Colorado Bill Increases Utility Accountability — Episode 194 of Local Energy Rules

Date: 18 Oct 2023 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Consumers pay for a lot of things on their utility bills. In Colorado, legislators took political lobbying out of the equation.

For this episode of the Local Energy Rules Podcast, host John Farrell is joined by Steve Fenberg, the Colorado Senate President representing Boulder County. They discuss Colorado’s Senate Bill 291, which changed incentives in the investor-owned utility business model to protect Colorado consumers from high fossil fuel costs and protects captive customers from paying for the utility to lobby against their own interests.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

Steve Fenberg: So if you’re talking about playing in the sandbox of the Public Utilities Commission and there are folks who are advocating for the public interest, there are folks that are advocating for their own maybe narrow interest, and then there’s the utilities that are obviously arguing for the utility interests. When the most well-funded and resourced voice in that sandbox is the utility, they often are going to get their way. And I think the fact that they are arguably well-resourced because it is largely recoverable expenses, I think that’s part of the problem.
John Farrell: There are many ways to run our energy utilities more effectively than we do, but that are blocked by these incumbent utilities, says Colorado State Senator Steve Fenberg. So when we spoke in September 2023, it was clear he must be an optimist. Armed with the knowledge of an uphill battle, he still set out last legislative session to better align the utility’s incentives with the public interest. Successful in the end, his Senate bill 291 made several changes to the investor-owned utility business model to protect Colorado consumers from high fossil fuel costs and to protect Colorado citizens from paying for the utility to lobby against their own interests. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system. Senator Feinberg, welcome to Local Energy Rules.
Steve Fenberg: Well, thanks so much for having me, John. I’m excited to have the conversation.
John Farrell: I suppose I really should have said welcome back. It’s a pleasure to have you back. You’ve been on here before because in earlier times you were involved in organizing in Boulder, Colorado, where you now represent around the issues of clean energy and municipalization and public power. So I’d love to start there. Actually, you got your start in politics as an organizer and maybe even before that, but you were a founder of New Era Colorado as an organization that was dedicated to increasing political participation. Did you ever imagine when you were doing that work, getting college students to the polls in Boulder, that you would be writing laws about utility regulation in the future? What motivated you to focus on this issue?
Steve Fenberg: Yeah, no, it’s a good question. I mean, back then, to be honest, I never thought I would be in elected office at all. Definitely wasn’t the master plan by any means, but it sort of made sense based on where the organization was, where I was, and politics is all about timing, so it just sort of worked out and happened to be what the next step was that I took. But that work in Boulder around the municipal utility fight really is why I have an interest in this. I mean, I think it’s what put me in a situation or a position to learn about monopoly utilities and how they’re sort of a relic of the past yet still have such an important role in our lives and our democracy and our future. And it’s why I am interested in the issue today. I’ve worked on energy and utility issues over the last seven years, but I think this bill Senate Bill 291 really probably is the one that’s most at the heart of this issue around monopoly utilities and how they act and how they’re regulated.
John Farrell: So the utility accountability legislation that you mentioned that you’ve authored that passed the Colorado legislature this year has already inspired similar action in other states, Connecticut for one, I think there’s at least a couple others. It seems like a lot of the legislation is targeting how investor utilities, which are these, for people who don’t know, for-profit companies, they have a state granted monopoly, how they can recover certain costs from customers. Was that one of the key drivers that your joint select committee on rising utility rates found behind the cost increases that were plaguing Colorado utility customers?
Steve Fenberg: Yes, and there’s more to it than that of course. I mean, the fact that it is a public for-profit publicly traded in this case, but it’s a public utility, they clearly have an incentive to make money and to increasingly grow their profits, that’s their responsibility as a publicly traded for-profit company. I’m not saying they have no interest in taking care of their customers or keeping rates low, but I do think those interests are sometimes at odds with one another. And so there are many reasons why rates go up in situations like these, but I do think the money that is recovered from rate payers for certain costs I think is part of it. And to be honest, it’s not – When you talk about cost recovery for things like advertising or political contributions or lobbying and things like that, frankly, the amount of money that we’re talking about in a situation like Xcel Colorado isn’t an astronomical amount of money. It is not having a huge impact on someone’s utility bills in Colorado. Now, in other states, practices might be different. Maybe it’s a much larger amount of money and it’s having a meaningful impact on someone’s utility bill. In Colorado, I wouldn’t say it adds a significant amount to someone’s bill, but I think there’s just sort of a principle of it that makes people think it is unfair.

But aside from the actual dollar impact, the traceable dollar, the amount of money on lobbying or advertising and what that does to your utility bill, I think there’s actually a much more profound impact under the surface. And that is that money is being spent essentially against the interests of the rate payers. Not in every case of course, but when you’re talking about regulatory lobbying and legislative lobbying and lawyers to make the case at the Public Utilities Commission, you often are talking about customers paying for the company to argue to raise rates on the customers.

And I think most people hear that and they’re like, well, that seems perverse. That does not make any sense. A company has the right to go and in the democratic process and argue for increased rates and increased profits and whatever it is, but they shouldn’t be using my money to make that case because it’s not in my interest. And so I think when you explain it that way, a, there’s a principle issue there, but I also think it makes it so the playing field is not level. So if you’re talking about playing in the sandbox of the Public Utilities Commission and there are folks who are advocating for the public interest, there are folks that are advocating for their own maybe narrow interest, and then there’s the utilities that are obviously arguing for the utility interests when the most well-funded and resourced voice in that sandbox is the utility, they often are going to get their way. And I think the fact that they are arguably well-resourced because it is largely recoverable expenses, I think that’s part of the problem. What we really should be doing is leveling that playing field and making sure frankly, that the public interest, that citizens have a louder voice, that they have a bigger role. Because at the end of the day, this is the Public Utilities Commission. They’re making decisions that should be in the public interest and obviously people can participate, but I don’t think the public should be subsidizing the lawyers and the legal fees and whatnot of the utility to the degree that it is unleveling the playing field against our interests. And that’s really, I think at the core of what this piece is about.

John Farrell: We’ve been doing some research recently and the intersection was interesting. So you mentioned maybe the lobbying dollars that Xcel Energy and the utility in your case and also where I’m from in Minnesota isn’t a huge amount relative to customer bills. But on the flip side, in terms of the amount of dollars spent lobbying by other institutions or on the money spent on political campaigns, utilities are often in the top among different industries in a state. I think in Minnesota, it was in the last decade, maybe over a hundred million dollars that the utilities investor owned utilities had collectively spent lobbying, which was huge compared to just about everybody other than the health insurance industry.
Steve Fenberg: In Colorado, the last few sessions, Xcel as a company has been the top spender in the legislature, not just the utility industry but them as a company.
John Farrell: Wow. Yeah, I mean I think it’s just worth helping people understand that it has these, like you said, it’s this disproportionate impact. Maybe it’s small on rates, but it can be big in terms of the outcomes, in terms of policy decisions, in terms of the commission decisions.
Steve Fenberg: Exactly.
John Farrell: I’d love to ask you about some of the other things that the legislation was targeting. One of them was about making sure utilities have an incentive to control fuel costs. So for an electric utility, maybe that’s purchases of coal or natural gas to fuel the power plants. Could you talk more about why that was an important piece of it?
Steve Fenberg: Yeah, so the context here partially is that last winter utility rates, I think all over the country were skyrocketing. That was especially true in Colorado. So any utility that relies on natural gas for a large portion of its fuel mix saw very big increases in their rates the last winter. And there are many reasons for that. A lot of it has to do with things that are much bigger than Colorado and much bigger than even just the United States. It’s an international market, and there was a war in Europe of course, and that was having profound impact. So it’s not to say that any particular utility or action caused these spikes necessarily, but it is this realization that we had that so much of it is based on the price of the commodity. And when a utility has a situation or a scheme where they’re allowed to pass off 100% of the cost of that commodity to the rate payer, meaning they pay nothing, they don’t make a profit off of it, they’ll be the first to say that’s their rebuttal.

But obviously in the business sense, saying that you don’t make a profit off of it is not the whole equation. If you also don’t pay for it at all, it means you have no exposure. Virtually no other business can say that about the raw products or the expenses that they have to provide a service so they don’t pay for it. They pass it off to the consumer dollar for dollar. That also means they have no incentive to control those costs. So if you’re a sandwich company and your tomato prices are going up, but you know don’t have to pay for the tomatoes, why would you spend a lot of time finding the cheapest tomato? Because it doesn’t matter to you. You’re going to spend your time on other things. You’re going to spend your time on how to make more money or how to get cheaper bread or how to squeeze profit out of a different area of the company.

