Colorado Clean-Energy Plan Looms as Issue for FERC Pick
When Ron Binz was Colorado’s top utility regulator, he championed a deal that critics said helped the state’s largest power company convert coal plants to natural gas at consumers’ expense.
The project was a big component of then-Governor Bill Ritter’s environmental agenda and was approved in 2010 by Colorado lawmakers.
“The eagle has landed,” Binz wrote in an e-mail to power company and state officials announcing that a deal had been struck that allowed it to go forward.
The project, and Binz’s role, won plaudits from environmentalists who say it has cut emissions linked to climate change. Critics, especially from the coal industry, cite it as evidence of an activist regulator and are trying to block his nomination to lead the U.S. Federal Energy Regulatory Commission. The Senate Energy and Natural Resources Committee is scheduled to hold a hearing on the nomination tomorrow.
If confirmed, Binz, 64, would take the helm of an agency that in 2005 gained congressional authority to broaden its enforcement powers. Over the past decade it has been transformed from a sleepy regulator of the U.S. electric grid to an enforcement authority. This year alone, FERC has sought more than $900 million in penalties and settlements from banks including Barclays Plc (BARC) of London and New York-based JPMorgan Chase & Co. (JPM), which were accused of gaming energy markets.
“FERC’s more out front, FERC’s under more scrutiny -- it works both ways,” Curt Hebert, a chairman of the commission in 2001, said by telephone. President Bill Clinton nominated Hebert in 1997.
Since President Barack Obama named Binz for FERC chairman on June 27, he has been the object of scorn from free-market advocates and the coal industry, who say he played a big role in passing Colorado’s 2010 Clean Air-Clean Jobs Act.
“Just like in Colorado under Commissioner Binz’s watch, electricity prices will increase if he is confirmed as FERC chairman, which will be a hidden tax on your constituents,” 14 organizations including the American Energy Alliance, National Taxpayers Union and Americans for Prosperity, a small-government group backed by billionaire industrialists David and Charles Koch, said today in a letter to the Senate committee.
Binz’s supporters say that case is overstated.
As chairman of the state utility commission, “he oversaw regulations for a smooth transition to a more efficient energy system with more diverse energy technologies, while minimizing rate impacts to consumers,” a coalition of clean-energy groups and companies including SunEdison Inc. (SUNE) of St. Peters, Missouri, and EnerNOC Inc. (ENOC) of Boston, said in a Sept. 13 letter to the senators.
Ritter, a Democrat and one of Binz’s staunchest allies, described him as a talented regulator who’s being pilloried for the clean-energy policies of the governor’s administration from 2007 to 2011.
“I think that folks who didn’t like what happened in that four-year period, they’re continuing to fight those battles,” Ritter said by telephone.
Binz is a former consumer advocate who now runs his own Denver-based company, Public Policy Consulting, which specializes in energy and telecommunications. He declined an interview request. He’s well-known in the energy-regulatory community in Washington, and many of his peers consider him a scholar on issues affecting the industry.
“I think he would make a very capable and competent chairman,” current FERC Chairman Jon Wellinghoff said in a telephone interview.
Anticipating controversy over his nomination, the Green Tech Action Fund, a San Francisco nonprofit group that backs clean-energy technology, hired a Washington public-relations firm to support Binz.
After the Wall Street Journal attacked him as “the most important and radical Obama nominee you’ve never heard of” in a July 30 editorial, 12 former FERC commissioners from both parties rose to his defense.
“Mr. Binz has an impressive 34-year career in energy policy,” they wrote in rebuttal, also published in the Journal. “If the Senate confirms him, we think he will be a fair and impartial judge and further the public interest within the FERC’s authority.”
Binz’s detractors include the Denver-based Independence Institute and the Washington-based Competitive Enterprise Institute, both describe themselves as advocates for limited government. They say he guaranteed Minneapolis-based Xcel Energy Inc. (XEL), Colorado’s biggest utility, a 10.5 percent return while charging its customers for the coal-to-gas conversion project. The deal was intended as an incentive for converting plants to natural gas, which when burned to produce electricity emits a fraction of the greenhouse gases tied to coal.
