Colorado already has the most expensive electric rates of all neighboring states and the second highest in the Rocky Mountain West, with projections to go even higher in the near future. Now, a bill just introduced into the state senate threatens to make Colorado’s energy rates even more expensive. The following is a column from the Colorado Consumer Coalition about the dangers of SB 178. Senator Kevin Lundberg offered an amendment that would have achieved the bill’s supposed primary purpose and saved consumers money, but it was voted down as the column details.
Colorado consumers—from Denver down to Pueblo and all across the state—could wind up paying even more for their electricity following a troubling development at the legislature this week. An obscure bill just introduced on Tuesday with almost no warning, only days before the end of the 2012 session, would pull the rug out from under the state’s public utilities and turn their long-term energy planning inside-out. And ratepayers would be left holding the bag.
Senate Bill 178 would scrap a key feature of Colorado’s renewable-energy mandate, on which utilities have based their plans and projections for years to come; the change would force them to get even more of their electricity from pricey renewables like wind and solar power than the law now requires. Specifically, the bill would take away a break that utilities have been able to pass on to consumers as they strive to meet costly state mandates to derive 30 percent of their electricity from renewables by 2030.
The break to ratepayers was enacted in 2004 along with the mandates because those who had been advocating for the shift to a greater reliance on alternative fuels also realized such a seismic change doesn’t come cheaply. And it’s neither fair nor even possible to make hard-pressed home- and business owners bear the whole burden. So, the policy’s authors not only placed a 2-percent cap on year-to-year rate increases due to the increased cost of renewables, but they also wrote the law to give extra credit to utilities for switching to alternative energy sources. That gave the utilities greater flexibility in meeting the statutory standards for renewables so consumers wouldn’t have to dig so deeply into their pockets.
Now, SB 178 aims to monkey-wrench that delicate balance. By revoking the extra credit for switching to renewable energy after 2015, the bill effectively would require the public to rely on an even higher percentage of renewable energy sources than most of the state’s utilities had anticipated. The result would be to wreak havoc with the balance sheets and strategic plans of the utilities, for-profit and nonprofit alike. They’d have to scramble to acquire more renewable sources for power and, inevitably, pass the cost on to the public through higher power bills.
Not surprisingly, when the bill was unveiled Wednesday at a meeting of the Senate Judiciary Committee, lawmakers got an earful from representatives of some of those utilities as well as other stakeholders—many of whom had only heard of the legislation a few days earlier and, in some cases, only hours prior to the hearing. And they told lawmakers point-blank what would happen if the bill were enacted.
“This bill will result in increased costs to… members and their customers,” said Thomas Dougherty, representing Tri-State Generation and Transmission Association, a wholesale electric power supplier owned by 44 electric cooperatives and serving 900,000 Coloradans.
Ratepayers of Black Hills Energy, which serves the Pueblo region, would be dealt a major blow by the legislation, the company’s Wenday Moser told lawmakers Wednesday.
“We are very concerned about Senate Bill 178 because we are concerned about our ability to meet the renewable energy standard,” Moser said. “As of now, Black Hills is marginally meeting the standard…We are struggling to meet that standard.”
Dougherty had noted in his testimony that even though the law caps renewable-energy cost increases at 2 percent a year on power bills, that increase in an of itself still can pack a punch for consumers. And Moser made clear that the cap really won’t spare consumers at all over the long run.
She pointed out that companies such as hers simply will be forced to assess that extra 2 percent “for many more years” until recovering the added costs of the additional renewables. After all, the utilities are legally bound to attain the renewable-energy standard; it’ll just take them longer to recover those costs from consumers.
Why this bill at this time—out of the blue like this? What possibly could have motivated some lawmakers to propose such a reckless policy for so little gain—at a time when Colorado already is well on its way toward greater reliance on renewable energy?
A representative of Attorney General John Suthers told the committee at Wednesday’s hearing that his office wasn’t behind the bill but had endorsed it because of concerns about a provision in the current law allowing the extra renewable-energy credits for purchases of Colorado energy but not for renewables originating outside the state. That, the AG’s rep said, set up Colorado for a constitutional challenge in court.
Fine, responded a skeptical Sen. Kevin Lundberg, of Berthoud—then why not simply extend the same extra credit to any acquisition of renewable energy from outside Colorado as well? Lundberg was told the attorney general would in fact be fine with that alternative, so Lundberg proposed it as an amendment to the bill. Unfortunately, it was voted down.
Lundberg and fellow Judiciary Committee Sens. Steve King, of Grand Junction, and Ellen Roberts, of Durango, deserve credit for asking tough and probing questions about the bill during the hearing. All three laudably voted against the measure, but they were outgunned by the majority, and the measure now moves to the Senate floor for further action.
Pending what happens next, let’s give credit to Black Hills Energy, too, for telling lawmakers what they really needed to hear—whether they wanted to or not—about a costly, destructive bill with no discernible value to Colorado Consumers.
My take: this bill isn’t about leveling the playing field for in-state versus out-of-state renewable energy producers but rather about forcing Colorado energy consumers to rely more heavily upon unreliable, expensive wind and solar energy. To make matters worse, this will be a windfall for Xcel Energy because the more expensive electricity is, the more Xcel makes. If this bill gets fast-tracked through the legislature like HB 1365, the infamous fuel-switching bill, consumers will have more proof that Xcel “owns” the state legislature.