Sen. Ray Scott wants to power up the Colorado Energy Office, with a new point of view


Senate Republicans prevailed in tacking an amendment on accountability to one of the 36 bills introduced on the Colorado Recovery Plan that they say will help address conflict-of-interest questions on the Clean Energy Fund.

Senate Bill 230 would send $40 million in general funds — part of the $800 million left over from the 2020-21 budget year — to the Colorado Energy Office. The office would then  send $30 million to its former chief operating officer, who now runs the Colorado Clean Energy Fund, which he set up while he was still in the state energy office. 

 The action has led to Republican accusations that the $30 million is a sweetheart deal for the office's former COO, Paul Scharfenberger.

The Clean Energy Fund is the state’s “green bank,” formed by the Energy Office in 2018 and spun off as an independent nonprofit, according to Will Toor, the energy office's current executive director. 

The $30 million would be leveraged “seven to ten times” with private sector investments that would turn into job creation and construction of clean energy projects, Toor told the Senate Transportation and Energy Committee on April 14. 

It would  enable new markets in rural commercial energy projects and small business energy projects, Toor told the committee. This will include clean energy upgrades of homes owned by low- and moderate-income Coloradans and in rural Colorado, he added.

But the energy fund has just one project to date in its 30 months:  According to its website, it funded a $2.5 million loan  in May 2020 for Fort Collins Utilities to support its EPIC Homes program. That project was designed to upgrade older, energy-inefficient homes and rental properties, particularly those with low- and middle-income residents.

That track record wasn't good enough for Senate Republicans, who tried Tuesday to slow the bill down and discuss the conflict of interest issues. 

In an attempt to tamp down some of the complaints, sponsor Sen. Chris Hansen, D-Denver, noted an amendment to the bill from the Senate Appropriations Committee that would require at least 75% of the money be spent by the state energy office by July 1, 2022, and 85% by July 1, 2023. Any money left from the $40 million as of June 30, 2025, would revert back to the state treasury.

"We felt there should be clear deadlines on the spending," Hansen told the Senate on Tuesday. This bill directs a resource to an area of the economy poised to grow quickly, Hansen said. 

Sen. Ray Scott, R-Grand Junction, has a long history with energy office, including efforts to cut off the office's funding in 2017 and to revamp its mission in 2018. He offered an amendment Tuesday to put more teeth, including annual reporting, tied to SB 230.  

That reporting would also call  for the amount and dates of how the grant money has been spent by the energy office, energy fund and a third entity created under the proposed bill, the Colorado New Energy Improvement District, that would receive grants. The report also would identify by name the contractors, vendors and grantees of grant money, how the money is to be used, as well as overhead and administrative costs.

Scott said they did a background check of the Clean Energy Fund, and found out it has just one employee, Scharfenberger.

"We're giving money to one individual in Ridgway, Colorado ... that's something that's unusual for us to do," Scott told the Senate. "That makes me a little nervous."

Scott said Scharfenberger answered honestly about the one-person office. 

The amendment would tell lawmakers how much Scharfenberger is paying himself, Scott said.

"I was told not to worry about it," that the information would come up in SMART Act hearings, which Scott said is generally poorly attended and get little attention.

Grants like this open the door to "nefarious activity," Scott warned. "If there's nothing wrong with this program, what's wrong with some accounting?"

Hansen took umbrage from what he called an impression made by Scott that there is something "foul-smelling," and said the amendment was not necessary. Most of those dollars actually go into a revolving loan fund which would be repaid, Hansen said, adding that it isn't a "slush fund with unaccountable grants."

"I hope it works the way it's described," said Sen. Dennis Hisey, R-Fountain, but the plan should not have one person distributing $40 million.

"When we give this away to a brand new non-profit, the state loses all oversight," he said. 

"Something does stink to high heaven on this," said Assistant Senate Minority Leader Sen. John Cooke, R-Greeley, who said the bill's original accounting would have resulted in a report from the energy office that they gave the $30 million to the energy fund. That's not what Cooke believes is a full accounting. 

After initially calling for a "no" vote on the amendment, Hansen changed his stance,  and the Senate approved it. The bill  won preliminary approval on a voice vote and heads to a final vote on Wednesday.

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