“He’s guaranteeing a rate-of-return to the power company he’s supposed to be in judgment of,” Amy Oliver Cooke, director of the Energy Policy Center at the Independence Institute, said by telephone. “Ron Binz should not be head of the U.S. Federal Energy Regulatory Commission.”
The average rate of return regulators awarded utilities for their construction projects in 2010 was 10.3 percent, according to data provided by the Edison Electric Institute, a Washington-based industry group.
A Denver District Court in January 2011 denied a request from the Intermountain Rural Electric Association, a Sedalia, Colorado-based power cooperative that wanted Binz disqualified from proceedings related to the pollution-reduction legislation.
A separate challenge to Binz’s role in the creation of the law “is still very much alive and kicking,” Stuart Sanderson, president of the Colorado Mining Association, said by telephone.
In February a judge from Denver District Court issued a stay in that proceeding, led by the Associated Governments of Northwest Colorado and the mining group, pending the outcome of a related case.
“There has been no court order exonerating Binz for his conduct in connection with the negotiations leading up to the Clean Air-Clean Jobs Act,” Sanderson said.
Binz, who led the Colorado Public Utilities Commission from 2007 to 2011, was Ritter’s first appointment as governor and the two have worked together beyond their public-service careers. Since 2011, Binz has been a senior policy adviser at Colorado State University’s Center for the New Energy Economy, which Ritter now directs.
Binz is transparent about his background. His website includes an 11-page resume detailing his employment history, publications and congressional testimony. Binz led the Colorado Office of Consumer Counsel from 1984 to 1995 and was the chairman of the National Association of Regulatory Utility Commissioners’ climate-policy task force from 2010 to 2011.
Early in his career, he taught mathematics at the University of Colorado, and he has been a managing partner in a Loveland, Colorado, winery. Binz gave $3,500 to Obama’s 2012 presidential campaign, according to the Center for Responsive Politics, a Washington-based campaign finance watchdog group.
Last year Binz was the lead author of a report that encouraged state regulators to develop new ways to manage risk as utilities deal with issues including aging power plants, the switch from coal to natural gas and competition, environmental rules and a sluggish economy.
“Ron Binz is a straight shooter,” Mindy Lubber, president of Ceres, the Boston-based nonprofit organization that published the report, said by telephone. Ceres, which advocates for businesses and investors to promote sustainability, chose Binz to lead the study because of broad knowledge of energy issues, she said. “Investors are not looking for us to put out reports talking about the beauty of solar energy.”
Other supporters, such as John Nielsen, energy program director for Western Resource Advocates, a Boulder-based environmental group, describe Binz as a “champion of consumer issues.”
The Colorado Mining Association, which obtained from public records and provided the “eagle has landed” e-mail, says it disagrees. The group in 2011 estimated that the coal-to-gas conversion project that the Binz-led Public Utilities Commission approved had cost Colorado consumers more than $1.3 billion. The commission “rejected lower cost alternatives,” including retrofitting coal plants with “additional pollution controls at a fraction of the cost,” the Denver-based organization said in a statement at the time.
While the Senate committee tomorrow will have a chance to question Binz about his previous experience and how he would lead the commission, the panel won’t vote until a later date.
In public appearances, decisions and papers, Binz has already provided an indication of his views. His resume lists implementation of Colorado’s Clean Air-Clean Jobs act first among his major accomplishments on the state utility commission.
During a March conference in Washington, he praised a National Renewable Energy Laboratory report that said 80 percent of the U.S. energy supply could come from renewable-power sources by 2050. He also described himself as a “fan and supporter of” carbon capture and storage and described natural gas as a “dead end” without it.
“By 2035 or so, we’re going to have to do better on carbon than even natural gas will allow us to do under current technology,” Binz said, according to an edited transcript.
“I think it’s time for a new grand bargain between regulators and utilities,” he said. “It’s time to restructure the bargain that regulators and utilities are operating under, one that looks forward to these immense challenges that technology is bringing to the industry.”
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