Last Thursday, seven Colorado State Senators sent Governor Bill Ritter a letter demanding that he remove PUC Commissioners Ron Binz and Matt Baker from deliberations on HB 1365, the Clean Air Clean Jobs Act. The Senators’ request is based on almost 70 pages of emails, obtained by the Colorado Mining Association with a Colorado Open Records Act request, that show how Commissioners Binz and Baker participated in the drafting of the law. The seven Senators and the CMA argue that Binz and Baker cannot possibly maintain impartiality while conducting hearings on the implementation of a law they helped draft.
According to the CMA, the PUC’s involvement in drafting HB 1365 creates the “appearance of impropriety,” because,
“the Commissioners actively engaged in negotiations with a primary regulated utility regarding issues that would come before the Commission for decision directly involving that regulated utility—issues that give the appearance that the Commissioners are pre-disposed toward [Xcel] and the Plan [ie, the HB 1365 implementation plan put forth by Xcel]. In particular, ratemaking treatment for the costs incurred by [Xcel] in implementing the Plan appears to have already been negotiated and resolved. As such, the Commissioners have essentially abdicated their core responsibility to assure that rates are just and reasonable.”
At face value, this line of reasoning makes sense, but there’s more to the story. The whole point of HB 1365 is to give favorable rate treatment to Xcel if the utility agrees to certain environmentalist measures (ie, forsaking coal for more natural gas). The terms of this favorable rate treatment are set by the text of the legislation (with considerable input from the PUC and Xcel). Because these terms are set by the law, the PUC doesn’t have discretion, so it can’t be biased.
Of course, it is inappropriate for the PUC to be writing legislation in cahoots with the utility that it regulated, but that’s an issue for the State Legislature. More precisely, why did the General Assembly pass a law written in large part by a utility? That’s where the system failed.
To my eyes, the email evidence indicts the Ritter Administration moreso than the PUC. In particular, Kelly Nordini, deputy chief of staff to the Governor, seemed to have shepherded the legislation through a gauntlet of special interests that stood to benefit from fuel switching legislation (Xcel, natural gas producers, environmentalists). Those who stood to lose (coal companies, independent power producers) were left out. Communications from all parties flowed through her, and in one email, Anadarko’s Scott Moore thanked Nordini for “keeping us all moving forward.” After completing a draft that was acceptable to all the ‘winners,’ Nordini then spearheaded the media outreach when the bill was introduced in the state Senate.
In a study released last month, the Independence Institute’s Amy Oliver Cooke and I demonstrated how the Ritter administration engineered the false threat of a pending EPA crackdown on coal in order to sell HB 1365 to the public and the Legislature. The emails unearthed by the CMA further show that the Ritter administration went to great lengths to craft and enact the bill.
All told, the evidence suggests that the Ritter administration played puppet master to push through a fuel switching bill that furthers the Governor’s green legacy. To that end, Governor Bill Ritter (1) created a false impetus for the bill, (2) led negotiations whereby the ‘winners’ wrote the bill to divvy up the spoils of fuel switching among themselves, and (3) lobbied the bill to lawmakers and the media.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute.