Appeals Court Upholds Renewables Mandate

DENVER (CN) - Colorado's renewable energy mandate, which requires investor-owned utilities to get 30 percent of their electricity from renewable sources, is not unconstitutional, the Tenth Circuit ruled.

The Energy and Environment Legal Institute, a free market advocacy group, sued the Colorado Public Utilities Commission, and several other environment and energy-oriented associations, in 2011.

The Institute argued that because Colorado's electricity comes from a grid that connects eleven other states, this mandate could burden out-of-state coal producers with possible limitations on their commerce with Colorado.

They also suggested that such a regulation could increase the prices of electricity both in and out of Colorado state.

U.S. District Judge William Martinez ruled in a favor of the defendants in May 2014. His decision was affirmed by the 10th Circuit on Monday.

"The mandate does have the effect of increasing demand for electricity generated using renewable sources and (under the law of demand) you might expect that to lead to higher prices for electricity of that sort for everyone in the market," U.S. Circuit Judge Neil Gorsuch said, writing for the three-judge panel.

"But the mandate also reduces demand for and might be expected to reduce the price everyone in the market has to pay for electricity generated using fossil fuels. So the net price impact on out-of-state consumers is far from obviously negative and, for all we know, may tip in favor of those willing to shift usage toward fossil fuel generated electricity," Gorsuch added.

The Institute argued that there were parallels to be drawn between Colorado's situation and that of Baldwin v. G.A.F. Seelig Inc., a 1933 lawsuit in which Charles Baldwin, New York's then-Agriculture and Market Commissioner, prohibited companies from other states from selling milk in the state, unless their prices matched that of New York's dairy farms. T

he case was eventually found to be discriminatory against out-of-state companies, and established that one state may not create an "economic barrier" by banning price competition from other states.

Gorsuch, however, did not see the similarity.

"While Colorado's mandate surely regulates the quality of a good sold to in-state residents, it doesn't directly regulate price in-state or anywhere for that matter," Gorsuch wrote. "It does not discriminate against out-of-staters."

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