Part II: Steve Fenberg on regulating oil and gas — and Xcel Energy, too

Former Senate president defends work of Carbon and Energy Management Commission and talks about regulation of Xcel Energy

In part II of the conversation with Steve Fenberg conducted on Sept. 10, he talks about whether the Colorado Energy and Carbon Management Commission has executed its mission. He also talks about revisions to regulation of Xcel Energy – and why they haven’t gone further.

Are there are differences of approaches that are deserving of description in how Colorado Democrats have engineered this energy transition? I think that in a general sort of way, the governor favors carrots as opposed to sticks. Some others may think that there should be more regulation. Now even the governor doesn’t have an absolute hold on anything. It varies upon the issue, but is there a way to describe the differences of thought, even within the Democratic caucus?

I don’t think it’s easy to distill, because it depends on the policy, it depends on the bill, it depends on the moment. I also think there’s a little bit of the carrot versus the stick. Another more nuanced way to put it is, how much should be legislated versus how much should be regulated by rule-makers, by regulators? And by that, I mean, should legislation be so prescriptive that you’re essentially playing the role of legislator and regulator, or should it really be a broad goal, laying out the objective in the statute and then passing the baton to the regulators who live and breathe this stuff every single day?

There has been less and less agreement on that between the Legislature and the governor’s office, for obvious reasons. The governor and the regulators are in the executive branch. He doesn’t want to just simply be told exactly what to do, word for word, and all they can do is bless it.

These are complex issues, and sometimes you paint yourself into a corner when you prescribe it so specifically that it does not allow for evolution and flexibility when you get under the hood.

To that very point, in 2019 you were a prime sponsor of a bill that became law. Senate Bill 19-181 amended and broadened the mission of the Colorado Oil and Gas Conservation Commission.

Yep, it’s burned in my brain.

Do you believe the agency now called the Energy and Carbon Management Commission has executed that new mission? The question needs elaboration. On one hand, drilling largely isn’t happening in the most contentious potential places, Boulder and Larimer counties in particular. But much new drilling continues in the ozone nonattainment area, which would seem to be a violation of the agency’s mission to protect public health, safety and welfare. Has the execution fallen short of the legislative declaration?

I don’t think so, and I think that might be because of a disagreement or a misunderstanding about the role of the commission. I also think a lot of times we forget how far we’ve come.

In 2019 the biggest conflict in everyone’s face was the conflict between residents and drilling happening in their backyards, largely in the populated areas of the Front Range. I think that just smacked people in the face, and it felt incredibly unfair. I’m not saying it’s not happening anymore, but then it’s a different conversation now. Now it’s much more about cumulative impacts and air quality.

We sometimes forget to credit ourselves for what we have accomplished. It was a sad state of affairs. You had drill rigs basically on playgrounds and in people’s backyards, and people couldn’t live in their homes anymore, people’s kids couldn’t go to school.

By no means am I saying we solved the problem, but it is a different landscape now. (SB19-181) said the oil and gas commission was supposed to prioritize public health and wildlife, etc. It was not that fossil fuels are bad, and therefore you can never use fossil fuels (if you are to) protect public safety and wildlife. That’s a logical conclusion in an academic setting. I think as a regulator, at the end of the day, their job is to regulate the industry and to consider permits.

The mission was never changed for them to have nobody to regulate. A lot of people would say, well, that’s what needs to happen. If that’s what needs to happen and there’s agreement, we could pass that policy that there is no more oil and gas drilling. But that’s not what 181 was. If it was, we wouldn’t have had the other 25 pages of how to regulate the industry differently.

Maybe folks are disappointed or feel like it hasn’t lived up to its potential. But from my standpoint, it generally did. And I do think the paradigm has shifted. Probably that means there needs to be new iterations of the conversation.

If Colorado is indeed to be a national leader of the energy transition, do we need to dramatically rein in oil and gas drilling even more than what we’ve done with our current legislation? Certainly, the state has done a lot with methane detection. Colorado has been a national leader in many respects, but do we need to go for more?

