House Committee on -- Select -- Strategic Renewable Energy (04/12/2006)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON -- SELECT -- STRATEGIC RENEWABLE ENERGY

Date:	04/12/2006	ATTENDANCE

Time:	01:41 PM to 04:00 PM	Lundberg	X
		Madden	*
Place:	SupCt	Rose	X
		Gallegos	X
This Meeting was called to order by		Solano	X
	Representative Solano

This Report was prepared by
	David Beaujon
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Biomass Base Heating Alternative Fuels Solar Energy Production Home Energy Efficiency Energy Saving from Recycling		Witness Testimony Only Witness Testimony Only Witness Testimony Only Witness Testimony Only Witness Testimony Only

01:42 PM -- Biomass Base Heating

Dan McClendon, General Manager, Delta-Montrose Electric Association, described Delta-Montrose Electric Association's customer base and introduced Mr. Bony.

01:45 PM

Paul Bony, Delta-Montrose Electric Association (DMEA), described the importance of energy efficiency and identified energy saving methods. He also described incentives offered by DMEA for its customers to install energy saving technologies such as compact fluorescent lighting and geothermal heat pumps. Geothermal heat pumps use the relatively constant temperature of the earth as a heat source and sink to cool a home. Mr. Bony proposed state policies to increase energy efficiency such as mandating that new public buildings be energy efficient and amending building codes to encourage energy efficient buildings.

01:58 PM

Paul Aldretti, International Center for Appropriate and Sustainable Technology (ICAST), identified sustainable energy projects in Colorado sponsored by his organization (Attachment A). ICAST helps local communities select appropriate energy technologies that address local needs, provide economic opportunity, and protect the environment. He explained that these project were selected based on their "triple bottom line" of economic benefits, impact on resources, and social impacts. To encourage use of renewable energy sources, Mr. Aldretti proposed financial incentives, public education and training, the creation of revolving loan program for community projects. He also identified sources of biomass energy including agricultural and forest products.

02:14 PM -- Alternative Fuels Manufacturing and Distribution

Stacey Simms, American Lung Association, provided an overview the American Lung Association's Clean Cities Program (Attachment B). She explained that alternative fuels, such as propane, natural gas, and hydrogen improve air quality, promote economic development, and enhance energy security. The Denver Metro Coalition of Clean Cities is promoting the use of alternative fuels and alternative fuel vehicles by providing grants, distributing fleet buyer guides, and assisting with project management and implementation. Ms. Simms identified alternative fuel programs in Colorado including Denver International Airport's compressed natural gas fleet, one of the world's largest. Other alternative fuel fleets includes the State of Colorado, the Regional Transportation District, and the Town of Breckenridge's biodiesel bus fleet. She identified barriers to increase use of alternative fuels in Colorado including too few retail distributors, lack of knowledge, a costly and inconsistent permitting process for retail stations, and insufficient funding for development and public education. Ms. Simms described challenge of obtaining permits from local fire districts for above ground storage tanks for alternative fuels and proposed a linear statewide regulation for such facilities.

02:28 PM

DuWayne Deperry, RecyclOil, explained that his business provides biodiesel feed stock for manufacturers of biodiesel to be used in modified diesel engines (Attachment C). This fuel is made from vegetable oil. It has a net energy yield ratio of approximately 3.2 units of energy produced for each unit of energy consumed in the manufacturing process. He explained that biodiesel has fewer environmental impacts than petro-diesel because it produces fewer pollutants and does not produce explosive vapors. Colorado is estimated to use nearly 800 million gallons per year of biodiesel and produces approximately 15 million gallons of the fuel per year. Mr. Deperry explained that his company collects used cooking oil from 400 restaurants and food service providers in Colorado. His facility then removes water, solids, and particulates from the used oil and converts it to a reactor-ready feed stock for biodiesel manufacturing customers. Mr. Deperry proposed policies to promote biofuels development including statewide use mandates, fleet mandates, and tax incentives for consumers of biofuels.

02:42 PM

John Cevette, Chief Executive Officer of Colorado Corn, described the benefits of ethanol and identified the challenges of competing with traditional petroleum fuels that receive larger tax incentives and other government subsidies.

