Senator Betty Boyd, a democrat member of the State, Veterans, and Military Affairs Committee, was not present in the committee hearing for any of the testimony either for or against HB 1172, the carbon tax repeal. Yet she knew exactly how to vote — against electricity ratepayers, against the environment, and for Xcel Energy.
According to lobbying disclosure reports available on the Secretary of State’s Web site, Xcel spent $64,243.38 in January and February to lobby lawmakers in the Colorado state legislature. Today it paid off when HB 1172 was killed in the Senate committee on a party line vote. After not ever making it out of committee last year, this year the “phantom carbon tax” repeal actually passed the House and made it all the way to committee in the Senate.
No worries for Xcel, all three Democrat Senators — Rollie Heath, Bob Bacon, and Betty Boyd — were there to stop any further progress on the bill sponsored by RepublicanTed Harvey. Boyd was in another committee hearing during testimony on HB 1172. After testimony was complete, she was called back for the vote. Committee Chair Rollie Heath asked her if she had any questions. She answered, “No,” and was pretty sure that she understood what was being proposed.
Boyd missed powerful testimony from Syndi Nettles Anderson, an engineer and NREL employee who is getting her PhD in biofuels. Anderson, who is also looking to replace Bob Bacon once he is term limited in SD 14, said that the imputed carbon tax on coal actually harms the environment because it incentivizes other technologies that have not yet been fully tested for their environmental impact. Some of these technology may do more harm than carbon emissions.
The results of today’s committee hearing does lend some credibility to a saying that is whispered in the halls of the capitol: “Xcel owns this place.”
Full Disclosure: I testified today on behalf of HB 1172. My full testimony is below.
Testimony on behalf of
HB 1172 No Imputed Carbon Tax
March 21, 2012
Senate State, Veterans, and Military Affairs Committee
Mr. Chairman and Members of the Committee
My name is Amy Oliver Cooke. I write on and direct the energy policy center for the Independence Institute, 727 E. 16th Ave, Denver, CO 80203
Thank you for allowing me the opportunity to testify today on behalf of HB 1172.
At the Independence Institute, we are agnostic on energy resources. It is our strong belief that the choice of energy resources should come from the demands of the free market, and not from the preferences of policymakers, lobbyists, or special interest groups.
HB 1172 is simple in nature, unless a carbon tax is passed at the federal level, ratepayers should not be disadvantaged financially by paying the phantom carbon tax to an Investor Owned Utility such as Xcel Energy.
History
We haven’t been able to find any other state that has a carbon tax in statute. Colorado’s is based in HB08-1164, which says the Public Utilities Commission “may give consideration to the likelihood of new environmental regulation and the risk of higher future costs associated with the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.”
HB 1172 would change the wording ever so slightly to the PUC “may give consideration to the existence of new environmental regulation and the costs imposed by current federal law or regulation on the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.”
When the 2008 bill passed, Colorado Conservation Voters explained the passage of HB 1164 this way: “By giving the PUC the ability to use carbon as a value in resource planning decisions, HB 1164 represented the first time that the Colorado General Assembly took a substantive step forwards in giving regulators the tools they need to explicitly address global warming.”
It is a selective, regressive tax – selective on resource fossil fuels and selective on customers (Xcel Energy), although pass through costs affect almost everyone in the state.
To tax or not to tax?
While it’s prudent for the PUC to consider the risks of Congress passing a cap-and-trade scheme that would put a price on carbon, it is, in equal measure, rash to include the cost of a federal carbon tax in resource planning that covers a time frame in which these costs don’t exist.
Ratepayers already are saddled with costs that do exist — $1.1 million for Xcel executives to travel via private jet. Or just in the last two months, $64,243.38 to lobby the Colorado state legislature, part of which is to kill this bill. Have you ever wondered where the “carbon tax” goes? Does Xcel cut a check to the state of Colorado or to the federal government? No. It doesn’t.
To its credit, the PUC staff registered second thoughts about the application of a carbon tax. Alluding to the $20 ton carbon tax during hearings for Xcel’s 2010 renewable energy compliance plan, PUC staff witness William Dalton expressed concern about “including costs that do not exist.”
But even Xcel Energy doesn’t believe that a carbon tax will be passed at the federal level any time soon.
As early as June 2010, Xcel petitioned the PUC for permission to renege on a commitment to build a 250 megawatt solar thermal power plant due to “changed circumstances,” among which the utility cited “the expectation that carbon legislation won’t be enacted for several years,” which would, “erode the economics of solar thermal” [Direct Testimony James F Hill, Xcel Witness, 4 June 2010, Docket 10A-377E]
In the 2012 Renewable Energy Compliance Plan, In Section 7 — Retail Rate Impact and Budget, Xcel acknowledges that the Independence Institute was correct in February 2011 when we predicted that there would be no national carbon tax in the near future with this statement:
“The carbon assumptions approved by the Commission in Docket No. 07A-447E assumed carbon regulation would be enacted in 2010; such regulation was not enacted and the prospects for near term carbon regulation appear to be slim.”
Because Xcel assumes there will be no carbon tax in the near future, it presents a cost model that excludes the carbon tax and another model that does include the tax but not until 2014:
“Due to the uncertainties related to the timing associated with possible carbon emission regulation, the Company did not include any carbon cost imputations in the model runs and other calculations set forth on Table 7-3. However, as discussed later, Public Service also presents with this Compliance Plan, as Table 7-4, a sensitivity case that assumes the same carbon imputation costs ($20 per ton, escalating at 7% annually) as approved in the 2007 Colorado Resource Plan but on a delayed implementation schedule of 2014.”
The cost difference between a carbon and non-carbon compliance plan is substantial – roughly $584 million between 2014-2021. That’s over $400 per Colorado ratepayer for a tax that doesn’t exist.
Colorado Legislative Council Staff wrote in the fiscal note for HB 1164, “the bill will not affect state or local revenue or expenditures, and is assessed as having no fiscal impact.” But including a non-existent $20 per ton carbon tax that adds millions of dollars to the cost of otherwise inexpensive fuels such as coal, has an impact on ratepayers. Currently, according to DOE statistics Colorado has the highest electric costs of any neighboring state, second highest in the Rocky Mountain West,
Conclusion
It’s true that the carbon tax is not a line item on a ratepayer’s bill, but is in included in the modeling of costs for resource acquisition. Costs dictate rates. The higher the costs, the higher the rates. The higher the rates, the more Xcel Energy makes. The “phantom carbon tax,” as we call it, increases costs and therefore rates. Xcel customers pay Xcel for a tax that doesn’t exist. It is a redistribution of wealth from ratepayers to shareholders.
If the state legislature wants to tax Coloradans to pay for global warming, they should make their case to voters — all voters – and not just penalize Xcel Energy ratepayers, who have no other place to go, no recourse.
As I stated at the beginning it is the strong belief of the Independence Institute that the choice of energy resources should come from the demands of the free market, and not from the preferences of policymakers, lobbyists, or special interest groups and we believe that HB 1172 is consistent with that principle.
