The Colorado News Agency reported a gem of a quote from State Representative Randy Fischer (D-Fort Collins). While providing arguments against Representative Kathleen Conti’s (R-Littleton) bill to bring more accountability to the Public Utilities Commission, especially in the area of utility rate increases, Fischer:
refuted Conti’s assertion and countered that cost increases can be attributed to an increase in coal prices and to capital construction by public utilities to accommodate growth in energy demand. Fischer also pointed to a 2009 law that established a 2 percent rate-hike cap on renewables.
“The costs of renewables are going down, and we are on a path that will eventually meet the costs of coal,” said Fischer. “Besides, the rates cannot exceed limits already in place regarding renewables.”
Where to start? First, Fischer is right that the price of coal is more expensive but not because the cost of mining suddenly skyrocketed. Rather, the increase in the cost of coal can be attributed to the Colorado General Assembly passing HB08-1164 which allows for a phantom $20 per ton carbon tax on coal — no other fossil fuel suffers such a tax. Fischer voted yes. So, Fischer himself is partially to blame for a higher price on coal in Colorado.
Second, we’ve proven repeatedly that the 2 percent renewable energy rate cap is a sham. From a previous post, my colleague William Yeatman writes:
The incremental costs are listed on consumers’ bills as the Renewable Energy Standard Adjustment (RESA). Since January 2009, the RESA charge has been set at 2 percent, the rate impact limit. For a consumer with a $150 Xcel bill, a 2% RESA charge would be $3 monthly, $36 annually.
Xcel defines the RESA on the monthly statements as representing “2% of an electric bill and funds the renewable energy program as required by Colorado law that asks utilities to generate increasing portions of their electricity from sun, wind and biomass.” Note with care that the Xcel statement does not say that the RESA covers the cost of renewable energy.
Incremental costs are only a small portion of the total costs of renewable energy that count towards RES compliance. The “non-incremental costs,” which are the total renewable energy costs minus the incremental costs, are recovered through a different monthly fee, the Electric Commodity Adjustment (ECA).
The Public Utility Commission staff’s William Dalton acknowledged confusion over the two fees as he explained the cost-shifting technique in testimony given to the Commission regarding the Public Service Company’s RES compliance plan in September 2009:
This could be a point of confusion to ratepayers and other interested parties: The [Public Service] Company is not exceeding the Renewable Energy Standard at the 2 percent retail rate impact that is borne by ratepayers. The costs above the retail rate impact limit are recovered through other Commission approved cost recovery mechanisms, primarily the ECA. Once the renewable energy resource cost recovery is allocated to the ECA, cost recovery of these resources is no longer subject to retail rate impact criteria or cost cap.
According to the Public Service Company’s 2010 RES Compliance Plan, the ECA is projected to be $6.3 million this year, before it balloons to $141 million in 2012. It then increases exponentially to $738 million in 2020, or almost 23 percent of total retail electricity sales—none of which would count against the 2 percent retail rate impact.
Assuming 1.5 million ratepayers in Colorado (current figure is 1.3 million) in 2020, and the mandated 20 percent renewable standard, the ECA cost alone will average nearly $500 per year per ratepayer.
The 2 percent rate cap does not apply to the preponderance of RES costs. And even where it does apply—to incremental costs—the price ceiling is evaded and exceeded.
But if a lie is repeated often enough, people will believe it even if it defies all the laws of economics.
Finally (for this quote), as for capital construction, Fischer voted for HB 1365, Ritter’s fuel switching bill, which allows for Xcel Energy to recover up 10.5 percent of the cost of its capital construction on new power plants taking another $130 million from ratepayers to Xcel. No wonder Xcel is so excited about building more.
Several weeks ago CNA reported another of Fischer brilliant statement. While opposing a bill from Representative Ray Scott (R-Grand Junction) that would prohibit Xcel from implementing its financially oppressive tiered rate structure, Fischer said:
he will vote against the measure, citing the need for a balanced way to address expanding energy needs driven by an increase in population and larger homes with air conditioning. Fischer’s district is not subject to the XCEL rates because Fort Collins utilities are municipally owned and not regulated by the PUC.
“It’s a fair way of distributing the cost of energy,” said Fischer. “People that drive the need for more plants should pay for them.”
As we have proven on this blog, Xcel’s tiered rates are a redistribution of money from Colorado’s working families to Xcel.
Most outrageous for Xcel customers, is that energy company doesn’t even service Fischer’s district so he doesn’t have to suffer the consequences of his own bad energy policy. Lucky for his constituents.
The good news is that both Conti’s (amended) and Scott’s bills moved out of committee and now are headed to the full House for a vote.