So they have no incentive to do it. Now, they would say that of course they have an incentive, they want to keep rates low, and I think there’s some truth to that, but that’s why this is important and their job is to make sure that their shareholders make more money. The public outcry about rate increases that were happening seemingly overnight during the winter was really a big reason why we formed this select committee to look at monopoly utilities and rise in utility rates and things like that. And a big part of it’s the natural gas price spike that happened in that time. And so that’s what led us to look at what can we do to insulate consumers from these price spikes.

One of it is making sure that the utility has skin in the game and therefore would theoretically care more about those gas prices. So that would hopefully lead to either being better purchasers of that commodity, being more thoughtful about future pricing and contracts and things like that. But then secondly, also to incentivize them frankly, to get off of gas faster. If there’s exposure to their bottom line by relying on natural gas in theory, that means they’ll be incentivized to move more quickly towards renewables where they don’t have a commodity price that’s fluctuating out there in the international market. So we did several things in the bill to get it this behavioral change. The common theme here is aligning the incentive of the utility with the incentive of the public because traditionally they’re not aligned. The public wants low rates, the utility wants high rates or at least to build a lot of things so that they can increase rates and recover those expenses and make a profit. So that’s what this was about.

There’s several things we did. We had a fuel sharing piece in there where the utility actually is on the hook for a portion of the fuel costs and then they’re incentivized to find efficiencies and do better purchasing and maybe even get off of fuel in the long term. But there’s other things that we put in there as well. Right now, the utility, they subsidize the expansion of pipelines. They like that because it guarantees future customers, but it means that we as the public, the rate payers are all paying for that subsidy when it might not actually be in our interest to do so. Meaning if there’s a new neighborhood getting developed, paying to put pipes in the ground when we know those pipes might not be used for their entire lifetime. And there is a different approach like electrification that in the short term and the long term is probably cheaper, especially if you’re starting from scratch, the utility subsidizes that developer to put in pipes to mandate natural gas in everyone’s homes when they buy ’em, even if those customers that end up buying those homes don’t want that product. So there’s various things we put in the bill, but it really has to do with better aligning the incentive of the utility with the incentive of the consumers,

John Farrell: As you pointed out, giving the utility some skin in the game around fuel costs like with gas, you have in a lot of cases when we’re talking about electric utility opportunities for them in avoiding gas use that are actually good for them too in terms of sales, right? Because you’re talking about electrifying appliances in a home, it could be a heat pump instead of a furnace, it could be an induction range instead of a gas stove, it could be an electric dryer instead of a gas dryer. On the electric generation side, it’s also potentially better for customers because wind and solar are really cheap, especially with the incentives from the federal IRA. So it would seem like you’re not only giving them some inducement to like, Hey, you might be penalized a little bit if you make bad choices about gas, but also there’s some really good opportunities for you to go forward and pursue alternatives.
Steve Fenberg: And I think we’re seeing utilities around the country wake up to this fact at different rates. Some utilities are just sticking their head in the ground and saying, no, we’re going to keep doing things the way we’ve always done. We don’t care about wind and solar. It’s just not part of their culture maybe. But I think Xcel, to their credit, they are smart and they understand where the market is going. They understand where these incentives are, they understand how to control the market to in their interest, and I think they see the benefit to them as a company with electrification sweet spot is figuring out where things are going and where the public wants them to go and then do it in a way that maximizes the most money they can get out of doing it. Again, that’s their job. That is how they’re set up and they’re supposed to do that, but they have a car EV charging system that the legislature blessed and the PUC blessed and they’re going to make a lot of money off that.

But it is also within the general policy position of the leadership in Colorado right now. But to go back, I mean utility at the end of the day, what they would prefer is to do both. They want to electrify and expand the grid and increase electricity sales and get into the EV charging market and do all of that. They want to get all in there, but they don’t want to do it at the expense of their gas infrastructure. So some utilities don’t do both, Xcel in Colorado does. So what they want is to continue making gas infrastructure expansion, the default supporting electrification so that they can get paid to expand the pipeline grid, the infrastructure for pipelines and the electrification grid and transmission grid to further bring on renewables and support electrification. They want to have it both ways. What we are saying is if you do this electrification thing, you actually don’t need to do the pipeline thing nearly as much.

And they’re basically guaranteeing future customers, whether the customer wants to be a gas customer or not, because once you lay that pipeline, once you put in that infrastructure, it’s so much harder to transition away. But also if they do transition away, they arguably have stranded assets that they still get paid for. So it’s not in the consumer’s interest by any means, but of course it very much is in the utilities interest to continue laying down pipes to continue gas infrastructure, to expand gas infrastructure while at the same time being all on board with electrification.

John Farrell: We’re going to take a short break. When we come back, I ask Steve about a concept called a discount rate and how it was part of this new law. I also ask about community choice energy and about his future in public service. You’re listening to a Local Energy Rules podcast with Senator Steve Fenberg of Colorado.

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John Farrell: There’s a part of me that almost wants to cry every time we get to this part of a conversation where it’s like, of course they want to get paid twice instead of just once. And I think to myself, why do we still do it this way? But I’m going to let that go for a minute. I want to ask you about something really obscure instead, which is one of the things that your utility accountability legislation tackled was something called a discount rate. And so I was curious if you could try to explain in simple terms why it was one of the key components of this legislation and how it might impact the mix of energy sources and the costs for utility customers.
Steve Fenberg: So discount rates are something that economists talk about all the time. Normal people never talk about it, but they sort of intuitively in the back of their head are behaving in ways that take the discount rate into consideration. The discount rate is basically comparing the value of money today versus later is a big part of what it is from a theory perspective. But in the context of utilities and rate making and deciding what types of generation assets to either build or purchase, the purpose of a discount rate essentially applies to the fuel of that investment. So a discount rate applies to fuel. It essentially discounts out the cost of the fuel to get that energy over time. And what happens is if you compare simply the capital investment of a coal plant or a natural gas compressor or something like that versus solar or versus wind, if you don’t take into account the fuel costs, there’s a real argument that in certain situations it still makes sense to do fossil fuels. Perhaps the utility likes that because those fossil fuel plants are very capital intensive, which just simply means more profit because of how they’re incentivized.

But if you don’t discount the fuel and if you say, well, we should really look at the full cost of this project on a consumer, or if you discount it at the rate of let’s say inflation, which more accurately portrays the scenario, then all of a sudden the coal plant looks much more expensive than the solar plant. That’s a simplified version of it. They currently often will discount it at the rate of their average cost of capital even though fuel is not capital, they’re not building anything when it comes to the fuel, the argument has been that it is a misplaced discount rate, or at least the amount is wrong. And if anything, if you’re going to discount it, you should discount it at the rate of inflation, which is what this bill did.

It basically said that if you’re going to rely on a discount rate, you generally have to rely on one that matches the rate of long-term inflation. We think that more accurately captures the true cost when comparing investments to make it more apples to apples, whereas up until now, it’s sort of apples to oranges. A solar investment doesn’t have fuel costs, wind does not have fuel costs, it has other costs, it has maintenance costs and stuff, but so does a coal plant. So we just wanted to level the playing field again to show the true cost of that investment, and that hopefully helps the utility better show what is a smarter investment versus one that’s not. But most importantly, it helps the regulator make a more informed decision when they get to more accurately see the cost of certain types of investments. And these are big investments. We’re talking billions of dollars. So it makes a big impact. And I think a lower income family that was living through last winter really wished that we had done this a long time ago, and perhaps it would’ve meant that they didn’t have as large of a fuel cost on their electricity bill because maybe it would’ve moved us faster towards renewables and their exposure to the natural gas commodity market would’ve been less.

John Farrell: It seems like there’s a lot, not a lot of downside to making this change, but a lot of potential upside when you marry that with the fuel cost responsibility that you’re giving utilities, there’s a lot more motivation for them to figure out how to reduce the risk to consumers that fuel costs will become really expensive, which is nice since usually consumers are the ones that are responsible for them and not the utility.
Steve Fenberg: Exactly. Exactly. Yeah, I mean the utility will operate in whatever lane or whatever rules or incentive structure you give them. They’re operating under the one that we’ve had and it’s our job, I think, as policy makers to shift that so that they behave in ways that we want them to behave.
John Farrell: I don’t think you could have segued any better into this next question because one of the things that has surprised me when we talk about they behave the way we expect them to is that we have these cases, rather extraordinary cases of investor owned utilities. They’ve been in the news for wildfires in California. We’ve got political corruption in Ohio and in Illinois for that matter, some political shenanigans. They’ve been involved in Florida. I guess what do you make of that? Are we really incentivizing them to behave in that way? What advice might you have for lawmakers in other states thinking about how do we protect consumers from that behavior that might be logical or rational given the structure but not really in the public interest?
Steve Fenberg: Well, I think again, it goes back to this. We’ve created a very strange structure and a very strange system. And if you go back a hundred plus years, it makes perfect sense why we did it at the time, right? I mean, it wasn’t irrational. It’s not that rational anymore, but it’s so hard to change the system once it’s been entrenched for so long. But at the end of the day, I mean they are behaving the way you should expect them to behave. They are political players, they’re hugely powerful. They play such an instrumental role in everyone’s life. And when it comes to the new risk factors out there when it comes to climate change and wildfires, they probably are under investing in wildfire prevention and maintenance because there’s more money in other types of investments. They simply get a profit margin on the investments they make.

So yeah, I mean, I guess the advice I have is maybe worthless because we haven’t figured it out in Colorado. We are still very much navigating this and dealing with these challenges in the world that we live in. But I think the reality is that they have so much power, yet they are a mandated monopoly in most states. And so we’ve sort of created a worst case scenario where they have a monopoly built-in customer base. They really can’t go wrong. They have to do something really bad for this business deal to go sour on them. And yet we regulate them, but we don’t run them. And the utility industry has gotten so much more complex and it’s ever been, and you go to a public utilities commission in a state. I mean the experts in the room are the utility. I mean that genuinely, they actually are the experts.

They know so much about their system, they know the ins and outs, they know everything that the regulator doesn’t know because the regulators happen to maybe have not asked the right questions. And basically it is not that they pull the strings, but they create the playing field and in some ways, they set the rules and provide the information in order to get more of a guarantee of certain outcomes. And so I think if we’re not going to blow up the system and totally change it, I think we need to have a heavier hand when it comes to regulation at least. And that means being much more prescriptive in law because if you’re not prescriptive and if you’re very general and vague and it goes to the utilities commission to get sorted out, that’s their playground. That’s where they have probably the most authority and ability to influence the outcome.

John Farrell: Well, speaking of, well, some people call it blowing up the system, some utility lobbyists would call it that. I wanted to ask you about community choice energy. I’ve been talking to some folks in Colorado. I know there’s been some study around that. It would seem from your experience organizing in Boulder around issues of local self-determination and then the work on utility accountability that this idea that you would let cities choose their electricity supply, even if it means choosing someone other than the monopoly utility, might be interesting. Has this policy been on your radar? Do you think it could be another utility accountability tool in the state’s toolbox?
Steve Fenberg: Yeah, I think it is very interesting. By no means an expert on the issue, but I think in some ways it’s another way of providing a little bit more of self-determination and giving communities more of a say in their energy future. When you go back to the Boulder case or other municipalization fights, those didn’t come about because the general public just really wants to own those poles and wires. They just really are coveting those poles and wires in their community and they want to buy them. That’s not what it is. I think most communities would say, yeah, I would be fine with somebody else continuing to operate the system, but either it’s because costs have gone too high and they don’t think their utility is serving them from a financial interest, or their utility isn’t serving them from an energy portfolio interest and they want to have more renewables and don’t think the utilities moving fast enough.

I think community choice provides some of what cities that want to municipalize it provides them some of what they’re looking for. Not all of it, and every community is going to be different. But yes, I mean the idea that the utility still operates the system, but the generation is up to the community to decide where they purchase it from, I think makes a lot of sense. And in fact, if the city of Boulder was successful and municipalized, that may have essentially been what they ended up doing. They may have kept Xcel as the operator of their grid, but they just would have had the authority to purchase energy and gotten it from a different place or even self-produce some of it. So I think it makes a lot of sense. I think it’s easier said than done everything in the utility space. And here’s the bummer, there are so many better ways to do what we do when it comes to utilities.

