Will A Hurricane Blow Your Business Down?

By Patricia Eggleston

For U.S. clean tech companies with global operations, events such as tornadoes, hurricanes, port

strikes and civil unrest, can shut down suppliers for months and threaten the financial resiliency of a company that does not have a business continuity and recovery plan. According to the Chubb 2012 Clean Tech Industry Survey, three out of four clean tech companies operate internationally, leaving them exposed to these very risks which may quickly threaten the financial stability of their business.  In addition, 40 percent of clean tech companies surveyed depend on foreign businesses for their supply chain, yet 59 percent do not have an up-to-date business recovery plan and at least 50 percent are not proactively planning for or protecting against disruptions caused by weather-related events.

Why is there a disconnect?  As innovators, clean tech executives are accustomed to the risks and constant changes that are a part of their industry. While clean tech executives are busy developing technology, securing funding and increasing sales, some may miss the global risks, such as supply chain resiliency, that could threaten their business.  For instance, earlier this year China reportedly shut down numerous factories due to heavy smog—a move that could quickly create costly production delays for clean tech firms awaiting the delivery of components in the U.S.

Developing a business continuity plan can mean the difference between long term survival and succumbing to a catastrophe, especially for small to mid-size businesses. According to the Federal Emergency Management Agency (FEMA), 40 percent of small businesses do not reopen after a weather-related disaster. Begin by assessing all parts of the supply chain—including your supplier’s supply chain—to expose any weaknesses.  If your company obtains a key component from a single location, that’s a red flag and could indicate potential trouble. A global property and business income insurance policy can help bolster strong supply chain management by providing a firm with a financial cushion for loss of income and extra expenses if operations are halted due to property damage caused by natural disasters or other causes.

Not sure where to start? Talk to your insurance agent or broker to learn how you can develop or update your business continuity plan. Some insurance companies may also offer online or print resources to help clean tech companies develop a plan.  Clean tech companies that prepare now may be able to avoid a costly loss in the future.

Patricia Eggleston, a vice president and commercial underwriting manager for the Chubb Group of Insurance Companies, is based in Englewood, Colorado, and can be reached at peggleston@chubb.com.

MLP Parity Act Would Include Clean Energy Companies

On April 24, 2013, a bipartisan group of senators and representatives reintroduced a revised version of the Master Limited Partnership Parity Act (the MLP Parity Act) to the Senate and House. Currently, a company can qualify as a master limited partnership (MLP) only if at least 90 percent of its gross income consists of "qualifying income," including income form the production and sale of oil and natural gas, coal extraction, and pipeline projects.

The MLP Parity Act would enable clean energy companies to qualify for MLP status by expanding the definition of "qualifying income" to include income from clean energy resources, including wind, solar, biomass, municipal solid waste, hydropower, and hydrokinetic energy. The expanded definition would also include waste-heat-to-power, carbon capture and storage, energy efficient building properties, and biochemicals, and would allow for income from certain transportation fuels to qualify, such as cellulosic, biodiesel, and algae‐based fuels. A company could qualify as an MLP under the MLP Parity Act only if at least 90 percent of its gross income is included in one or more categories of qualifying income, as modified by the MLP Parity Act.

Renewable Energy Standard Increase - SB 13-252 - Needs Your Help

Chris Shapard, CCIA

We need your help to push back on the attempts to get Governor Hickenlooper to veto SB 252.  Outside groups have waged a campaign of misinformation about this bill.  An anti-climate change think tank called the Heartland Institute, the Americans for Prosperity, and others have bought radio, television, print and internet ads against the bill.

Not mentioned in the ads is the historic rise of fossil fuel costs that always get passed onto the consumer, the recent increase in electricity costs from wholesale electricity cooperative associations due to fossil fuel costs that exceed 2% and Colorado’s success thus far with our current Renewable Energy Standard (30% by 2020 for Investor Owned Utilities and 10% for rural cooperatives).  Also, not being heard in the noise are the off ramp provisions that if a utility can’t meet its requirement under the 2% rate cap increase (an increase from the current 1%) then their requirement percentage decreases.

The 2010 Colorado Cleantech Action Plan, sponsored by CCIA, state, federal and economic development partners found that a leading driver for cleantech growth was our strong public policy accomplishments – specifically our Renewable Energy Standard.  No bill is perfect and SB 252 is no exception but it is a reasonable and important bill for the continued success of cleantech in Colorado. 

CCIA actively lobbied and testified in support of this bill to increase the Renewable Energy Standard (RES) from 10% to 20% by 2020 for cooperative electric utilities providing wholesale electricity and large cooperative electric associations with at least 100,000 meters. Consumer costs are capped at a maximum 2% annual increase (up from the current 1%) for compliance with the standard. Compliance off ramps were put in place to decrease the standard for cooperatives who can't meet the goals under the consumer cost cap.

SB 13-252 also:

• Requires 1% of cooperatives' retail sales to come from distributed generation (DG) and .75% for a cooperative with less than 10,000 meters;
  

• Expands the definition of eligible energy resources to include coal mine and landfill methane if the PUC qualifies the projects to be greenhouse gas neutral;
  

• Removes the additional RES credit for new generation built in Colorado after Jan. 1, 2015.
  

Please contact Governor Hickenlooper via phone, email or letter to express your support for SB 13-252.

Email: http://www.colorado.gov/govhdir/requests/opinion-leg.html
Phone: (303) 866-2471
Mail: John W Hickenlooper, Governor
         136 State Capitol
         Denver, CO 80203-1792