In 2020, the raft of bills passed by Colorado legislators the previous year began altering the state’s energy story. Then, the markets and economy were ravaged by the effects of COVID-19. 2021 will be a fascinating year in the Colorado energy sphere. Here are the stories to keep an eye on for the coming year:
10. Legislating the decarbonization path
Colorado in 2019 adopted a goal of decarbonizing its economy 50 percent by 2030 (and 90 percent by 2050). The decarbonization targets aligned with the cuts in greenhouse gas emissions climate scientists warned will be needed to reduce risk of dangerous climatic disruptions. Both provoked human energy and influenced every corner of physical energy in Colorado in 2020, from farms to cities, towns and counties to the state agencies and regulatory bodies. The draft decarbonization roadmap issued by the Air Pollution Control Division offered a pathway that was criticized by environmental groups as fuzzy and lacking the necessary urgency. This will be a big, big topic. Continued drought, rising heat, and renewed forest fires will only elevate its prominence.
9. The bell tolls for coal
It was a tough year for coal – and it’s unlikely to get better. Tri-State Generation and Transmission and Colorado Springs Utilities both announced they’d close their last coal plants by 2030. That will leave just coal plants operated by Xcel Energy puffing, but who knows what state regulators will rule or what Xcel will announce in 2021. Meanwhile, Peabody, operator of the Twentymile Mine near Steamboat Springs, furloughed half its employees in May, partly because of COVID-19. In November, Peabody announced it was considering filing for bankruptcy. If so, it will be the second time in five years.
8. Future of Comanche 3
The Comanche 3 power plant in Pueblo began operation in 2010, and it remains the newest (and likely last) coal-burning unit in not only Colorado but all Western states. It’s been a lemon. In 2020 the Colorado Public Utilities Commission decided to order a deep dive into why Xcel Energy, the primary owner, was forced to spend so much money on this plant. Those costs get passed along to customers. The question driving the upcoming investigation is whether Xcel customers, who represent 53 percent of electrical demand in Colorado, would be better served by shuttering this coal plant well ahead of its originally scheduled 2060 closing.
7. Just Transition to clean energy
Colorado Gov. Jared Polis spent the first Friday in March in Craig and Hayden, two coal towns in northwest Colorado. Legislators in 2019 created a Just Transition office, still largely unfunded, but with the tall order of figuring out how to smooth the glidepath for workers and communities displaced by the transition to clean energy. In Hayden and Craig, Just Transition committee members heard from some who saw no need to transition. A final report to state legislators is required by the state. Where will the dollars come from to assist workers and communities? That’s to be determined. In Craig, and elsewhere, the thinking has begun in earnest about diversification and reinvention.
6. New rules for oil and gas drilling
Colorado’s revamped oversight of oil and gas drilling and processing continued with a new legislatively-delegated mission for the Colorado Oil and Gas Conservation Commission: protecting public safety, health, welfare, and the environment. This is in stark contrast to the old mission: fostering development. Guiding this is a new five-member commission, only one of whom can be from the industry. The 2019 law also specified shared authority over oil and gas regulation with water and other commissions to also have say-so. Local governments can adopt stricter regulations, a win for municipalities and counties that have sued the COGCC in past years over this very issue.
The specifics of this came into sharp focus in November with 574 pages of new rules adopted after 10 months of proceedings, including what both industry and environmental groups called cooperative and collaborative discussions. The new rules simplify the bureaucratic process for drilling operators, require that drilling operations stay at least four blocks (i.e. 2,000 feet) from homes; old regulations required only a block. The new rules also ends the routine flaring of natural gas, as occurred in North Park.
The new rules won’t end objections of those who want to see all fossil fuels just stay in the ground – now. But there should be more harmony.