The biggest impediment is the entrenched utility that has no reason to support a change. And so I mean, I firmly believe in Boulder, after we voted to municipalize, if we had people at the table that simply were there to solve the problem and figure out how to get from A to Z, I think we would’ve done it years ago, but that’s not what we had. We had a table and there were people who showed up every day to that table, and their only purpose was to make sure that this group of people were not successful in solving the problem. And they did that through lawsuits. They did that through political campaigns. They did it through influencing community groups and providing grants to organizations so that they would stay on the sidelines. When you have the money and the power and the influence like a utility has, it just makes doing anything new so difficult. And so does CCE make a lot of sense? Yes. Is it almost like a no-brainer? Yes. The question is can we do it in a way to be successful when the utility will oppose it and keep it from being successful every step of the way if they can?

John Farrell: It’s interesting. I just heard from somebody, I am thinking about this just because it happened to me today, but someone reached out to me who is in Maine working on this ballot initiative that’s coming up this fall where it would take over the investor owned transmission and wires utility and convert it to consumer ownership. So it’ll be interesting. It’s similar to Boulder in terms of changing ownership, but it would make it consumer owned. And he was saying that one of the things that people are saying that is making them hesitant to vote for it or one of the themes that they’re hearing probably being pushed by the utility is that, well, it’s going to be so hard to do, so why are we investing so much effort in it? And it’s interesting in light of what you’re saying of course, it’s hard to do in Boulder.

You passed a ballot initiative in 2011 saying the city wants to take over the utility, and a decade later you’re still in litigation with the utility fighting about that without getting too much into the weeds there, that was the choice the utility made. And I sort of have this feeling of it’s like you’re getting bullied by somebody and people are telling you, Hey, don’t stand up and fight that bully. That would be hard. Just stay on the ground and let ’em keep kicking you. I mean, I don’t know. Is there any alternative? It seems like the worst reason not to support something like that. I don’t know if you have any thoughts about that.

Steve Fenberg: Totally. I think you’re right. I think at the end of the day in politics, you got to remind yourself that the average person doesn’t wake up every day thinking about this stuff, and they have interests and problems they want to solve in their life and how to make sure their family is safe. And so these scare tactics work really well on them because they’re not thinking every day. I’m like, how would I envision a new utility system for the modern era? And then being like, yeah, that seems great. How do we get there? Oh, we just do this, this, and this, and it’s intuitive and it makes sense. They’re thinking, okay, I got to take my kid to school and then I got this big thing at work and rent is due, and meanwhile the city wants to maybe change my utility, and I don’t really understand it, but sure, sounds like things couldn’t go wrong, and although I don’t love my utility, but my lights turn on every day, and so I don’t know that I really feel like looking into this a whole lot more and taking a risk. Right, right. I mean, that’s the atmosphere we’re living in. I think some people, different communities are different, but it’s easy to scare people when the status quo for the average person is working for them in their daily life. Now obviously we’re not taking into account climate change and air quality and maybe even the price of their utility bill, but generally speaking, I think a lot of people when they’re confused or when they’re scared, they default to the status quo.
John Farrell: I wanted to wrap up by asking you, I’ll just start by saying I am philosophically opposed to term limits, but now that I’ve said that, I’m just going to say you are term limited in the Colorado Senate in 2024. So what are you imagining for your final session in the legislature, and do you have any thoughts about how you’ll continue your long-term commitment to public service beyond your service in the state senate?
Steve Fenberg: Well, you’re right. I am termed out. I have one more year. We start our session in January, and so there’s some great folks coming into the Senate after me and hopefully it’ll pick up where I left off on a lot of issues. I mean, we have a lot of challenges and a lot of big opportunities. I’m super excited on the energy front with all of the financial support that could come from the IRA. And so a lot of what I want to think about is how do we position Colorado to take advantage of this moment in time as much as possible. I think that’s not just when it comes to energy investments. I think it also is for transportation and other issues that impact our quality of life and our climate impact and our air quality and things like that. So I’m super excited about some of those opportunities.