I think we do. There’s no question. I’ll never get to a point where I would say there’s nothing more we need to do. I hope I live to get to that point, but I think we always need to continue pushing because we’re facing a crisis. I think it’s just a lot more nuanced of a conversation now, and I think it is fine to inject the question into the debate of, should we just shut down oil and gas production period?

I don’t know that there is the public support for that. Short of that, the question is, what needs to be done further, from a regulatory standpoint, to make sure that when oil and gas extraction is happening, it’s done in a way that we feel more and more confident that it’s approaching as best as it can be done. Are we there yet? No, but I do think we’ve made strides.

It is a sector, and we should remind ourselves that many sectors are part of this problem. I’m not saying we should let them off the hook. I’m saying we should be equally obsessed with each of the sectors. I don’t know that that’s going to make a big difference when it comes to production, because I think a lot of our production actually goes out of state, if not out of country. We’re part of a much larger global market than just the state of Colorado. That’s just the reality.

In the last legislative session our approach was to see if we can (make extraction cleaner) and also make sure at least that Colorado citizens are benefiting more from the production. Is that a long-term solution? No, but it’s better than not doing so .

Some would argue it just makes us more reliant on production. I don’t know that’s true, but I think it’s an interesting debate to have. But if extraction is going to continue to happen, I would like it to pay for cleaning up its impact but helping us clean up other sectors, like transportation. We’ll get to that with rail.

Also in this conversation:

Part I: Steve Fenberg reflects on Colorado’s embrace of climate goals

You chaired a special committee in the ‘23 legislative session after Xcel charges for natural gas skyrocketed because of how it had prepared itself for natural gas price shocks (resulting from extreme weather). Did your bill achieve all that you had wanted? If it fell short, how so? And very fundamentally, does Colorado need to redefine the relationship between state regulators and its monopoly investor-owned utilities?

I’m a crusty, dried-up legislator at this point, and I know that a bill never accomplishes everything, but I think it was a very productive conversation. I think it laid the groundwork for the beginnings of some bigger conversations about the fundamentals of how we regulate and produce energy from our utilities.

It was a start, it was a beginning conversation. We were in a bit of a crisis, where we had people’s attention, and I’m glad we did it. I think it put the utilities on notice, which is good. It scratched the surface of the bigger conversation. That’s a very difficult conversation, and I knew we would never transform the regulated monopoly system through a bill from a special committee, especially because that committee came about pretty last minute.

Looking back, i had known that I would keep he majority through 2024 I think maybe we could have made some progress on that front. Of course, there were a million fights that were happeningand I think we still made a lot of progress.

That’s a healthy debate to have. Are we just simply stuck with all of the remnants of the structure that we have, and therefore we just need to work within it the best we can to make the most progress? A major transformation cannot happen overnight and would be pretty disruptive. And I think, as we learned in Boulder, it would be very painful and expensive. But I don’t think it has to be all or nothing.

There is nuance. I think we can still make more progress when it comes to how we regulate monopoly utilities. I also think that we need to care about consumers at the same time as we care about climate. We just need to work within the system. And sometimes what that means, the translation of that is you just need to pay Xcel off like they will do the right thing if they get paid.

I don’t begrudge people who say, “Well, it’s an existential crisis and the grand scheme of things, we just have to get to where we need to get.” But I do think eventually that catches up to us. The impact on households and consumers will be felt. We need to think about how to how to have a better balance between hitting our goals and not making it cost an arm and a leg.Next, in Part III, Steve Fenberg talks about Colorados dependence on oil and gas revenues and admits that he has concerns about Colorado not meeting its greenhouse gas reduction goals.

Next, in Part III, Steve Fenberg talks about Colorados dependence on oil and gas revenues and admits that he has concerns about Colorado not meeting its greenhouse gas reduction goals.