The Conservative Case for HB 1240

February 18, 2011 by williamyeatman
Filed under: Archive 

Republican lawmakers in the General Assembly will have a rare opportunity to repeal an energy tax this Monday, when the House Agriculture, Livestock, and Natural Resources Committee is scheduled to take up Representative Spencer Swalm’s HB 1240.

Rep. Swalm’s bill targets a surreptitious energy tax that was authorized by the General Assembly in 2008 with the passage of HB 1164, although it’s doubtful that most legislators knew the ultimate impact of what they voted for.

After all, the language of the bill seems innocuous enough. It allows the Public Utilities Commission to “give consideration” to “the risk of higher future costs associated with the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.”

That sounds reasonable, but the implementation has been anything but. While it’s prudent for the PUC to consider the risks of Congress passing a cap-and-trade scheme that would put a price on carbon, it is, in equal measure, rash to include the cost of a federal carbon tax in resource planning that covers a timeframe during which these costs couldn’t exist.

In its most recent Resource Plan, Xcel made acquisition decisions based on an assumed $20 per ton carbon tax from 2010 through 2015, even though it is inconceivable the federal government could have a carbon bureaucracy ready by 2015. And that’s only if Congress passed cap-and-trade legislation tomorrow.

In light of the recent Republican takeover of the House of Representatives, it’s highly unlikely Congress will enact a controversial carbon tax anytime in at least the next two years, which pushes off a federal carbon price until at least 2017. The next Resource Plan begins in May. Unless the General Assembly enacts HB 1240, the PUC will again spike the resource acquisition models with a $20 ton carbon tax.

Ratepayers can’t see it on their bill, but it’s there. 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.

It is inconceivable that a conservative could vote against HB 1240, because doing so would be acceding to an energy tax. However, this does not mean that HB 1240 is a partisan issue. As I note in a companion post (“The Progressive Case for HB 1240”), lawmakers in the Democratic Party also should support HB 1240.

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

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2 Comments on The Conservative Case for HB 1240

    [...] 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 [...]

  1. Xcel Energy’s Versatile, Profitable Carbon Tax on Thu, 5th May 2011 12:26 pm
  2. [...] a carbon tax into the economic models used to make resource acquisition decisions (see here and here). Ratepayers can’t see it in their monthly bill, but the tax is used in the models, and the [...]