Monday, July 14, 2014

Colorado Peak Politics - WE ALL PAY: Colorado Clean Air – Clean Jobs Mandate 400% More Expensive Than Predicted

Colorado Peak Politics - WE ALL PAY: Colorado Clean Air – Clean Jobs Mandate 400% More Expensive Than Predicted

WE ALL PAY: Colorado Clean Air – Clean Jobs Mandate 400% More Expensive Than Predicted


Hang on to your wallets:  another bill is coming due for former Governor Bill Ritter’s ill-conceived “New Energy Economy.”  And of course it is middle-class Colorado families who are shouldering the burden of these expensive policies.
Sadly, the economic fallout from the the Colorado Clean Air – Clean Jobs Act, signed into law by Ritter in 2010, will last throughout this decade and beyond.  One of the major consequences of this law is either the retirement of perfectly serviceable coal fired electric plants and replace them with natural gas fired plants or add pollution capturing equipment.
We always find it instructive to examine the costs that the creators of big government programs predict for pet projects during the legislative process, and then compare those to what actually happens.  So let’s turn back the clock to 2010….
Shortly after the Colorado Clean Air – Clean Jobs Act was passed, the Denver Post reported that “the program will add about two percent, or $14 to the average annual residential bill by 2020.”
Oops.  It appears that they were a bit off, to the tune of 400%.
This week, the Denver Business Journal reported that Xcel is looking for approval of an increase in base rates that would amount to $3.96 per month for the average ratepayer.  On top of that, the utility wants to add a surcharge that will increase the average bill by $1.06.  These new costs, totaling more than $60 per year for the average ratepayer,  are designed to cover more than $1 billion worth of changes and upgrades that the utility needed to enact in order to comply with the Colorado Clean Air – Clean Jobs Act.
There are also a number of hidden costs associated with this disastrous legislation.  The Denver Business Journal article noted that Xcel is now the largest property tax payer in the state, and the improvements mandated by the Colorado Clean Air – Clean Jobs Act have pushed that tax bill higher.  Guess who ultimately pays that?
Another hidden cost related to an increased reliance on gas fired plants has to do with the relatively high volatility of gas prices over time, when compared to the price patterns of coal.
Obviously, these costs will be passed on to consumers as well.
It is unlikely that Xcel will face any meaningful push back from their regulators for these two items.  Maybe Governor Hickenlooper, who has time and time again proven himself to be a supporter of expensive energy, can channel Jimmy Carter and tell us to save energy this summer by setting our thermostats to 80 and walk around the house in our boxers.

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