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Colorado Introduces Legislation to Create a New Utility Business Model

colorado utility legislation

Throughout the country, contentious energy policy debates arise when public policy objectives are misaligned with utilities’ source of revenue.  The utility industry group the Edison Electric Institute identified this as a critical challenge in their 2013 publication “Disruptive Challenges” and it has been the topic of numerous studies and forums over the past five years.

Colorado HB 1250 follows the lead of proactive utility commissions in Hawaii, New York and Massachusetts, instructing the Colorado Public Utilities Commission to open an investigatory docket to look at different ways the state might be able to align the public policy objectives of a cleaner, more efficient and innovative energy system with the utility’s business model.

Utilities earn money on investments in infrastructure and recovery of costs through rates. So, building things and selling electricity are their bread and butter.  There was a time in this country when those objectives were the primary goals of an expanding and growing nation.

But today we have numerous other public policy objectives. And frequently those objectives reduce revenues to the utility.

Recently, the Center for the New Energy Economy did a month of podcasts on the Net Metering issue (www.policypodcast.com).  Net Metering is a great example of a policy that has been tremendously successful at increasing solar deployment, reducing costs, streamlining permitting processes, attracting large scale investment driving innovation and creating jobs – but at it’s core, it reduces revenues to utilities. Simply put, if customers are selling their home-grown power to the grid, that’s power that utilities aren’t selling to the grid. As a result, the policy has been under fire across the country.

Rather than simply roll back the public policies that are both successful and quite popular with the public, Colorado’s legislation is proposing to align the public policy objectives with the utility’s earnings objectives.

We can probably all agree that legislators shouldn’t be tasked with coming up with a new utility business model.  But they are the ones setting the public policy of the state. So, the Colorado legislation declares that the commission should investigate changes to the utility business model that would help achieve the following policy objectives:

  1. Maximizing: customer satisfaction, system reliability, supply and demand side efficiency, system intelligence and flexibility, diversification of central and distributed generation.
  2. Minimizing: consumer costs and risks, pollution, water consumption and the need for new investments in large generation.

The end result of the investigatory docket is a report to the general assembly in October of 2016. The hearing for HB 1025 is on March 25th at 1:30 PM Mountain Time and you can stream it live here.

For Colorado, perhaps starting the conversation around the potential of a utility system that nurtures innovation may generate enough political will to pull the utility system into the 21st century – and it’s a template that other states may want to follow.

Photo Credit: Colorado Utility Legislation/shutterstock

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