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Energy Policy Center testimony on HB17-1116

Mr. Chairman, members of the committee thank you for the opportunity to testify today. My name is Michael Sandoval. I am the senior energy policy analyst for the Independence Institute, a state-based, free market think tank, headquartered in Denver.

The Independence Institute is opposed to HB17-1116 not in intent, but in process. We do think Coloradans deserve help with their skyrocketing energy—we sympathize with ratepayers like Sharon Garcia of Pueblo, who like many other low income folks saw rates that “happened in a way that has left poor consumers gasping for relief,” according to the Washington Post.

Coloradans need help with their electricity bills, because of what the state legislature has done to them.

We just don’t think that taxpayers should have to pay for it. There is a better way to help low income Coloradans with their bills, which I’ll get to in just a moment.

First, we must look at why we are here in the first place. State lawmakers are trying to solve a problem – high electric bills –  for which lawmakers are responsible. It’s legislative atonement for a 60+ percent increase in electric rates, which is nearly twice the inflation rate and nearly three times the rise in median household income. I know the increase because I wrote the report just about this time last year.

Over the last decade, lawmakers in this building have passed more than 57 different pieces of legislation that have moved the state away from a least cost principle, that enriched the state’s largest monopoly utility, and drove low-income Coloradans into energy poverty. Essentially the state legislature incentivized a monopoly to drive up electricity rates through renewable mandates, demand side management programs, fuel switching, and building unnecessary capacity just to name a few.

Our 2013 analysis showed in one year alone, four key cost drivers (DSM, fuel switching, mandates, building transmission lines) cost one group, Xcel ratepayers, $484 million – more than 18 percent of Xcel’s total electricity sales. Based on 1.4 million ratepayers, that’s $345 per ratepayer in just one year. No wonder they need help paying their bills.

The legislature sends ratepayer dollars up to Xcel shareholders, then tries to atone for it by sending taxpayer nickels back down to low-income ratepayers.

Instead of addressing energy poverty by taxpayer subsidy, this body should not create energy poverty in the first place through policy choices that unnecessarily drive up energy costs in the near or long term.

Our preference is for this body to reverse a decade of bad policy that has driven up Coloradans electricity rates. But absent that, the nickels that trickle down to ratepayers should come from Xcel shareholders’ dollars rather than taxpayers’ dimes.

Here is what we recommend:

•The state legislature require the PUC to direct Xcel to pay not less than $8 million (.7 percent of its 2016 net income of $1,123,379,000) directly to the non-profit Energy Outreach Colorado, skipping the Colorado Energy Office for efficiency sake.

•PUC cannot allow Xcel to ratebase the donation.

•Xcel gets a tax deduction for the gift.

•Index the donation to the rise in Colorado electric rates.

•The state legislature require the PUC to direct Xcel to pay not less than $3.5 million (about .3 percent of its 2016 net income of $1,123,379,000) directly to DHS earmarked for LEAP.

•PUC cannot allow Xcel to ratebase the payment.

•Index the donation to the rise in Colorado electric rates.

•DHS is subject to CORA and must make available a complete accounting of all monies allocated to LEAP.

The Colorado Energy Office must report to the legislature every year no later than March 15th exactly how the dollars were allocated including but not limited to:

•Complete accounting of how all monies were spent. Submit most recent audited financials (cannot be more than one year in arrears).

•Number of ratepayers requesting help for electricity bills and number receiving help and how much money was spent.

•Number of Coloradans requesting and receiving help for weatherization/energy-efficiency services and dollars spent.

•Line item cost of administration and overhead including but not limited to salaries, benefits, travel costs, marketing materials, direct and indirect expenses.

•Projected budget for the following year.

Thank you for your commitment to all Coloradans and service to the state. I’m happy to entertain questions.