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Legislature provides cover for Xcel Energy

Xcel Energy enjoys great success at the state Capitol. It seems that whatever Xcel wants legislatively, Xcel gets. Relief for ratepayers is met with opposition.

According to the Secretary of State’s online lobbying information, through March 2011, the utility company has taken positions on 28 different bills this year: opposing 14, supporting 3 and “amending” or “monitoring” 11.  So far, bills the utility company supports have either passed or are making their way through the General Assembly.

Most interesting are the 14 bills Xcel opposes, including pro-consumer legislation such as transparency on ratepayers’ energy bills and reducing energy costs through utilization of a “least cost principle.”

Under the leadership of Speaker Frank McNulty (R-Highlands Ranch), the House has done its part by killing all seven bills Xcel opposed in that chamber, including HB 1240 which would have repealed Colorado’s carbon tax and restricted Xcel’s rate of return on capital construction.  The “phantom carbon tax,” as my colleague William Yeatman and I have labeled it, is:

a central component of his [Governor Bill Ritter] New Energy Economy…a big, hidden energy tax that makes customers pay for the controversial theory of global warming.

In order to make Ritter’s New Energy Economy appear affordable, the Public Utilities Commission (PUC) allows Xcel Energy to incorporate at least a $20-per-ton carbon tax into the economic models the utility uses to make resource acquisition decisions.  The tax is used in the models, and the models dictate spending.

Ritter’s carbon tax is the worst kind of virtual reality because it leaps from the computers to your wallet.

Representative Spencer Swalm garnered bi-partisan support for the repeal, but Republicans killed it in the House Agriculture Committee with “NO” votes from Representatives Glenn Vaad (Greeley), Ray Scott (Grand Junction), and Committee Chairman Jerry Sonnenberg (Sterling). Sonnenberg and Scott were even listed as sponsors of the legislation.

The all-Republican Weld County Board of Commissioners also joined the Ag Committee Republicans, going on record as supporters of Colorado’s phantom carbon tax.  Commissioner and Chairwoman Barbara Kirkmeyer, testified that her “entire board” opposed HB 1240 and thus opposed the repeal of the phantom carbon that is so costly to ratepayers.

Furthermore, in 2008, Vaad, Sonnenberg and McNulty opposed the initial legislation that enabled the carbon tax that they now support.

The State Senate, under the leadership of Senate President Brandon Shaffer, also has done its part to appease Xcel. So far, it has killed five Xcel-opposed bills, including the “least cost principle,” and two more are languishing in committee.

Monday the House continued its anti-ratepayer policy with passage of HB 1291, which would approve Colorado’s State Implementation Plan (SIP) for regional haze costing ratepayers an additional $1 billion according to Xcel’s 2010 annual report. The plan is both expensive and likely illegal. The $1 billion price tag is of little concern to Xcel because it recovers the entire cost from ratepayers. Xcel customers can thank Representatives David Balmer, Don Beezley, Kathleen Conti, Don Coram, Robert Ramirez and Spencer Swalm for their courageous “NO” vote.

Mr. Yeatman, our energy policy analyst, has written extensively on the SIP. In particular, he has detailed the plan’s unnecessary inclusion “of two small coal fired power plants near Steamboat Springs, Hayden 1 and Hayden 2, because it mandates controls that are at least $100 million more expensive than what is required by the Environmental Projection Agency.”

Yeatman notes:

  • Costs of the plan exceed benefits by a 40:1 ratio.
  • Even the EPA concedes that the chosen technology, Selective Catalytic Reduction (SCR), is not cost effective for smaller plants such as Hayden 1 and Hayden 2.
  • Utah determined that SCR is not cost effective.
  • Evidence suggests that the Colorado Department of Public Health and Environment grossly overestimated visibility benefits.
  • The threat of a federal takeover if the plan was not submitted by January 2011 was greatly exaggerated, rushing the deliberative process.
  • Under Colorado law (§25-7-105.1(1) C.R.S.), a SIP cannot impose emissions controls that are more stringent than what the EPA requires.

HB 1291 must be important because the Colorado Oil and Gas Association (COGA) is saturating television and radio with ads encouraging Republicans to approve it. Leaving nothing to chance, sponsorship includes two heavy hitters – Speaker McNulty and Senate Majority Leader John Morse – essentially guaranteeing passage at the expense of ratepayers.

The prevailing paradigm on Colorado’s energy policy is that industry, the utility, politicians, environmentalists and bureaucrats have come together to forge a united “clean energy” path for Coloradans. However, there’s one group that has been noticeably absent – ratepayers, those fools who actually pay the bill.

Yeatman conservatively estimates that the four most prominent aspects of the New Energy Economy will cost Colorado ratepayers an additional $212.3 million in 2011 alone.  Add millions more for the SIP that the Colorado General Assembly does not have the courage to challenge along with tiered seasonal rates, and Colorado ratepayers are in for an expensive 2011.

There is good news.  Two State Senators Kevin Lundberg (R-Berthoud) and Lois Tochtrop (D-Adams County) are challenging leadership and providing a voice for consumers.  Senator Lundberg introduced SB 237 to require state to consider the cost-effectiveness of the SIP and be more energy-neutral.

According to the Colorado News Agency, Tochtrop’s bill SB 236 would replace “a key provision of the PUC-backed” SIP with “what Tochtrop says is less costly approach.”

Energy experts say that either Lundberg’s or Tochtrop’s bills likely would save ratepayers between $100-200 million dollars, which means they probably don’t have a chance in this state legislature.

While it’s not surprising that an investor-owned, state-sanctioned monopoly would seek favor with the legislature, it is surprising that elected officials expected to represent the interests of their constituents would simply rubber-stamp Xcel’s political and financial agenda.

But with this General Assembly, Xcel gets its way.