First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0338.01 Duane Gall HOUSE BILL 11-1228 HOUSE SPONSORSHIP Solano, Vigil, Massey SENATE SPONSORSHIP Schwartz, White House Committees Senate Committees Agriculture, Livestock, & Natural Resources A BILL FOR AN ACT Concerning measures to promote economic development through the use of distributed renewable energy generation, and, in connection therewith, authorizing an independent study of the potential for job creation and preservation and other benefits available from adoption of incentives for distributed renewable energy generation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill directs the office of economic development to commission a study of the potential benefits of building upon the state's existing renewable energy portfolio standard through the adoption of additional incentives to increase the amount of distributed generation included in utilities' portfolios for the purpose of job creation and economic development. The bill specifically requires this study to include the potential for job creation and retention in Colorado, broken down by region and by the type of renewable energy source; attraction of new businesses and new capital from outside the state; expansion of revenue streams for farmers, ranchers, and retirees; and creation of additional tax revenue for the state. The study is to be conducted by an independent entity selected by the office of economic development, and funded through gifts, grants, and donations. A report is due to the committees of the general assembly with jurisdiction over business and economic development issues by late 2011. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. The general assembly finds, determines, and declares that, as a means to improve Colorado's economy, there is a need to conduct an independent, legislatively sanctioned, Colorado-focused study of a distributed generation policy with proven results worldwide for creating jobs and accelerating markets for local energy production. SECTION 2. Part 1 of article 48.5 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 24-48.5-113. Economic development through distributed generation - study - report - funding - fund created - repeal. (1) (a) As soon as possible, but no later than July 1, 2011, the office of economic development shall select one or more independent persons or entities, also referred to in this section collectively as the "analyst", to provide technical expertise and strategic policy recommendations, from a statewide perspective, to the office and the general assembly. The office shall select the analyst through a competitive request-for-proposals process. (b) The analyst's primary task is to produce a report containing findings and legislative recommendations on the potential for promoting economic development in Colorado by increasing distributed generation of energy from renewable sources, as more fully described in subsection (2) of this section. (c) In collecting information for its report, the analyst shall: (I) Solicit and receive comments, including written submissions and other information, from members of the public. The analyst may determine the manner in which comments are solicited and received. (II) Consider any comments, including written submissions and other information, received from: (A) Businesses, trade associations, and industry groups; (B) Public and private entities that promote rural economic development; (C) Counties, cities, and state agencies; (D) Public utilities and their customers; (E) Environmental groups; and (F) Other interested stakeholders; and (III) Consider any available reports, analyses, research papers, white papers, feasibility studies, pilot projects, and technical information, including aggregated utility data; research from the national renewable energy laboratory, the governor's energy office, the Colorado public utilities commission, academic institutions, public utilities, and private citizens; and information from any other public or private entity. (2) Report - scope and content - issues to be considered. (a) The analyst shall prepare and deliver its report to the house economic and business development committee, the senate business, labor, and technology committee, and the members of the general assembly, in accordance with section 24-1-136 (9), on or before December 15, 2011. The report must contain an independent study of the opportunities for economic development and job creation in Colorado derived from deploying locally generated renewable energy via a legislatively enacted policy mechanism, which may consist of or include a standard offer that: (I) Covers all forms of renewable energy generation; (II) Connects all producers of renewable energy to local distribution in a timely fashion; (III) Compensates producers for the cost of their system plus a modest rate of return through a long-term, must-take contract with the local utility; (IV) Covers costs through modest utility rate increases; (V) Applies to electricity and heat generation; and (VI) Has a defined lifetime, and is not a policy intended to run in perpetuity. (b) The report must address at least the following specific points: (I) An assessment of the probable economic impact of a market-based approach to increasing renewable energy generation on a utility-by-utility basis, including investor-owned, municipally owned, and cooperatively owned electric utilities. The assessment is to include outcome data relevant to: (A) Potential job creation and preservation per region within Colorado and per renewables sector, including the multiplier effect of wages and salaries earned for those jobs; (B) Rate impacts for customers; (C) Avoided costs for utilities; (D) Attraction of new capital to Colorado; (E) Attraction of new businesses to Colorado; (F) Encouragement of entrepreneurial activity and innovation; (G) Expansion of revenue streams for farmers and ranchers; (H) Passive income for citizens living on fixed incomes; and (I) Additional tax revenue for the state of Colorado; (II) Presentation of case study information from the implementation of pilot programs or other, similar efforts in Colorado or other locations, if such information is available; (III) An assessment of grid connectivity costs and issues for new renewable generation, ranging from small-scale to large-scale deployment; (IV) Information on the mechanics, advantages, disadvantages, and costs of establishing a third-party, nonregulatory clearinghouse to monitor the operation of a market-based policy, once implemented; (V) An estimate of the economic benefit of including renewable heat, solar thermal collection, combined heat and power retrofits, district heat, or waste heat recapture, together with the costs and benefits of any associated incentives; (VI) A determination of what accommodations, if any, would need to be made for federal policies and potential changes to those policies; (VII) Comparison and contrast between any proposed policy for the promotion of renewable energy generation and existing policies, including an assessment of the relative cost-efficiency of those policies, and suggestions for any necessary amendments to harmonize, upgrade, or unify existing policies with the proposed policy. As used in this subparagraph (VII), "existing policies" includes net metering, time-of-use rates, interconnection, solar gardens legislation and regulation, tiered-rate electricity pricing, tax credits, rebates, and the renewable portfolio standard contained in section 40-2-124, C.R.S. (VIII) An assessment of whether any proposed policy would affect access to capital for renewable project developers of various scales; (IX) An estimate of the aggregate economic effects of any proposed policy; and (X) Suggestions for identifying appropriate milestones for success and defining the decommissioning triggers, in recognition that the proposed policy is not intended to continue indefinitely. (3) Funding. (a) The office of economic development may accept private gifts, grants, and donations for the purpose of providing support to the analyst to perform its responsibilities specified in this section. Any such gifts, grants, and donations shall be held in the distributed generation economic development fund, also referred to in this section as the "fund", which is hereby created in the state treasury, and shall be available to the office and the analyst only for the purpose of carrying out the analyst's duties under this section. The fund also consists of moneys appropriated and transferred to the fund. Any unexpended or unencumbered moneys remaining in the fund as of June 30, 2012, reverts to the general fund. (b) It is the intent of the general assembly that the office of economic development not be required to solicit gifts, grants, or donations from any source for the purposes of this section and that no general fund moneys be used to pay for grants awarded pursuant to this section or for any expenses of the analyst. (c) If, by June 1, 2011, moneys in the fund have not reached an amount sufficient to pay the expenses of the analyst, the analyst shall not undertake any duties pursuant to this section, and the office of economic development shall return to each grantor or donor an amount equal to such grantor's or donor's contribution. The state treasurer shall transfer the interest, if any, earned from the investment of moneys in the account to the general fund. (4) Repeal. This section is repealed, effective July 1, 2012. SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.