September 10th, 2007 Minutes of the Senate Bill 91 Task Force

Minutes of the SB07-091 Task Force

SB07-91 Task Force on Renewable Resource Generation Development Areas
State Capitol, Denver, Colorado
September 10, 2007
and Notice of Work Group meetings, September 18 and October 1, 2007

Attendance: Fifteen members of the sixteen member Task Force (Glenn Gibson, Dan McClendon, Barbara Walker, Craig Cox, Rick Gilliam, Richard Smart, John Bleem, Ron Lehr, Sam Mamet, Tony Frank, Ron Larson, Frank Prager, John Nielsen, David Hurlbut, and Morey Wolfson). There was one excused absence (Mac McLennan).

The meeting was convened at 1:30 p.m. by Task Force Chairman Dan McClendon. Mr. McClendon welcomed the SB07-091 Task Force (TF) and members of the audience (about 15 people, who introduced themselves). The TF approved the draft agenda. The TF then approved the minutes of the August 6 Task Force meeting and the minutes of the August 15 Work Group meeting. The budget was then referenced and displayed on the screen:

SB07-091 Renewable Resource Generation Development Areas TF Budget

Anticipated Expenditures

• Technical work and report writing $24,000
• Prepare, print report, web work, postage 6,000
• Purchase generation and transmission data from Platts 2,192
• Contingency- room rental for Task Force meetings (two times @ $300) 600
• Mileage for Task Force Members to attend meetings 400
• Refreshments at Task Force meetings 400
• Coordination and logistics - GEO 0
• GIS assistance
• NREL Technical Assistance Contract - $10,000 0
• Department of Local Affairs - Colorado GIS Coordinator 0
• Electric utilities and others 0
• $33,592
• Donations to date:
• Aquila $2,000
• Colorado Association of Municipal Utilities 2,000
• FPL Energy 3,000
• Iberdrola 3,000
• Interwest Energy Alliance 5,000
• Midwest Research Institute 5,000
• PPM Energy 3,000
• Tri-State G & T Association 5,000
• Vestas Wind 3,000
• Xcel Energy 5,000
• $36,000

There were no concerns or discussion offered regarding the budget.

Chairman McClendon asked TF Member Morey Wolfson (Governor’s Energy Office) to proceed with the next segment of the meeting. Mr. Wolfson presented summary slides reminding the TF and the audience of the requirements and objectives of SB07-091. These elements include the creation of maps to include existing generation and transmission lines and potential renewable resource generation development areas within Colorado that have the potential to support competition among renewable energy developers for development of renewable resource generation projects. His briefing described the SB07-091 process, including:

• A 16 Member Task Force has been appointed by the Governor, the President of the Senate, and the Speaker of the House
• GEO has raised approximately $36,000 to fund the project
• Meetings – Task Force meetings (4) – Work Group meetings (5) – Opportunity for public comment
• Scope of work has been defined
• Renewable Resource Generation Development Areas need to be identified
• Final products to be delivered to Legislature and Governor before December 31, 2007

Mr. Wolfson then described how mapping is the key project focus, including these elements:

• Identify potential wind, solar, hydroelectric, biomass, biofuel, ethanol, and geothermal resources
• Identify all existing generation
• Identify existing transmission
• Quantify renewable energy resources in capacity and energy terms
• Identify transmission needed to serve the renewable resource generation development areas
• Identify existing economic, regulatory, and policies related to the resources and their potential expansion
• Identify the role of enterprise zones in the development of renewable resource generation development areas

At this point, Mr. Wolfson introduced Dave Skiles, who serves as GEO’s technical contractor to implement the provisions of SB07-91. Mr. Skiles described the key requirements of the GIS work, which includes these elements:

• Plan Requirements
• Design Information Products
• Create Technical Design (this is where the investigation is at this juncture)
• Develop Map Components (this is where the investigation is at this juncture)
• Review and Refine Map Components
• Document Map Components
• Construct Prototype Assembly
• Review Prototypes
• Create Finished Maps
• Document Finished Maps
• Publish Maps Set and Documentation
• Work Review

Mr. Skiles then described the Work Plan as approved by the TF in August:

• Phase 1 – Develop detailed requirements.
• Phase 2 – Create map information components. The map components and descriptive text represent spatial considerations for renewable energy resources. (this is where we are at this juncture)
• Phase 3 – Assemble renewable resource maps and documents into a final map set publication.