5. COVID-19 lays down the drilling rigs
Oil prices dove from nearly $60 a barrel in January to $15.71 in May. All but seven drilling rigs in Colorado’s Wattenberg Field were folded by then, compared to 31 a year before. COVID-dampened travel had slackened demand, and supply was glutted by a production war between Saudi Arabia and Russia. Unemployment claims from March to November grew to 8,425, compared to 30,000 direct jobs in 2019. With the jobs multiplier, the impact may have been 230,000 jobs in Colorado. Dan Haley, chief executive of Colorado Oil and Gas Association, at year’s end reported cautious optimism for 2021 as prices escalated and vaccines began to be administered.
Covid slowed the renewable sector, too, causing Vestas to announce in November it would lay off 185 from its blade factory in Brighton.
4. Utilities mostly hold onto empires — for now
Xcel Energy got a big win in November when Boulder voters approved a new franchise after a decade-long lapse while the city investigated creating its own utility. Black Hills Energy crushed a proposed municipal break in Pueblo. And Tri-State Generation & Transmission stalled exit attempts by two of its three largest member cooperatives, Brighton-based United Power and Durango-based La Plata Energy, through an attempt to get jurisdiction in Washington D.C.
But there was much turbulence. Xcel lost its wholesale supplier contract to Fountain, a municipality. Cañon City voters declined to renew the franchise with Black Hills. And Tri-State lost Delta-Montrose, which is now being supplied by Denver-based Guzman Energy, a relatively new wholesale supplier created to take advantage of the flux in the utility sector. Low-priced renewables have shaken up the utility sector – and the shaking will most certainly continue as the relationship between consumers and suppliers gets redefined.
3. Utilities racing to 100 percent decarbonization
Xcel Energy in December 2018 famously announced its intent to reduce carbon emissions from its electrical generation 80 percent by 2030 (as compared to 2005 levels), a pledge put into law in 2019. In 2020, nearly all of Colorado’s electrical generators quietly agreed to the same commitment.
Meanwhile, several utilities began publicly plotting how to get to 100 percent. Most notable were Platte Valley Power Authority and its four member cities in northern Colorado. Holy Cross Energy, the electrical cooperative serving the Vail-Aspen and Rifle areas, announced its embrace of the goal in December. CEO Bryan Hannegan said the utility sees multiple pathways to this summit.
2. What is the future of natural gas infrastructure?
Cities in California and elsewhere have adopted bans on new natural gas infrastructure in most buildings. In response, several states have adopted bans against local bans. Colorado a truce in 2020 until 2022, but the discussion has begun with a go-slow position paper by Xcel Energy and heated arguments from environmental hard-hitter Rocky Mountain Institute. Eric Blank, appointed by Gov. Polis in December to chair the Public Utilities Commission, told energy newsletter Big Pivots that he thought it’s insane to build 40,000 new homes annually in Colorado with expensive natural gas infrastructure even as Colorado attempts to decarbonize its economy.
2. Energy, environmental justice and equity
The phrase “disproportionately impacted communities of color” joined the energy conversation in Colorado in 2020 as decisions were framed in environmental justice terms. Environmental groups are pushing industry leaders and lawmakers to acknowledge existing harms, such as placing fossil fuel plants near low-income neighborhoods and neighborhoods of color, and to more consciously avoid repeating past injustices. Nationally, Robert Bullard helped relaunch the disbanded Black Environmental Justice Network, which he co-founded in 1991. It’s not clear exactly what impact more environmental justice and equity discussion will have on the formal public discourse yet, but it’s likely to be more important in 2021.
BONUS: 11. Gearing up for more electric vehicles
You can now get a fast-charge on your electric car in Dinosaur, Montrose and a handful of other locations along major highways in Colorado, but in 2021 that list will grow to 34 locations. Colorado is gearing up for electric cars and trying to create the infrastructure and programs that will accelerate electric vehicle adoption. Environmental advocates say this will help reduce greenhouse gas emissions from transportation, which rose to the top source of emissions, while delivering hard-to-explain-briefly benefits to a modernized grid.
Also coming will be new programs in Xcel Energy’s $110 million transportation electrification program approved by the Public Utilities Commission just before Christmas. Still to come will be programs to accelerate electrification of medium- and heavy-duty transportation fleets. Easy enough to imagine an electrified Amazon van. How about electric garbage trucks? They’re coming.