Colorado’s Renewable Energy Mandate Constitutionality Challenged

Published November 24, 2014

The Energy & Environment Legal Institute is challenging the constitutionality of Colorado’s renewable energy standard.

In November of 2004, Colorado voters passed a referendum imposing a renewable portfolio standard on the state. This was the first time a referendum had been used to pass a renewable power mandate, occurring after the Colorado legislature had rejected proposed mandates three times.

Colorado’s two-tiered approach requires large industrial and investor-owned power plants to meet stricter standards than electricity cooperatives. Since the referendum passed, legislators have increased the renewable requirements three times: in 2007, 2010, and 2013, with the 2013 change requiring electric cooperatives to supply 20 percent of their power from renewables by 2020 instead of the original 10 percent mandate.

Raising Prices

Analyses confirm Coloradans are paying significantly more than the national average for electricity because of the renewable energy mandate. U.S. Energy Information Administration (EIA) data show Colorado electricity prices rose 20 percent faster than the national average since the renewable mandate passed in 2004.

A second analysis, by James Taylor, senior fellow for energy and the environment at The Heartland Institute, showed the average Colorado household has paid an additional $2,100 for electricity (more than $350 per household per year) beyond what they would have paid if the state’s electricity prices had risen at the national average since 2007.

In 2014, Republican legislators tried to roll back the higher renewable energy mandate imposed in 2013. Democratic legislators beat back the Republican challenge on a party line vote, keeping the newer standards by one vote.

Commerce Clause Cited

EELI’s suit argues Colorado’s RES violates the U.S. Constitution’s Interstate Commerce Clause by providing economic benefits to renewable electricity generators located in Colorado unavailable to out-of-state renewable power producers and by imposing Colorado’s laws on businesses operating in other states.

The argument pertains to Article I of the U.S. Constitution, which states Congress has the power to regulate commerce with foreign nations, among the states, and with Indian tribes. The clause implies states may not implement protectionist legislation favoring in-state interests or industries or regulating business outside of a state’s border.

The renewable mandate discriminates against out-of-state producers by defining retail distributed generation as a renewable energy source located on the site of the customer’s facility interconnected to the customer’s side of the utility meter. Since customers of a Colorado utility will generally be Colorado residents, this definition usually requires distributed generation come from within Colorado. In addition, wholesale distributed generation is explicitly defined as a “renewable energy resource in Colorado.”

These requirements clearly discriminate against electric power producers in other states, EELI’s complaint argues.

Enables Discovery of Facts

David Schnare, general counsel of the Energy & Environment Legal Institute, said, “Courts of law offer what academia from time to time forgets to provide—a neutral forum within which to debate scientific findings that allows full exposition of facts as they relate to policy. The Energy & Environment Legal Institute challenged the Colorado Renewable Energy Standard for two reasons. It is unconstitutional, and it causes more harm to human health and the environment than it prevents.”

Schnare says litigation is sometimes the only way to get to the facts behind public policy claims. “Without a deep investigation into the claims of the Sierra Club and [what the] Colorado litigation requires, one would never learn these facts,” said Schnare.

REM Health Hazards Asserted

In addition to being unconstitutional, the REM is bad public policy and a human health threat, Schnare said. “Examination of the 665 pages of expert reports and several thousands of documents produced during the litigation result in the unimpeached finding the Colorado statute would cause the premature death of up to 250 Colorado citizens in 2015 alone, with that number rising in future years, without preventing a single premature death.”

Schnare says his research also shows the REM does nothing for the environment. “With regard to the environment, the statute, aimed at reducing human-caused global warming, would result in a change in global warming so small as to be undetectable even using the most sensitive laboratory instruments, according to models developed and used by the U.S. Environmental Protection Agency,” Schnare said.

Heartland Institute Policy Analyst Taylor Smith applauds the EELI’s challenge in Colorado. Smith, who has worked extensively on renewable energy mandates, said, “It’s great to see E&E Legal is not giving up on this very important issue. Colorado has one of the nation’s most stringent renewable energy mandates, a law that accomplishes little else than shift resources from productive sectors to unproductive ones. Let’s hope the law is found unconstitutional.”

H. Sterling Burnett ([email protected]) is managing editor of Environment & Climate News.

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