2021 Leg Session, Energy, Environment, Land Use, Uncategorized

Koncilja: Senate Bill 72 gives away Coloradans’ say over utilities

How do you feel about a transmission line 50 feet from your back door? “Ha” you say.  “Cannot happen because I have local zoning and permitting processes that will stop that.”  If Senate Bill 72 passes out of the legislature, those local protections do not apply.  “Ha” you say again.  “My land is protected by a conservation easement.”   You are wrong again.  If SB72 passes, this new Transmission Authority has the sole discretion to build transmission lines anywhere they want, with no notice to you and no way for you to participate in the decision.

The authority will have the power of eminent domain, but not to worry, the authority will pay you for the value of that sliver of land without the conservation easement on the property.  So, the first time you will find out about the new transmission line 50 feet from you backdoor or across that pristine vista, is when the authority knocks on your door and tells you they are taking your land.  The authority will make a take-it-or-fight-it offer to pay you for the land.  Your only remedy is to hire a lawyer to represent you in the condemnation proceeding, and the only issue you can raise is the value of your property the authority has taken.

How do you feel about huge transmission charges on your electric bill?  “Ha” you say again, “I can participate in rate cases at the Colorado Public Utilities Commission (PUC) and challenge the outrageous amount.” You are wrong again.  If SB72 passes, you will have the “opportunity” to challenge the amount at the Federal Energy Regulatory Commission (FERC). As a former PUC Commissioner, I was, at times, critical of the complicated PUC processes and the expense in participating at the PUC.  The FERC processes make the PUC look easy and simple to navigate. For example, FERC Order 1000 that governs the transmission issues is over 620 pages. Lawyers who handle matters at FERC, located in Washington D.C, are very expensive.  Tariffs at FERC are usually 1500 pages or more.  So, you will need to hire a high-priced K street lawyer who understands the orders, the tariffs, and the processes.  The cost and the distance will limit if not eliminate your ability to fight the charges.

How do you feel about another large charge on your bill for the expense of your utility becoming a member of a Regional Transmission Authority (RTO)? “Ha” you say again, “the PUC is studying whether or not joining an RTO is in the best interests of the citizens of Colorado and as required by 2019 legislation they have hired the consultant, paid the consultant $500,000. I have submitted comments. The report will issue on May 1. I can submit more comments.”  You are wrong again.  SB72 orders the PUC to order Colorado utilities to join an RTO by 2030, unless the PUC decides that joining an RTO is “against” the public interest of the citizens of Colorado.  So, SB72 creates a presumption that the Colorado utilities will join an RTO and the PUC, the regulatory agency, must rebut the presumption, taking into account the needs for transmission for other states. How is that for turning the regulatory process on its head? The current study is looking at the costs and benefits of joining an RTO. So that $500,000 study that is almost completed will be worthless because SB72 makes the decision, then changes the criteria and the standard the study is based on.

RTOs are very complex organizations.  Each of them spends about a quarter of a billion dollars a year to operate.  Those costs flow down to electric customers.  The environmental community, bless their hearts, are wildly enthusiastic about RTOs.  They continually say that an RTO “increases the penetration of renewable energy.” The important question, however, is what are the costs and benefits for the citizens of Colorado. That is what the PUC is currently studying.  Without even considering the study SB72 makes the decision—join.

We have all seen how badly the RTOS have operated this last year.  The Electric Reliability Council of Texas (ERCOT) is a disaster, brought to you by the same folks who brought you ENRON. (Those expensive “Market Monitors” paid for by electric customers missed the obvious.) The California Independent System Operator (CAISO), another golden child in the environmental world, had rolling black outs in August.  Southwest Power Pool (SPP) the other nearby RTO had blackouts during the extreme weather in February.

SB72 is so detailed in the requirements for an eligible RTO, that the PUC must order Colorado utilities to join, that one must conclude that the backers of SB72 have already decided which RTO Colorado should join.  SB72 ignores whether the PUC has the legal authority to order a utility to join an RTO and turn over its transmission assets to the RTO—there is this annoying due process clause that requires due process before property rights are taken. SB72 contains other hidden minefields, too numerous to review here.

This new authority can plan, build, own and finance transmission lines, enter into contracts and leases, operate the transmission lines, hire an operator, and issue revenue bonds. The authority will be run by a board of 7—not elected, but appointed, part time and not paid. This means they will be captive to the unregulated independent transmission builders, the out of state hedge funds who want to make as much profit as they can from transmission and the environmental organizations who want new transmission, regardless of the cost and regardless of the benefits for Colorado citizens.

This new authority is not any agency of the state, not subject to administrative direction from the state and not subject to the personnel rules, so they can pay their executive director whatever they want–$300,000? $400,000.  I wonder who the candidate waiting in the wings for this plum assignment to be the King or Transmission Dictator is? This authority and its Transmission Dictator will be answerable to no elected official—not the governor and not the General Assembly.

To add insult to injury, SB72 will raid the fixed utility fund (which Colorado electric and gas customers fund) for at least a half million dollars to create this authority.  I predict this $500,000 is only a first installment, because $500,000 is not enough to run this authority. (If the backers of SB72 really thought it could fund itself, they would set up the authority as an enterprise.)  The authority will drain the PUC of the resources it needs to adequately regulate the investor-owned utilities in this complex environment.  You may not always agree with the PUC (I know I did not and wrote dissenting opinions), but the PUC does its best to limit the return on equity (meaning the profit that the utility can make) and require that the utility follow the public policies of the state, including hiring union workers.   If SB72 passes, you will never know how much the hedge funds are making from transmission in this state, unless you have enough money to invest in them. Independent transmission builders are not subject to Best Value Employment Metrics, and will only care about their bottom line, not Colorado workers or Colorado ratepayers.

SB 72 is one of the largest transfers of power from the towns and communities in Colorado, and the Colorado PUC, to an Authority that is accountable to no one.  The transfer of Colorado decision making to this Authority and FERC is not in the public interest of the citizens of Colorado.  It will only benefit unregulated out of state transmission builders, the hedge funds who finance them, and some environmental organizations.   (Did I mention that the out of state hedge fund has the same lobbying firm as many of the environmental organizations?).  Decisions concerning where to build and how much to pay for new transmission should be made by local towns and the Colorado PUC, who will consider your costs, your backyards, who benefits and how much they benefit.  This bill should be killed.

Frances A Koncilja, a Denver lawyer and lifetime Colorado resident who served as a Commissioner on the PUC from 2016 to 2020, is now at Koncilja Public Utility Law and Strategy, LLC.  She can be reached at fkoncilja@koncilja.com. A version of this column first appeared in Colorado Politics.


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