For the last two and half years, the Independence Institute along with other free market energy policy advocates have pounded the drum of transparency and exposed the federal government’s infamous Department of Energy (DOE) loan guarantee program that rewarded the politically well-connected while costing taxpayers billions of dollars with high profile bankruptcies such as Solyndra and Colorado’s own Abound Solar.
Without the work of the Independence Institute’s investigative reporter Todd Shepherd, the Energy Policy Center, and Michael Sandoval now with the Heritage Foundation, Abound Solar’s history is little more than a footnote in failure in the grand scheme of the DOE. We covered it. The mainstream media did not…until we shamed them into doing so.
Now the Government Accountability Office (GAO) has released a report on its audit of the DOE loan guarantee program that finds negative publicity surrounding the embattled program has left billions of taxpayer dollars untouched in the public trough.
More than $51 billion in unused loan guarantee authority and $4.4 billion in unused credit subsidies…remain available under the DOE’s Loan Guarantee Program (1703) and Advanced Technology Vehicles Manufacturing (ATVM) loan program.
According to the report,
Some applicants noted that the Solyndra default and other problems have created a negative public image and political environment for the program, which has made its future less certain and the DOE more cautious about closing on loan guarantees.
Good news for taxpayers, the DOE has not closed a loan since September 2011, the month that Solyndra shuttered its doors. The GAO conducted the performance audit beginning in June 2012 (the date Abound Solar went bankrupt) to February 2013.
Most impressive is that taxpayers are making their voices heard and companies themselves are feeling the negative public pressure of socializing risk while privatizing profit:
“Most applicants and manufacturers noted that public problems with the Solyndra default and other DOE programs have also tarnished” other programs such as ATVM. They believed the negative publicity makes the DOE more risk-averse or makes companies wary of being associated with government support.”
We would be remiss if we didn’t mention by name the excellent work of Paul Chesser of the National Legal and Policy Center exposing the DOE’s corporate welfare program for Big Green projects such as electric vehicle manufacturers to the stars Fisker and Tesla and battery maker A123 Systems.
I didn’t make up this. The Denver Post lede paragraph in a story about the National Renewable Energy Laboratory (NREL) is almost laughable:
Hooking a toaster oven to a solar panel is not an easy thing, but the National Renewable Energy Laboratory’s new $135 million integrated energy facility will able do just that. While it may seem like a lot of money for toast, the Energy Systems Integration Facility can do a lot more.
That doesn’t just seem like a lot of money, it IS a lot of money. On this blog we’ve detailed NREL’s excessive spending. And Colorado Watchdog.org exposed NREL’s million dollar employee Executive Director Dan Arvizu.
So is $135 million a lot for toast? For most taxpayers yes but likely not for NREL. It might be more humorous if it weren’t our money. Frankly, we haven’t seen NREL do anything that couldn’t wouldn’t be done better in the private sector — assuming it is done at all.
By Peter Blake
This column appeared originally on Complete Colorado Page 2.
When the runners are closing in on the finish line, move the tape farther back.
That’s the usual strategy employed by greens when it comes to establishing renewable energy standards for electricity production. It’s a marathon that never ends, and the added cost to consumers is secondary, if not irrelevant.
Colorado’s power producers are awaiting introduction of a bill that would raise the minimums yet again. But their lobbyists don’t know the details — and neither does the prospective sponsor, apparently.
There’s plenty of “radio chatter,” said Jeani Frickey, a lobbyist for Colorado’s rural electric associations, but “we don’t have anything specific yet.”
“I’ve not seen any bill drafts, or even outlines of ideas,” said Mike Beasley, an Xcel Energy lobbyist.
An aid to Rep. Su Ryden confirmed that the Aurora Democrat is going to be a sponsor of a bill, but even she hasn’t seen it. “A lot of different people” are still working on the bill.
The ever-rising renewable standards began back in 2004, when Colorado voters approved Amendment 37, an initiative that required regulated, investor-owned utilities to produce 10 percent of their electricity through renewable energy by 2015.
Three years later the legislature, assuming that one popular vote gave them carte blanche to do the work themselves from then on, raised the minimum to 20 percent by 2020. At the same time it established a 10 percent mandate on REAs, co-ops, which are not under the Public Utilities Commission.
In 2010 lawmakers raised the minimum to 30 percent for regulated utilities by 2020. The REAs were left at 10 percent. Now it’s three years later, again, and history tells us that lawmakers will be back with yet higher standards.
Some predict the figure will go to 40 percent for Xcel and Black Hills Energy, and 20 percent for the REAs. Others believe that only the REAs will be raised. But they’re only guesses, and the figures could be adjusted during the legislative process anyway.
By the way, you might think that hydroelectric power would count as a renewable, since no fuel is required and it produces, as Frickey noted, “zero greenhouse gas emissions.”
But Colorado enviros refuse to recognize water power as a renewable. Perhaps they’re afraid it would lead to the damming of various rivers. But if it did count, the REAs would already be over their required 10 percent just using existing dams. Tri-State Generation & Transmission, which supplies 18 of Colorado’s 22 REAs with electricity, gets 12 percent of its power from water, said Tri-State spokesman Lee Boughey. It’s generated by the Western Area Power Administration, an agency of the Energy Department.
REAs would be a natural target for the Democratic-controlled legislature. They cover 73 percent of Colorado’s land but less than 25 percent of the state’s population, said REA lobbyist Geoff Hier. Democrats predominate along the Front Range, where Xcel provides most of the power, and Republicans in the hinterlands.
One group working on the bill is Conservation Colorado, a recently formed amalgam of the state’s Conservation Voters and its Environmental Coalition.
Last September, before the merger was formalized, the leaders of the two groups wrote a letter to legislative candidates urging their support for “Colorado’s Path to a Clean Energy Future.” [Read entire letter below]
They seemed to be targeting the REAs. Noting that Xcel has a 30 percent mandate, “most rural and municipal energy providers have only made a 10 percent commitment that is below the national average,” says the letter. It went on to blame coal plants and autos for air pollution and urged a four-point program:
- “Decreasing the emissions that cause climate change” by at least 2 percent a year;
- Ensuring that “over a third” of Colorado’s electricity comes from renewable technologies;
- Requiring all utilities to offer “energy efficiency” programs that will help customers save energy.
- Encouraging the installation of charging stations for electric vehicles.
- Senate Bill 126, now in the House, would help promote the last point.
It’s hard to predict how Xcel or the REAs will react when a bill is finally introduced. In 2004, Xcel fought the first mandate. But then the greens got smart and stopped treating it as an evil corporate enemy while Xcel came to realize its job was to make money, not provide cheap power. It’s entitled to 10 percent return on investment, no matter what the cost of fuel or capital equipment.
The PUC helped by no longer requiring utilities to apply the “least cost” principle when building facilities or buying fuel. What’s more, the PUC made retail fuel prices subservient to more nebulous environmental goals.
Xcel ended up backing the 2010 bill, just as the REA’s backed the move to 10 percent renewable for them.
If renewables were economically competitive in the marketplace, there would be no need for legislation. Utilities would turn to them automatically. But so far, they’re not. Wind survived only because Congress belatedly extended its special tax credits. Solar is even less competitive.
Xcel already is allowed to charge you an extra 2 percent per month to pay for its renewable facilities and fuel.
Three years ago, when Bill Ritter was still governor, a coalition of natural gas companies, Xcel and greens worked behind closed doors for months before dropping House Bill 1365 into the hopper on March 15. It required Xcel to close down three coal-fired plants or convert them to natural gas by 2017. It was then rushed through the legislative process in a couple of weeks as more than 30 lobbyists worked the halls.
A similar rush-rush process recently worked for the gun bills. Perhaps it will be tried again when the renewable energy bill is introduced.
Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at email@example.com
By William Yeatman
In mid-February, EPA Region 8 Administrator James Martin—who previously had served in the Ritter administration as the key facilitator of the Clean Air Clean Jobs Act—announced his resignation. The announcement came as a surprise, as Martin’s tenure at EPA was unusually brief. In fact, only one other (of 9) EPA Regional Administrators served a shorter term during the Obama administration. That was EPA Region 6 Administrator Al Armendariz, who quit after infamously comparing his enforcement strategy to a “crucifixion.” Martin served about 1 month longer than the disgraced Armendariz.
Martin cited “personal reasons” as the cause of his departure, but the truth is that he left amidst a storm of controversy. Only two weeks before his resignation, Martin was caught lying before a federal court about the extent to which he used his private email accounts to conduct official EPA business. Fibbing to a federal court is a much more likely explanation than “personal reasons” for Martin’s abrupt departure.
The lawsuit that led to Martin’s mendacity was filed by the Competitive Enterprise Institute. And CEI’s lawsuit, in turn, was based on records from a Colorado Open Records Act obtained by the Independence Institute. The upshot is that the two organizations likely toppled an EPA Regional Administrator. In light of Martin’s history of using public office (first in the Ritter administration, then in the EPA) to wage a war on affordable energy, the Independence Institute and CEI have performed a public service. This blog post explains how we did it.
It all began in the fall of 2010. At the time, Colorado state regulators were implementing the Clean Air Clean Jobs Act (CACJA), legislation requiring that Xcel Energy switch almost 1,000 megawatts of electricity generation from coal to natural gas. On this blog, Amy and I were posting regularly on the folly of the CACJA (see here, here, here, and here). In that capacity, we attracted the attention of the Colorado Mining Association, which was also opposed to the CACJA, for obvious reasons. The Mining Association had performed a Colorado Open Records Act request for all Ritter administration correspondence pertaining to the development of the CACJA. In return, the Mining Association received a huge tranche of almost 3,000 emails, which were provided to us.
The emails demonstrate that James Martin, who was head of the Colorado Department of Public Health and Environment when the Ritter administration pushed the CACJA through the General Assembly, was a central player in the development of the fuel switching plan.
Yet the emails also expose the fact that Martin worked exclusively from non-official email accounts while serving in the Ritter administration. Whereas every other state official involved in CACJA deliberations sent emails from a government email account (ending in “@state.co.us”), Martin used three different “@gmail.com” accounts.
At the time, I made a mental note of Martin’s unique use of private email for public business, but I didn’t think anything more of it…
…Until last summer.
A colleague of mine at the Competitive Enterprise Institute, Chris Horner, is one of the foremost transparency experts in the country. He literally wrote the book on the Freedom of Information Act (FOIA). While researching that book last summer, he came across mounting evidence that Obama administration officials are using private email accounts to conduct official business, in an effort to circumvent public scrutiny.
His concerns prompted my memory of Martin’s practice of using his gmail accounts. So we filed a FOIA request with EPA, asking for all email correspondence about policy between Martin and the professional greens at Boulder-based Environmental Defense. We limited the search to email traffic to and from Environmental Defense because Martin had spent ten years there as a litigator before joining Ritter’s team. Also, we knew from the Colorado Open Records Act emails that Martin coordinated public policy with his former colleagues. To be precise, with this FOIA request, we were trying to find out how much environmental policymaking was being rendered by unelected EPA bureaucrats colluding with unelected bureaucrats. (This is a practice known as “sue and settle” policymaking).
Here’s a timeline of what followed:
May 1, 2012: CEI files FOIA request for EPA Region 8 Administrator James Martin seeking all business emails between him and Environmental Defense. Our request noted that Martin had a history of using non-official email accounts to consuct official business.
May 7, 2012: EPA acknowledges our FOIA request, and assigns it ID number 08-FOI-00203-12
July 5, 2012: EPA responds to the request. The Agency provides 11 emails from an official “epa.gov” account. Regarding our specific request for EPA’s FOIA search to include all emails, in both official and non-official account, EPA states, “Documents sent to a personal email address that an individual is not intending to use for official purposes are not Agency records.” That’s all they said. We were confused. It seemed as if EPA was dodging the issue.
July 19, 2012: CEI files an administrative appeal of EPA’s July 5 FOIA response.
September 9, 2012: Although the Freedom of Information Act gives EPA 20 days to respond to an administrative appeal, the Agency ignores CEI’s July 19 appeal for more than 6 weeks. So we sued EPA in the District of Colubia federal district court. Here’s a copy of our complaint.
November 19, 2012: EPA files a motion to dismiss the case. The Agency’s motion relies on a signed affidavit by Martin, attesting to the fact that he had conducted a “broad” search of his personal email account, and had produced 19 records. Of the 19 records, Martin testified that “While some of these documents mention EPA of environmental issues, I did not solicit them, nor did I act on them in connection with my EPA position.” Based on this evidence, EPA moved to close the case.
January 29, 2013: Senator David Vitter and Rep. Darrell Issa launch an investigation into Martin’s use of private emails to conduct public business.
February 19, 2013: EPA Region 8 Administrator James Martin resigns.
March 7, 2013: EPA withdraws its motion to dismiss the case. The Agency tells CEI that Martin had “alerted us to additional documents that he came across. In a motion filed in court that day, EPA states,
“Based upon its review and analysis of the content of the additional documents, the EPA has concluded that there are additional documents from Mr. Martin’s personal, non-Government email account responsive to the FOIA request at issue in this litigation.”
Present day: CEI, the Department of Justice, and EPA are negotiating a full release of Martin’s newfound emails.
The timeline speaks for itself. Martin had a long history of using private emails to conduct official business. CEI learned of this history from the Independence Institute. CEI then filed a FOIA request to probe the extent to which Martin continued to employ non-official emails to perform official work. When EPA obfuscated, CEI sued. In the course of this litigation, Martin lied to CEI, EPA, the Justice Department, and a federal judge. Then he resigned. Case closed.
Good riddance. This is a positive development. Martin is not capable of being a disinterested civil servant. Rather, he is a professional environmentalist who has spent a career demonizing industry. It’s one thing to war with economic development as a lawyer at a deep-pocketed green group like Environmental Defense. It’s an entirely different ballgame when these same anti-industry zealots are allowed to take the reins of the EPA, and use state power to “bankrupt” entire sectors of the economy.
By William Yeatman and Amy Oliver Cooke
As Coloradans we thought we might have to apologize to the rest of the country if President Barack Obama nominated former one-term Colorado Governor Bill Ritter to head the Energy Department. If the President wanted to make electricity costs skyrocket and the eco-left community happy, Ritter was his guy, but the President didn’t pick him.
Despite his dense résumé and desire to cut emissions, however, Moniz can be a polarizing figure in scientific and environmental circles. Few experts deny the value of a scientist as DOE chief, but many fans of renewable energy worry about Moniz’s gusto for natural gas and nuclear power — not to mention his financial ties to the energy industry.
‘We’re concerned that, as energy secretary, Ernest Moniz may take a politically expedient view of harmful fracking and divert resources from solar, geothermal and other renewable energy sources vital to avoiding climate disaster,’ Bill Snape of the Center for Biological Diversity said in a recent press release. ‘We’re also concerned that Moniz would be in a position to delay research into the dangers fracking poses to our air, water and climate.’
And the Washington Post reports:
But over the past couple of weeks, many environmentalists and some prominent renewable energy experts have tried to block the nomination of Moniz because of an MIT report supporting “fracking” — as hydraulic fracturing is commonly known — and because major oil and gas companies, including BP, Shell, ENI and Saudi Aramco, provided as much as $25 million each to the MIT Energy Initiative. Other research money came from a foundation bankrolled by shale gas giant Chesapeake Energy.
‘We would stress to Mr. Moniz that an ‘all of the above’ energy policy only means ‘more of the same,’ and we urge him to leave dangerous nuclear energy and toxic fracking behind while focusing on safe, clean energy sources like wind and solar,’ Sierra Club executive director Michael Brune said in a statement Monday.
The Sierra Club doesn’t have much credibility because financially it was sleeping with the enemy, having taken $26 million from Chesapeake Energy to destroy the market for coal. One place they enjoyed great success was in Colorado with HB 1365, the fuel switching bill and cornerstone of Ritter’s “New Energy Economy.”
Governor Ritter coined the term New Energy Economy for his signature agenda. In practice, his New Energy Economy entails three policies: (1) a Soviet-style green energy production quota; (2) subsidies for green energy producers; and (3) a mandate for fuel switching from coal to natural gas. Renewable energy is more expensive than conventional energy, and natural gas is twice as expensive as coal in Colorado, so these policies inherently inflated the cost of electricity.
Last month, the Independence Institute published the first ever line item expensing of Ritter’s energy policies, and the results were shocking. In 2012, the New Energy Economy cost Xcel Energy (the state’s largest investor-owned utility) ratepayers $484 million, or 18 percent of retail electricity sales.
This princely sum purchased the equivalent of 402 megawatts of reliable capacity generation. By comparison, Xcel had a surplus generating capacity (beyond its reserve margin) in 2012 of 700 megawatts—almost 75 percent more than the New Energy Economy contribution. Thanks to Governor Ritter’s energy policies, Xcel ratepayers in Colorado last year paid almost half a billion dollars for energy they didn’t need.
In addition to implementing expensive energy policies, Governor Ritter also has experience picking losers in the energy industry. In May 2009, Governor Ritter hand-delivered to Secretary Chu a letter in support of a $300 million loan guarantee for Colorado-based Abound Solar, a thin-filmed solar panel manufacturer. In the letter Ritter claimed Abound would “triple production capacity within 12 months, develop a second manufacturing facility within 18 months and hire an additional 1,000 employees.”
Taxpayer money couldn’t keep Abound afloat, which never reached production capacity. After its solar panels suffered repeated failures, including catching fire, Abound declared bankruptcy in early 2012 leaving taxpayers on the hook for nearly $70 million and even more at the state and local level. A former employee explained, “our solar modules worked so long as you didn’t put them in the sun.”
Abound Solar wasn’t the only pound-foolish Stimulus spending associated with Governor Ritter. During his administration, the Colorado Energy Office’s coffers swelled with almost $33 million in stimulus subsidies for weatherization efforts. According to a recent report by the Colorado Office of State Audits, the Ritter administration failed to even maintain an annual budget for the program. As a result, the audit was unable to demonstrate whether the money had been spent in a cost effective manor. All told, the auditor found that the energy agency could not properly account for almost $127 million in spending during the Ritter administration.
Ritter told the Fort Collins Coloradoan that the scathing audit accusing the agency under his watch of shoddy management practices was not the reason the President passed over him for Energy Secretary.
The former Governor is especially proud of the job creation associated with the New Energy Economy. To be sure, throwing taxpayer money at any industry would create jobs. The problem occurs when the public money spigot runs dry. In this context, an October 22, 2012 top fold, front page headline in the Denver Post is illuminating: “New energy” loses power; A series of setbacks cost over 1,000 jobs and threatens the state’s status in the industry. To put it another way, in the two years since Ritter left office, his New Energy Economy has atrophied in lockstep with the reduction in public funding.
Ritter has taken to proselytizing for the gospel of expensive energy. He founded the Center for the New Energy Economy, the purpose of which is to, “provide policy makers, governors, planners and other decision makers with a road map that will accelerate the nationwide development of a New Energy Economy.” He even brought with him the former head of the beleaguered energy office Tom Plant to work for him as a “policy advisor.”
So far Ritter’s bad energy policy has remained largely within the Centennial State, and, for now, that’s where it will stay. With the choice of Moniz, the rest of the country can breathe a sigh of relief. For Coloradans, we’re still stuck with him.