Mr. Wolfson then presented a progress report, including a review of the August 18 Work Group meeting held at the National Renewable Energy Laboratory (NREL). He referenced the attendance at the Work Group meeting and what was discussed. His briefing included short presentations on these topics:

• Introduction/review of Geographic Information Systems - Dave Skiles
• Defining a Generation Development Area (GDA) – Dave Skiles
• Three minimum elements needed to describe a GDA – Dave Skiles
• A description of NREL’s capability of conducting GIS economics analysis - Donna Heimiller, NREL
• A review of NREL screening analysis - Donna Heimiller
• Description of our basic data requirements - Dave Skiles
• electric utility service territories need to be overlaid on the base maps
• location and size of existing generation and transmission facilities, with available capacity
• existing and planned renewable resource projects
• an overlay of enterprise zones
• GDA socio-economic data
• policy overlays (such as renewable energy incentives offered by taxing authorities and utilities)
• distribution and substation levels
• Description of our proposed deliverables
• Maps of solar, wind, hydro, geothermal, biomass, biofuels, ethanol
• Overlay of socio-economic data
• Analytical document
• Online access to the data
• Mapping project focus
• Potential use of enterprise zones in the development of renewable resource generation development areas
• Transmission needs of the renewable resource generation development areas to locations in which customers can use the renewable resources
• Potential development of various renewable resources, including, but not limited to, wind, solar, hydropower, biomass, biofuel, ethanol, and geothermal resources.

Mr. Wolfson then described the results of defining the SB91 region boundary. He described the consensus at the Work Group meeting that the region boundary should extend north into the southern part of Wyoming and south into northern New Mexico and partially in to Kansas. He described that the analysis would not characterize the renewable resources in the neighboring states, but the purpose derived was aimed at characterizing transmission resources, including available transmission capacity. This portion of the meeting included discussion whether the boundaries of the investigation should be limited to the four corners of Colorado. A consensus was not achieved, and it was agreed that this should be placed on the agenda for the September 18 Work Group meeting.

At this point, TF Member David Hurlbut summarized his presentation on “Mapping Texas Competitive Renewable Energy Zones.” He described how the Texas process used PNL wind resource map. The process then took a first cut detailing sites with similar wind. This was followed with an identification of the best 1,000 MW within each area. This was followed by identifying counties of stakeholder interest. This was followed by identifying areas considered by the PUC of Texas, followed by selection of the final Competitive Renewable Energy Zones.

At this juncture, Mr. Wolfson described the current status of obtaining data. He said that we have what we need relative to solar and wind maps, thanks to NREL. He said that we now have what we need relative to generation, because we have purchased the North American Power Plant data set information from Platt’s. He referenced the receipt of help from both Tri-State Generation and Transmission Association and Public Service Company of Colorado. He referenced the difficulty in obtaining information on available transmission capacity. It was agreed that this topic should be explored in greater depth at the September 18 Work Group meeting.

The TF was then briefed on obtaining socio-economic variables. The following GIS information will be developed by the State GIS Coordinator by September 28: population, lodging, schools, employment status, and most enterprise zones. Mr. Wolfson said that the effort will be made to develop the following GIS information between September 28 and October 15: labor, education/training, access to transportation infrastructure, housing, income, education attainment, and remaining enterprise zones. He then said that the following have been evaluated, and are potentially difficult information data sets to obtain in a timely manner: access to water pipelines, property value, and commuting.

At this juncture, the TF considered what other topics ought to be considered for inclusion. It was agreed that the mapping should strive to obtain information on landfills and waste water treatment plants. It was suggested that this data might be available either through the Department of Public Health and Environment of the Department of Local Affairs. The TF then discussed what exclusion areas are embedded in NREL’s maps and whether we should consider adding other exclusion zones, or areas of potential concern if not outright exclusion. Mr. Wolfson said that he was in touch with the Western Governors Association (WGA) regarding their process of compiling the data for three states. He reported that WGA is doubtful they will have the data in a form that is ready by September 28.

