Xcel Energy testified today in the House Agriculture Committee that its resource acquisition projections DO include a $20 per ton “phantom carbon tax” as allowed under language from HB 08-1164, but the tax DOES NOT affect ratepayers. The Denver Business Journal reports:
But Karen Hyde, Xcel vice president of rates and regulatory affairs, said the potential carbon tax has not increased her company’s rates. And, she said, the transition from old coal-fired plants to new gas-powered plants will help to avert larger future rate hikes because the money that would be needed to upgrade and continue running the old plants would have been significant, she said.
Now that is both mind boggling and confusing. It’s true that the tax does not show up as a line item on ratepayers’ bills, but as William Yeatman wrote in an earlier post, “The tax is used in the models, and the models dictate spending. It leaps from the computers to your wallet, like the worst sort of virtual reality.”
The Denver Post recently reported that Xcel rates are up 21 percent (two times greater than inflation) over the last few years and projected to go up another 20 percent in the next six, “as the utility adds renewable energy, builds transmission lines and passes fuel costs through to consumers.”
Key phrase: “passes fuel costs through to consumers.” Included in that fuel cost? A $20 per ton carbon tax that doesn’t really exist.
Even the PUC staff is critical of the practice.
Alluding to the $20 ton emissions fee during hearings for Xcel’s most recent renewable energy compliance plan, PUC staff witness William Dalton expressed concern about “including costs that do not exist.”
Furthermore, if the tax doesn’t matter, then why incorporate it in modeling? And if the tax doesn’t matter, then why testify against repealing it?
Representative Spencer Swalm’s HB 1240 garnered bi-partisan sponsorship and support in testimony with both Landri Jones of the Urban League of Metropolitan Denver and the Independence Institute’s Amy Oliver Cooke testifying in favor of ratepayers. Former PUC Commissioners Polly Page and Carl Miller both testified as well. Diana Orf representing the Colorado Mining Association decided to testify after opponents aggressively criticized the coal industry.
In the end the voting proved somewhat confusing. Representative Marsha Looper offered to narrow the focus of the bill by addressing the carbon tax only with a friendly amendment to strike all language below section one. Oddly it was defeated. Two Republican members of the committee who voted AGAINST HB 1164 in 2008 apparently had a change of heart on carbon taxes because they voted AGAINST the amendment and AGAINST this bill.
For now, the phantom carbon tax will continue to haunt ratepayers.
