the law.  According to an email from Tri-State post-meeting, they believe they will have to construct or commit to 230 megawatts of clean energy to be in compliance.  They also state they will need to construct or commit to an additional 254 megawatts of natural gas generation as back-up power.  They also add that transmission will need to be built to carry the additional 484 MW to lead centers.  They do not believe it is feasible to meet compliance in 6.5 years. 

            Intermountain Rural Electric Association indicates they may meet compliance simply by buying Renewable Energy Certificates [REC's]. 

            Now that is real innovation at work. 

            Senator Greg Brophy couldn't help himself, stating that he wasn't surprised by the discussion on the REC's, saying that he was aware of that option during the session.  He described REC's as "a waste of money and my neighbor's monies".  He further stated that buying REC's would simply be "transferring our money to Xcel shareholders".

            The state-senator-turned-gubernatorial-candidate ended with the statement that "he'd be happier if they'd just roll back the legislation".

            – See more at: http://coloradopols.com/diary/47656/the-war-on-rural-colorado-v-the-innovation-economy-2#more-47656

  8. Awen says:

    Sorry about that previous post: apparently we STILL cannot edit our own comments. But I hope you get the gist of it 🙂

    • MichaelBowmanMichaelBowman says:

      No problem, Marianne.  I'll edit the diary now.  I intended to go to your website last night and grab the link but got sidetracked.  What I wouldn't give for an edit button, too 🙂  Thanks for bringing it to my attention.   MB

  9. yumameyumame says:

    Having farming interests in rural Colorado, I found the voter demographic map complelling, as should every rural politician, resident and buisness person in Colorado. If the vote in 2004 had been a referendum overwhlemingly supported by urban Coloradoians for more meat and vegitables, how do you think the rural communtiy would have responded ? What is it about supply and demand economics that is not being understood here ?

    As to Senator Brophy, my observation is that he has not yet figured out how to overcome the rotation of the earth, and his politcs are unencumbered by facts. 

    • MichaelBowmanMichaelBowman says:

      Last fall I had the opportunity to play host in Germany with a handful of US-based rural electric managers.  The purpose of the trip was to expose these managers to the 'German model' of renewable energy development, "Energiewende" [EEG]

      We had a fascinating trip that began in Frankfurt and ended in Berlin.  A week-long study of small German communities who have been empowered under German law to have the same rights to produce energy as the German utilities. 

      It's hard to miss all of the irony when I compare the 'new', dynamic German rural landscape to the US-version served by rural electrics.  First, the law was proposed and put into German law by the conservative,  Bavarian-region agriculturalists.  Our version of the Tea Party.  These are real conservatives, not the fake ones like we suffer fools with on a daily basis in this country.  EEG has delivered 25% renewable energy to the German grid today; at its current pace it could deliver 100% by 2035.  The ownership of the generation assets are most interesting:  Private individuals and farmers now own 51% of these assets, trapping significant, new dollars into the local economies.  In the process they estimate they have created something in the neighborhood of 300,000 net net jobs.

      There's no shortage of critics, both domestic and internatinally, regarding EEG.  What would you expect?  They are threatening the traditional, business-as-usual utility scenario.  Those who cling to centralized, fossil-fuel paradigms are doomed to perish.  And so, they'll make up lies and distribute them as if they free watermelon slices at the county fair.  And they will do it shamelessly.  

      The ulitmate irony?  The fastest growing form of governance for this German model is Energy Cooperatives.  Yes, our version of the rural electric.  But they have an advantage: In Germany, with the right to freely assemble and self-determine their future – fully empowered to develop their local resources and thus, provide both the entirety of their local needs and the right to export.  Vibrant small communities that, for the first time, are allowed be in the 'energy game'.

      It's a much different scenario in the US.  While there is lots of fluffy rhetoric about "local, self determination", "independence" "grass roots" and "innovation", the stark reality is that every one of our local coops in Colorado are chained to Tri-State coal plants and are held captive by the ever-present threat of the ominous "All-Requirements Contract". 

      One would have to search far and wide to find a more draconion model of governance.  What isn't hard to find is apologists from rural Colorado who gleefully perpetuate the myth of local, self-governance as Tri-State Cooperative member.

  10. MichaelBowmanMichaelBowman says:

    Vincent Carroll's opinion piece in today's edition of the paper that shall not be named is yet one more mark on the wall in the category "things he's been wrong about" regarding our New Energy Economy for a decade.  He was wrong in 2004 when he carried the water for Intermountain Rural Electric Association, Xcel Energy and Tri-State. 

    No, the amendment, as he promoted its demise it, "did not cost you $2 billion".  In fact, it caused billions of dollars of investment to be made in rural areas to serve an urban load, a mandate overwhelming popular with the very people put under the demands of the initiative.  In fact, in this case, it was a classic "Makers v. Takers" argument.  Rural Colorado has benefitted significantly from our growing portfolio standards.  And up to today, they have done it without lifting a finger.  No risk.  No investment on their part.  But, reaping the benefits of jobs and a significant increase in their tax base.  We are 'the takers', the urban supporters of this initative are 'the makers'. 

    He was wrong about the carbon 'stealth tax'; a legislative mandate to impute a relatively low cost of carbon in the future when considering utility obligations to new power generation.  It has given our state utilities a more diverse portfolio of generation projects, given us cleaner air, cheaper electricity and a more robust economy.

    He was wrong about "Clean Air- Clean Jobs".  It had forced the retirement of coal plants that, in the absence of legislation, may well have been kept in service well beyond their useful life.  CACJ is not a silver bullet, it was a necessary transition step to 'where we're going'.

    He's wrong about SB-252.  You've all suffered my rants on this page regarding those issues and the economic argument for the legislation.

    Now, he's wrong on Boulder.  While Vince makes his case on 'morality', Boulder's case could easily made in other ways as well: the adoption of innovation;  promoting a business environment that lets entrepreneurship and Yankee ingenuity solve problems and make for a more competitive marketplace. 

    Someone in Vince's position should take pause before they attack someone on their actions based on 'morality'.  This country has a rich history of attacking societal challenges based on moral reasons alone.  Plantation owners in the south could have [and did] used the same false equialency to preserve slavery amongst an entire list of other societal challenges.

    This is a discussion that can't be contained to one silo:  it's about morality; it's about ethics.  It's about innovation.  And it's about 'arithmetic'.  And responsibl journalism would looks through the lens of all of them. 

    Vince, if you're reading this, call me.  I'll buy the first round.  303-570-9277

  11. mamajama55mamajama55 says:

    Excellent reporting. I'm informed about northern CO rural issues now.

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