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CDPHE Lied about HB 1365 Deadline, Coloradans Pay the Price

Usually, it takes about 18 months for the PUC to deliberate a major acquisition plan for new power plants. For HB 1365, however, the PUC decided on a $1.3 billion plan, affecting almost 1,000 megawatts of electricity generation, in only four months. According to the PUC staff (p 14), the truncated timeline shortchanged the vetting process, such that the cost and engineering analyses were “preliminary.”

To be sure, the PUC didn’t choose to rush; rather, the compressed timeline for HB 1365 deliberations was mandated by the legislation. HB 1365, which was enacted in April, 2010, gave the PUC until December 15 to finalize a plan. Xcel first pitched its preferred plan on August 13, so the PUC had four months.

Why the rush? The official reason, provided by Colorado Department of Public Health and Environment, was that the December deadline was a necessary evil in order to avoid a federal crackdown. Specifically, the CDPHE argued that the HB 1365 fuel switching plan had to be finalized by December, 2010, so that it could be incorporated into the state’s Regional Haze State Implementation Plan (SIP). According to the CDPHE, if the HB 1365 plan wasn’t completed by mid-December, then it would delay the submission of the Regional Haze SIP–due on January 9, 2011–which would lead to a federal takeover of the state’s air quality permitting.

Consider this HB 1365 direct testimony from CDPHE witness Paul Tourangeau, director of the Air Pollution Control Division  (p 3),

Q: What if the Regional Haze SIP is not submitted to EPA by January 2011?

A: If the Regional Haze is not submitted to EPA on time, EPA will take over the Department’s regional haze program and regulate utilities and other large sources of nitrogen oxides and sulfur dioxide in the state through an EPA-promulgated Federal Implementation Plan. An EPA FIP would impose federal mandates on the large NOx and SO2 sources in the state, including Xcel facilities.

This supposed threat (of a federal takeover) is the reason that Xcel’s HB 1365 implementation plan was rushed through the PUC, thereby depriving the PUC staff and other stakeholders the opportunity to properly review Xcel’s proposals.

Of note, the alleged threat of a federal takeover also was essential for the bi-partisan support that HB 1365 enjoyed in the Colorado General Assembly. In an opinion piece titled, “The Conservative Case for Supporting HB 1365,” some Republicans lawmakers explain that,

“HB 1365 was a product of bipartisan compromise that grew out of the unpleasant fact that Colorado’s Front Range is out of compliance with federal air quality requirements. This left policymakers in our state with two options: develop a proactive plan to get Colorado into compliance, or let Barack Obama’s air quality policy in Washington write one for us.”

In making accusations about “Obama’s air quality police,” these GOP lawmakers were referring to the CDPHE’s claim that the federal government would seize the state’s air quality planning if the January 9, 2011 regional haze deadline was not met.

Clearly, the CDPHE’s warning about a federal takeover played a key role on HB 1365. The CDPHE’s allegation resulted in: (1) GOP support for HB 1365 and (2) an accelerated timeline for HB 1365 deliberations that shortchanged Colorado electricity consumers.

Although we suspected it then, we now know for sure that the CDPHE’s claims about a federal takeover were false. While the PUC rushed on HB 1365, the General Assembly has taken its time. Lawmakers have yet to approve the Regional Haze SIP, so it hasn’t been sent to the EPA. The January 9 deadline came and went….and nothing happened.

Moreover, North Dakota regulators are taking public comment on its Regional Haze state implementation plan through the end of March. The state won’t submit the plan until the spring. The EPA hasn’t seized the state program. Indeed, there will be no ramifications–my contact told me the EPA won’t get around to addressing Regional Haze SIP’s until May.

The upshot is that the CDPHE lied, and because it lied, Colorado consumers got shafted. There was no January deadline for Regional Haze, so there was no need to rush the PUC process. If the CDPHE had been honest, then the PUC could have deliberated for as long as it needed, Xcel’s proposed plan would have received a proper review, and Colorado consumers would have been better protected.

Why would the CDPHE lie? The likely answer is that it didn’t want to leave anything to chance. After all, HB 1365 is a major component of ex-Governor Bill Ritter’s awful New Energy Economy. My guess is that the Ritter Administration didn’t want to risk a GOP candidate winning the Governor’s mansion and inhibiting HB 1365, so it engineered an artificial deadline to ensure that a HB 1365 implementation plan was finalized before Ritter left office.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute