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Review of October 29 PUC Hearing on HB 1365

HB 1365 Primer
Xcel’s New HB 1365 Implementation Plans

Peabody to PUC: Gas Is the New Coal

A Peabody Energy witness today challenged the conventional wisdom that natural gas is a clean alternative to coal. Kipp Coddington, a consultant contracted by the coal company, warned the PUC that, “there is not the information before you to make the decision required by the Clean Air Clean Jobs Act (HB 1365),” because Xcel failed to account for the “lifecycle” emissions of natural gas. Mr. Coddington cited a recent study by Cornell Professor Robert Howarth, which suggests that natural gas drilling is a significant source of methane, a powerful greenhouse gas. When these methane emissions are accounted for, natural gas “lifecycle” greenhouse gas emissions approach those of coal. Under cross examination, Coddington said that the Cornell study has yet to be published in a peer-reviewed scientific paper, although he noted that the author is in the process of doing so.

The methane study was one of two clever objections to fuel switching offered by Mr. Coddington. He also noted that Xcel’s failed to consider the air quality permitting needed for a new natural gas plant to replace an existing coal plant, and is therefore in violation of HB 1365’s requirement to address all “reasonably foreseeable” air quality regulations.

Dueling Economic Analyses

What is the economic impact of HB 1365 on Colorado communities? It depends on whom you ask.

On the one hand, there’s an economic analysis performed by the Leeds School of Business, commissioned by Xcel, and wholeheartedly supported by natural gas producers. The study, “Economic Impacts of Implementing the Colorado Clean Air-Clean Jobs Act under Different Scenarios,” calculates that HB 1365 would add almost $1.8 billion and 1,254 jobs to the state’s economy.

On the other hand, there’s an economic analysis performed by Dr. Roger Bezdek of Management Information Systems, commissioned by the Colorado Mining Association, and wholeheartedly supported by the American Coalition for Clean Coal Energy. This study concludes that HB 1365 would cost Colorado $117 billion through 2020 and would put 57,000 jobs “at risk.”

Of course, both studies are nonsense, because there is no such thing as an accurate economic forecast. That said, it doesn’t take a genius to figure out the economic impact of HB 1365, legislation that increases demand for natural gas at the expense of coal. Colorado counties that produce gas would gain jobs; coal counties would lose jobs. The bitter pill is that this geographic shift in employment is the result of politics in the capitol building, rather than competition on the market.

Quote of the Day

“On behalf of the local government perspective, we firmly believe that we’re sacrificing long term mining jobs for short term drilling and construction jobs.”

-Routt County Chairman Douglas Monger