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Colorado Law Favors Gas Over Coal

The landmark Colorado Clean Air-Clean Jobs Act, which will require the state's largest investor-owned utility to replace 900 MW of coal-fired capacity with natural gas and alternative fuels, was signed into law Monday by Gov. Bill Ritter.

The legislation, swiftly enacted in March with the support of affected utility Xcel Energy, several natural gas producers, bipartisan support in the General Assembly and the blessing of several national environmental groups, requires Xcel to cut nitrous oxide emissions by up to 80% from several Front Range coal plants by the end of 2017, most likely sooner (see Daily GPI, April 1).

The sweeping law gives other states "a new roadmap to a sustainable energy, economic and environmental future," said Ritter.

"This law is a template for tomorrow that allows us to transform our energy portfolio, our economy and our environment by working strategically and collaboratively," the governor said. "By shifting our oldest and least efficient coal plants to cleaner, Colorado-produced natural gas, we send a strong message to the rest of the country that we absolutely can cut air pollution and protect public health while also creating jobs and protecting ratepayers."

Xcel officials will work with the Colorado Department of Public Health and Environment to submit a plan to the Colorado Public Utilities Commission by Aug. 15, which details how the utility will retire or retrofit 900 MW of coal-fired capacity.

"Primary consideration" to replace or repower the coal-fired plants is to be given to "natural gas, renewables, greater efficiencies and other cleaner energy sources," the legislation noted.

Joining Ritter at the signing ceremony were members of a broad bipartisan coalition that supported HB 1365, including Xcel Energy CEO Dick Kelly, lawmakers, power producers and conservationists.

"HB 1365 will help us comply with looming federal clean air standards in a way that is proactive and makes sense for Colorado," Ritter said. "By using Colorado-produced, homegrown energy sources, we will jump start our natural gas sector the same [as] we are driving Colorado's solar and wind industries."

The legislation serves as "the exclamation point on Colorado's New Energy Economy, which now also features a 30% renewable energy standard and a new set of balanced, responsible and modern drilling rules," he added.

Xcel was singled out for partnering with Colorado to create a more diverse and secure energy portfolio.

"This law gives us a great opportunity to address the issues of regional haze and ozone in a comprehensive fashion, with some certainty for our customers," said Xcel's Kelly.

Ritter and the legislation's proponents secured the legislation's quick passage with a warning that the federal Clean Air Act was to require the state to submit a plan to address regional haze by early next year. Without an adequate state plan in place, federal regulators with the Environmental Protection Agency would have stepped in to enact a plan.

With the state plan now law, investor-owned utilities like Xcel may help state officials craft plans to meet new regional haze guidelines, as well as new mandates for ozone, mercury and carbon dioxide using a comprehensive analysis that is expected to minimize costs and maximize emissions reductions.

"More drilling, less federal intrusion in Colorado -- that's the reason so many Republicans supported this bipartisan compromise," Senate Minority Leader Josh Penry said. Penry, who has in the past been a staunch opponent of the Democratic leader, said, "It was a pleasure to work with Gov. Ritter on this important public policy victory."

Three natural gas produces that helped to craft the legislation, EnCana Corp., Noble Energy Corp., and Anadarko Petroleum Corp., jointly stated that the legislation "brings together two key policy imperatives -- energy independence and harmful pollution reductions -- which are made possible and are inextricably linked by home-grown natural gas.

"HB 1365 serves as a model for what is possible when disparate interests come together for the common purpose of creating new, high-quality Colorado jobs and cleaning our air for future generations."

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