The discussion then turned to additional information search issues and a progress report. With respect to available transmission capacity, it was suggested that a Technical Studies Subcommittee of the Western Electric Coordinating Council might have information on path ratings www.wecc.biz With respect to biomass, the work effort will be in touch with the USDA Forest Service Rocky Mountain Region and the Colorado State Parks. With respect to geothermal, we will work with the Colorado Geological Survey, who has already provided us with geothermal GIS data. With respect to hydroelectric, TF Member Richard Smart has provided us with four databases for hydro sites. A preliminary review of the data lists around 91projects with a development potential of about 782 MW.

At this juncture, the TF considered the Work Plan Deliverables, that include these elements: maps (solar, wind, hydro, geothermal, biomass, biofuels, and ethanol); utility service territories; overlay of socio-economic data, such as enterprise zones; transmission system (existing and planned); generation locations, and exclusion zones. The TF then discussed deliverables, including these elements: analytical document- final report; the media for the report (DVDs and hard copies for distribution); online access to the maps and the report; plans for distribution, plans for publicity; potential for updates in 2008 and into the future.

Mr. Wolfson then outlined preliminary plans for the organization of the SB91 Final Report, which would contain these elements:

• SB91 Legislation
• Appointment of Task Force (TF)
• TF timeline, meetings, public comment
• Related legislation
• Colorado renewable energy- background and future
• Overview of renewable energy generation
• Colorado demographic considerations
• Economic considerations
• Generation
• Transmission
• Colorado’s electric utility industry
• Electric regulatory structure
• Electric service territories
• Electric utilities profile
• Colorado’s proposed renewable generation
• Map set
• Analysis
• Topics for further study

Following a break, Mr. Wolfson briefed the TF on proposed processes for: notices of meetings, receipt of, and response to, verbal and written public comment; and plans to disseminate preliminary GDAs prior to October 15 meeting for more substantive public comment.

This was followed by a review of meeting dates, locations, and purposes, as follows:

Tuesday, September 18, 2:00 – 4:00. Work Group meeting at NREL Visitors Center. Monday, October 1, 2:00 – 4:00. Work Group meeting at NREL Visitors Center. Review inputs received regarding SB100 maps, generation data, biomass, hydro, etc. October 15, 1:30- 4:30. Task Force. Hearing Room 0112. Receive public comment, review progress since the September meeting, and define next steps. Late October/early November - Possibility of two more Work Group meetings. November 19, 1:30. Determine the location- Hearing Room 0112 is not available. Final meeting- receive public comment, review progress since the October 15 meeting, and complete the TF work. December- If necessary, Staff prepares final deliverables following TF approval via email. December 31- Deadline to submit maps and report to the Legislature and Governor.

At this juncture, TF Member Ron Lehr presented suggested ideas for a Project Development Check List. He said that the charge of the SB 91 Task Force is to “. . .identify renewable resource development areas. . .to support industry development among. . .developers. . .for development of renewable resource generation projects. (CRS 40-4-116). He posed the question: what is project development and what should state government and stakeholders be doing about it? He advocates that a Renewable Energy Project Development Check List be developed. He said that Colorado has a lot of renewable energy resources. But by themselves, wind, solar, biomass, geothermal, and hydro resources don’t add any value. Resources require development projects that install technology to produce electricity (or fuel). Getting a power purchase agreement for the power is the biggest obstacle. He said the Colorado has many renewable energy goals, that include: “New Energy Economy”; Amendment 37 benefits (PUC rules ignore six -save consumers money, new businesses and jobs, rural economic development, save water, diversify energy resources, reduce impacts of volatile fuel prices, improve natural environment); fair competitive bids for power contracts, local ownership, develop rural economy, diversity of resources to manage fossil risks, and consideration of non-utility benefits. He then described what started ten years before the Lamar Wind Farm, including: study of wind resources (OEC and DOE UWRAP, “Gobbler’s Knob”); champions said that wind should be on the Xcel system (OEC, LAW Fund); propose voluntary payments—Windsource, waiting lists, TV http://www.9news.com/weather/video/webcams/imageenlarge.aspx