When it comes to specifically on energy, I geek out on the utility level stuff like we’ve been talking about today. I also care a lot about distributed generation because I think that’s another aspect of giving people more control of their energy future. And so I’m having conversations on what we can do in Colorado to sort of regain the mantle of being a leader in this area. We were one of the original states to really embrace distributed generation. From a policy perspective, I think we’ve fallen far behind. I think there are many states, including conservative states, that have actually well surpassed us when it comes to distributed generation investments. And I think that’s partially because we have a very large sophisticated utility that has gotten in the way of that. And again, on one hand, that probably means maybe we’ve moved faster than we would have otherwise in some areas, but I think it has meant that again, we further entrenched the utility interest in our daily lives when it comes to energy instead of allowing us to democratize it a little bit more.

So those are some of the areas I’m excited about that I’m hoping to work on. There’s a whole lot of other issues that have nothing to do with the issues you work on, John, so I won’t bore you on them, but we obviously, like any state, we have a lot of challenges and opportunities at the moment that I’m looking forward to working on. In terms of my future, I honestly don’t know. There’s no master plan. I am committed to serving out my term and being there till the very end, and whether I or my wife like it or not, I think I will always be in public service one way or another. I don’t know that I’ll run for office again. Again, there’s no master plan of what I’m going to run for next. So I’m not jumping from one thing to the next immediately, but we’ll see. I’ve got two little kids and maybe I’ll one of these days find myself a real job and think about taking care of the family, but we’ll see. No plan, and I’m sure I’ll be still working in the public sector one way or another.

John Farrell: You mentioned before that most people don’t wake up thinking about these things, about a vision for a different utility future. And as one of those few people that does, I will be very interested to see where you land after your time in the Senate and just really appreciate how much the work that you’ve already done in public service has animated this conversation of what we broadly talk about as energy democracy. So at any rate, thank you very much for what you’ve already been doing. It’ll be exciting to see what your next chapter is.
Steve Fenberg: Thanks for taking the time to chat.
John Farrell: Thank you so much for listening to this episode of Local Energy Rules with Senator Steven Fenberg, president of the Colorado Senate, about the recently adopted Colorado utility accountability law he authored. On the show page, look for links to Senate Bill 291 and to stories of other states where utility accountability legislation has passed or is pending, including in Connecticut and in Maine. You can also read my recent piece in the American Prospect about the failures of the investor-owned utility system to adequately serve the public interest and find a New York Times commentary by David Pomerantz from the Energy and Policy Institute about the practice of allowing utilities to charge customers for their anti-clean energy lobbying. Local Energy Rules is produced by myself and Maria McCoy with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.


A Bill to Protect Colorado Consumers from their Utilities

In the 2023 legislative session, Colorado passed a novel bill to hedge the growing costs of energy for Colorado consumers. Steve Fenberg, who authored and co-sponsored Senate Bill 291, hopes that the bill will encourage utilities to behave differently. The bill does this in several ways.

First, Senate Bill 291 limits how utilities can recover costs from their customers, specifically when it comes to advertising, lobbying, and participating in rate cases. Fenberg describes this provision as a matter of principle; the utilities were using customer dollars to advocate for rate hikes.

When the most well-funded and resourced voice in that sandbox is the utility, they often are going to get their way. And I think the fact that they are arguably well-resourced because it is largely recoverable expenses, I think that’s part of the problem.

Connecticut and Maine have followed suit and similarly addressed how utilities can and cannot pay their utility lobbyists.

Making Utilities Share in the Risk of Gas

Colorado Senate Bill 291 also targeted how utilities make decisions on fossil fuel investments. Traditionally, utilities can pass fuel costs through to their customers, giving them no incentive to be proactive about their energy portfolio. Fenberg explains that fossil gas price spikes following Winter Storm Uri moved the Colorado Legislature to enforce gas price risk management through Senate Bill 291. The bill also makes utilities use discount rates matching long-term inflation to run financial calculations. When a utility is planning fossil gas expansion, it must now look at the true cost of the infrastructure and fuel costs to fairly compare investment options.

The common theme here is aligning the incentive of the utility with the incentive of the public, because traditionally they’re not aligned.

Episode Notes

See these resources for more behind the story:

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.

This is the 194th episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares stories of communities taking on concentrated power to transform the energy system.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach.

This article originally posted at For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.

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Maria McCoy is a Researcher with the Energy Democracy Initiative. In this role, she contributes to blog posts, podcasts, video content, and interactive features.