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Early Concerns and Approval – 2019 Energy Bills

Early Concerns and Approval – 2019 Energy Bills

After getting steamrolled in state legislative elections, center right voters across the state need to prepare themselves for progressive left legislation that more than likely will drive up energy prices for the sin of being productive and prosperous. Apparently, the best way to ecological paradise is by enriching monopoly utilities like Xcel Energy.

While it is early in the session, there are three bills that we have our eye on: HB19-1037, SB19-077, and SB19-053.

HB19-1037: Colorado Energy Impact Assistance Act

Representative Chris Hansen (D-Denver), the sponsor of HB19-1037, looks to speed up Colorado’s fuel switching away from baseload hydrocarbons in favor of industrial wind and solar generation, which will enrich Xcel at ratepayer expense.

HB19-1037 stipulates that upon approval from the Public Utilities Commission, electric utilities will be able to refinance what they still owe on a prematurely closed power plant through ratepayer-backed bonds. You read that right. Captive ratepayers guarantee the bonds!

Hansen believes HB19-1037 will benefit ratepayers for three reasons. First, it makes it easier for utilities to prematurely close power plants deemed uneconomical and environmentally inferior. Second, it mitigates the initial rate increase that results from accelerating the depreciation of a power plant. Lastly, it will save ratepayers money since the amount owed will be refinanced using low-interest rate-payer backed bonds.

But if history is any guide, it’s important to remember that it could incentivize Xcel to initiate more proposals like the Colorado Energy Plan (CEP), where the utility prematurely closed two environmentally superior and economical coal plants. And based on our experiences as the monopoly’s chief opponent in the CEP proceeding, we know Xcel isn’t afraid to distort the numbers and lie about supposed “savings” ratepayers may see some 20 plus years in the future.

We believe it’s essential that Colorado treads carefully with legislation like HB19-1037. In theory, refinancing undepreciated capital costs through ratepayer backed bonds could be beneficial, but only if those ratepayers have a say in whether or not it’s what they want. In reality, it’s more likely that Xcel and others will abuse this financial tool and accelerate Colorado toward 100 percent industrial scale wind and solar – all financed by captive ratepayers who will also assume the financial risk.

SB19-077: Electric Motor Vehicles Public Utility Services

As our resident command-and-control economist masquerading as a fiscal conservative, Senator Kevin Priola (R-Adams County) finally can pass legislation that steals from the poor and gives to the rich.

Priola is devoted to legislation that benefits Colorado’s small contingent of electric vehicle (EV) owners. Last session, he sponsored a similar bill to SB19-077, but luckily, free market Senate Republicans killed it. This session, Colorado may not be as fortunate since Democrats control the House, Senate, and Governor’s office. SB19-077 gives public utilities (i.e., rural-electric cooperatives [co-ops], municipalities [munis], and investor-owned utilities) the green light to build EV charging stations and rate base the expenses.

There is the possibility that some co-ops and munis will be excluded from this legislation because of municipal home rule, which is defined and explained in Article XX of the Colorado Constitution. But even if they aren’t exempted, customers of both municipalities and rural-electric cooperatives are capable of stopping a build out of EV charging stations.

Municipal utility governing boards are comprised of elected officials that are supposed to represent customers’ interests. Hence, theoretically, if the people want the charging stations, the board will approve the plan and they’ll be built. Vice versa, if the customers don’t want them, they won’t be built. Co-op customers have even more authority. Before a co-op can break on an EV charging station, its customers must approve it.

Xcel’s ratepayers have no authority. If Priola’s bill passes, the monopoly will be able to build charging stations and make their captive customers pay the construction costs. And guess who profits? If you said Xcel, give yourself a gold star – if you can still afford it.

Who else benefits? The Tesla-owning Senator Priola, who won’t be forced to pay the extra costs because he’s NOT an Xcel ratepayer.

Due to the current make-up of the Colorado General Assembly, it is more than likely that Colorado’s energy customers, who can’t afford an electric vehicle but have already helped pay for someone else’s, will effectively be forced to write another check to those same privileged people.

SB19-053: California Motor Vehicle Emission Standards

Contrary to the other two pieces of legislation, we fully support SB19-053, which Senator John Cooke introduced in an attempt to keep Colorado in control of Colorado’s own air quality control commission. Thanks to a Governor John Hickenlooper executive order, Colorado’s Air Quality Control Commission is surrendering our regulatory sovereignty to California’s more stringent vehicle emission standards.

First, adopting California’s standard could tie our state in perpetuity to regulations passed by the California Air Resource Board. As a result, any update made by regulators in Sacramento must be endured by Colorado residents from Burlington to Grand Junction.

This binding effect threatens the interests of Colorado residents, since regulators living in California simply do not consider how a new policy may impact someone in Grand Junction or Arvada. And why should they? California regulators have zero responsibility to Colorado residents.

This may seem obvious, but our states have different lifestyles. For instance, unlike a resident of Orange County, who can choose to drive any vehicle because the climate, a resident of a mountain town like Gunnison has to drive an SUV or truck year-round because of severe weather and terrain.

If Colorado adopts California’s standard, Tim Jackson, the president of the Colorado Automobile Dealers Association, believes the price of a new vehicle will increase by at least $2,110 because of new taxes.

And as a Reason Foundation report about fuel standards explained, the rising cost of new vehicles also increases the price of used vehicles. As new car prices rise, many drivers are priced out of buying a new vehicle and decide to continue driving their current one – effectively decreasing the supply of used cars on the market. Nevertheless, due to cost reasons, many prospective buyers can’t afford a new car and must purchase a used one, which drives up demand. Hence, since the supply of used vehicles decrease while demand for them increases, the prices of used vehicles ultimately increase.

Furthermore, 71 of every 100 vehicles sold in Colorado are trucks. For reasons unique to each buyer, consumers living in Colorado simply do not want to purchase low or zero emissions vehicles. However, if more stringent standards are adopted, in order gin up more interest and be able to sell all of their available vehicles, dealership owners will most likely raise the price of their trucks and other best sellers, so they can reduce the price of vehicles that meet emission standards.

Tying Colorado to California is a lose, lose proposition. Regulators in California should never be able to determine Colorado public policy, and it is not up to the government to decide what type of vehicle a person drives.

Senator Cooke, well done. Now, we hope that other legislators support this commonsense piece of legislation.

As the session progresses, we expect to see more radical bills that will affect Colorado’s environment and energy sector.  A setback bill hasn’t been introduced yet, but rumors indicate a freshman legislator might be working on it right now.

Stay tuned. The circus has just begun, and we expect things to get much worse.


This post has been edited by the author in order to accurately reflect the intent of SB19-053.