Don’t Let the PUC Hide the Cost of HB 1365

December 28, 2010 by williamyeatman
Filed under: Archive, HB 1365 

“I have a moderate proposal” was how PUC Chairman Ron Binz introduced his interpretation of cost recovery provisions in HB 1365, the Clean Air Clean Jobs Act, legislation that effectively mandates fuel switching from coal to natural gas for almost 1,000 megawatts of base-load electricity generation along the Front Range. It was a very important exegesis. One of the major reasons Xcel agreed to go along with fuel switching was the possibility of ultra-generous rate treatment accorded by the legislation. Yet the language of the law was ambiguous on certain key points, and the PUC was the final arbiter of what these words meant. Millions of dollars hung in the balance.

Chairman Binz pitched his proposal on December 9, during the PUC’s final deliberations on HB 1365, and he was true to his word when he labeled it “moderate.” The PUC Chairman denied many of Xcel’s demands—most significantly, the utility’s insistence on upfront payment, without having to submit to a cumbersome and time-consuming rate case procedure.

Although I disagree with PUC regulation of the electricity industry to begin with (for my take on this matter, click here or here), I don’t think Chairman Binz’s proposed cost recovery regime (which ultimately was adopted by the PUC) is unreasonable. I do, however, disagree with Chairman Binz’s statement that he did “not think highlighting this [HB 1365 costs] on a bill will serve us well.”

Perhaps Chairman Binz was worried about his legacy and was therefore loathe to allow a monthly reminder to more than a million Coloradans of the costs of legislation he helped write. Governor Bill Ritter, too, would be poorly served by a constant reminder that his “New Energy Economy” came with big strings attached.

Quite contrary to Chairman Binz and Governor Ritter, the public would be well served if HB 1365 compliance costs were highlighted on utility bills. Indeed, Coloradans should never cease to be amazed at how much money they will pay in order to meet HB 1365, a farce of a bill, written by big business, and mendaciously sold to the public by the Ritter administration.

In ten years, when the price of electricity is at the mercy of the mercurial gas market, and the price of heating gas is artificially inflated due to demand engendered by the Clean Air Clean Jobs Act, Coloradans will still be paying for HB 1365 capital costs on a monthly basis. They should know it.

The General Assembly should pass a simple law that forces investor owned utilities like Xcel to disclose on a monthly basis the compliance costs for HB 1365.

William Yeatman is an energy policy analyst at the Competitive Enterprise Institute

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