Udall bill: clean energy choices; engage Zond, Enron, GE Wind, then PPM Energy, Shell; Colorado Coalition for New Energy Technology, Interwest Energy Alliance; rural support—Lola Spradley, Farm Bureau, RMFU, CWL; economic case: high, variable natural gas prices, predicting fossil prices futile, asymmetrical impacts on ratepayers; modest costs to integrate naturally variable generation; external and non-utility costs; supporting policy: renewable energy standards. He then discussed the utility acquisition process, contract and risk issues, interconnection, and property tax issue. The lesson that he learned is that a check list for success is needed so that projects can happen in less than ten years. He suggested that what is needed is a better understanding of renewable energy project economics, and policy support. The PUC Lamar wind project decision found the large wind project economic at about $3.50/mmbtu on natural gas, but transmission constraints have limited access to cost effective wind bids. The Lamar project was found to be the most cost effective project bid to Xcel, but for one small hydro project that cost less. Electric generation from methane from water treatment, landfills is cost effective, in place now, could be expanded. A37 policy: lead with cost effective projects, keep consumers better off, share benefits with new technologies that need economic support.

What about the other renewable energy technologies? He said that support is needed for smaller wind projects (< 50 MW?)—need access to turbines, economics don’t save utility consumers money, and for small wind turbines—payoff in second decade, no policy support, and for solar photovoltaic—Amendment 37 market, economic with rebates, A 37 “net benefits” flow from large wind farms, and for solar thermal electric—needs Colorado system demonstration, then scale economics, costs?; and for biomass—forestry red zone issues; water system, other benefits; costs?, and for natural gas cogeneration projects; and for geothermal.

Mr. Lehr suggested that Colorado needs a Project Due Diligence Checklist, including these elements:

• Financing requires meeting requirements for risk assessment
• Grant making requires meeting requirements for successful projects
• Power purchase agreements require bidders that can show project meets utility requirements
• Question: If we had a widely supported checklist, would it help project developers be successful?
• Question: If we helped project developers meet checklist requirements, would it speed project development?

Project Due Diligence Check List contents:

• Legal format: LLC, S Corp, C Corp, partnership agreement
• Organization: people and money applied to opportunity, expertise covering business, finance, technology, economics, HR, etc.
• Supporting organizations: AWEA, IEA, COSEIA, GEO, CEDA, Collaboratory and universities, NREL, utilities
• Location: resource, access to resources, access to markets
• Interconnection, transmission studies and agreements
• Economics: Renewable energy project compared to what else? Will consumers benefit?
• Finance: development funds available; project cost of money; risk profile, return requirements
• Access to supplier markets: (wind turbine suppliers, installation contractors, operations and maintenance)
• Policy support: Will PUC consider “non-utility” benefits, how? Will utilities set aside “diversity bids” and count benefits?
• Public outreach: make the case for public and private sector decisions, tell the story
• Roles and Responsibilities
• Development Zones
• Both SB 91 and SB 100 indicate interest in identifying development zones.
• Minnesota: five Community Based Energy Development (CBED) zones, local ownership interests, production goals

http://www.cleanenergyresourceteams.org/registrationform.html

Mr. Lehr concluded by asking the TF whether Colorado should identify development plans for development zones.

At this juncture the TF had open discussion on Ron Lehr’s ideas and other information discussed earlier in the meeting. The TF was asked to identify gaps, refine goals, and propose improvements. Due to insufficient time for this portion, it was suggested that TF members email Mr. Wolfson with suggestions for identifying gaps, refining goals and proposed improvements. It was suggested that should the TF proceed with a checklist that it avail itself of a report produced by the GEO, entitled “Handbook on Renewable Energy Financing for Rural Colorado.” Mr. Wolfson said that he would send the report to the TF.

The TF then heard public comment from the following individuals:

• Richard Loesby, President, Natural Resource Recovery, Englewood.
• Mark Morley, hydroelectric power developer
• Rebecca Cantwell, Colorado Harvesting Energy Network
• Brian Greenman, Greenman Financial Advisors
• Matt Sares, Colorado Geologic Survey
• Ginny Pigenot, Colorado Counties
• Gary Beatty, Lincoln County Commissioner
• State Senator Gail Schwartz
• Jim Spiers, Tri-State Generation and Transmission Association

This was followed by announcements, including

• Transmission White Paper by CO Energy Forum
• PUC/OCC Town Meetings
• September 19 - Biomass Co-firing, Golden
• October 19 RE Conference- DMEA, Montrose
• October 24-26 – Colorado Utilities Efficiency Exchange Conference, Aspen
• October 30 – New Energy Economy Conference, Denver

The meeting was adjourned at 4:35 p.m.

Respectfully submitted by Morey Wolfson, GEO Utilities Program Manager