02:47 PM

Patty Stulp, Ethanol Management Company, proposed sales tax exemptions for ethanol fuels and other public policies to encourage long-term investment in ethanol production. She explained that ethanol is competitive with gasoline when crude oil prices exceed $40 per barrel.
02:55 PM - Economic Issues Associated with Solar Energy Production

Jim Welch, Sun Electric System, identified the factors driving the rapid growth in solar energy production. These factors include high fossil fuel prices and Amendment 37 requirements concerning renewable energy that was approved by Colorado voters in 2004. Amendment 37 requires that a portion of the electricity generated by affected utilities be generated from solar resources. Private investors are also more interested in investing in solar technologies. Mr. Welch explained that the permitting process for solar facilities is cumbersome and should be streamlined to encourage solar energy production.

03:06 PM

Mark Mehos, National Renewable Energy Laboratory, described energy production from concentrated solar power. This method concentrates the sun's energy on to a receiver, which absorbs the heat to and transfer it to a fluid. The heated fluid is then used to power a turbine. He explained that a large concentrated solar power facility is being constructed in the San Luis Valley in southern Colorado. Due to its high altitude and dry climate the San Luis Valley is one of Colorado's best locations for solar power generation facilities. He compared the cost of generating electricity from coal, natural gas, and solar power and identified barriers to building concentrated solar power facilities including start-up costs. Mr. Mehos recommended that the investment tax credit for solar facilities be extended and that such facilities be exempt from state sales tax and local property taxes.

03:22 PM -- Home Energy Efficiency

Howard Geller, Southwest Energy Efficiency Project, explained that his organization promotes utility energy efficiency programs in Colorado, Arizona, Nevada, New Mexico, Utah, and Wyoming. (Attachment D). Utilities can encourage energy efficiency by providing incentives to install efficient appliances, heating and cooling systems, and compact fluorescent lighting. Utility energy efficiency programs offer the greatest opportunity to save consumers money by lowering their electricity and natural gas bills. Reducing demand by increasing efficiency saves money by delaying the need to build new power plants. Energy efficiency also helps reduce pollutant emission and water consumption.

Mr. Geller expressed concern about public policies that discriminate against energy efficiency measures. For example, the Public Utility Commission (PUC) prohibits utilities from raising their rates to pay for energy efficiency but allow them to raise rates to increase generating and transmission capacity. A state policy also allows gas utilities to recover costs to pay for energy savings measures for low income customers but not other customers. He identified energy savings programs sponsored by Xcel Energy and the Colorado Springs Utilities. Mr. Geller spoke in support of House Bill 06-1147 that requires the PUC to adopt rules establishing funding and cost-recovery mechanisms for natural gas distributors to pay for conservation and energy efficiency programs. He also proposed legislation to require the PUC to allow rate increases to pay for other energy conservation programs. Legislation or PUC rule should also be adopted to require utilities to evaluate energy conservation measures prior to requesting rate increases for increased power generation capacity.

03:36 PM

Megan Edmunds, Executive Director of E-Star, explained that her organization certifies energy efficient homes and said that constructing efficient homes is cheaper than retrofitting existing homes. She explained that Colorado is a heating-load dominated state that uses natural gas to heat homes and electricity to cool homes. She expressed concern that current law (Senate Bill 01-144) does not require the PUC to consider energy efficient technologies for gas utilities such as is required for electric utilities. She explained that recent electricity outages experienced by Xcel customers during the winter were related to natural gas shortages.

03:46 PM -- Energy Savings from Recycling

Marjorie Griek, Colorado Association for Recycling, described the energy savings from recycling common materials such as aluminum, copper, paper, and plastic (Attachment E). For example, the Institute of Scrap Recycling Industries determined that recycled aluminum saves 95 percent of the energy that would have been needed to make new aluminum from ore. Recycling also reduces environmental impacts such as green house gas emissions related to the production of glass. She also identified local recycling business. For example, the Ball Corporation manufactures approximately 5.5 billion aluminum cans that contain an average of 42 percent recycled materials. Ms. Griek recommended that a department of resource management be created to assist with recycling in Colorado. Moneys should also be made available through the Colorado Commission on Higher Education and the Governor's Office of Energy Management and Conservation to support new recycling businesses.

03:58 PM

The meeting adjourned.