William Yeatman is the Assistant Director of the Center for Energy and Environment at the Competitive Enterprise Institute and a policy analyst for the Independence Institute in Denver, Colorado. Amy Oliver Cooke is the Director of the Energy Policy Center for the Independence Institute
By Syndi Nettles Anderson, guest writer for the Independence Institute Energy Policy Center
Earlier this week Todd Shepherd of Complete Colorado reported that before thin-filmed cadmium-telluride solar panel manufacturer Abound Solar declared bankruptcy it was the subject of a Colorado Department of Public Health and Environment (CDPHE) investigation after an anonymous tip raised concerns about cadmium contamination.
Shepherd provided documents showing that the now abandoned Weld County plant produced monthly 630 pounds of highly toxic cadmium waste that was shipped to Deer Trail in Arapahoe County for storage.
Because of the recent interest in cadmium, below is a primer on the rare earth element used in so many products besides solar panels.
Cadmium, one of the 17 rare earth elements (REE), is a soft silver-grey metal, commonly found in ores containing zinc. Products that use significant cadmium include rechargeable batteries, solar cells and protective steel coatings. Recently cadmium has been priced about a dollar per pound.
Cadmium is a byproduct when zinc is refined from zinc ore, or recycled from nickel-cadmium rechargeable batteries. The largest producers of cadmium are China, South Korea, Japan and North America. The concentration of cadmium in the earth’s crust is between 0.1 and 0.5 parts per million (ppm). This is about one hundred times more common than gold.
Cadmium is very useful in rechargeable batteries and solar cells. In the U.S., about 27 percent of cadmium-nickel batteries are recycled, which requires batteries to be taken apart.
However, cadmium is also very poisonous. Exposure is most dangerous when breathing in dust or vapors containing cadmium. Other methods of exposure are also dangerous, as cadmium can be absorbed through the skin or by ingestion.
People can absorb cadmium through inhalation, absorption or by eating it. The cadmium is transported through the body by blood cells and plasma. Cadmium goes into the kidneys, resulting in kidney failure. Before toxic levels are reached, kidney function will start to deteriorate. Generally a third to half of the cadmium that is in a body will be found in the kidneys. Cadmium will also move to the liver and muscles. In the liver, the half-life of the cadmium is 5-15 years, in the muscles-30 years and in the kidneys 10-30 years.
During ore smelting processes, cadmium is released into the air. It may also be released into the atmosphere by burning cadmium-containing garbage. Cadmium exposure can cause throat and lung irritation. Lower levels of exposure also cause shortness of breath, and with prolonged exposure resulting in bronchiolitis and emphysema with lung damage, bloody coughing, and accumulation of fluids in the body. One highly concentrated exposure can cause lifetime damage to lungs. 
Metal fume fever can be caused by inhaling cadmium during the welding and metal heating processes of older silver solder. Metal fume fever can cause flu like symptoms with fainting, sore throats, coughs, and headaches. Working with cadmium requires extremely well ventilated areas, respirators, and extreme care. Regular blood and urine checks are required to monitor the amount of cadmium that can get into the body. 
Phosphate fertilizers, sewage sludge and contaminated water can deposit cadmium into food sources. Growing rice and wheat can absorb Cadmium. Large ocean fish can also take up a lot of cadmium. Smokers also intake cadmium into their bodies and have about double the cadmium levels that non-smokers have. Cadmium is associated with breast cancer, lung cancer, prostate cancer, heart disease, and kidney dysfunction. 
As a result of the increased awareness of the danger of cadmium to humans, the EPA released a new report December 3, 2012, expanding the regulations and proposing new regulations regarding cadmium.
This final rule requires manufacturers (including importers) of cadmium or cadmium compounds, including as part of an article, that have been, or are reasonably likely to be, incorporated into consumer products to report certain unpublished health and safety studies to EPA. 
Occupational Safety Health Association (OSHA) also highly regulates workers contact with cadmium stating,
Cadmium and its compounds are highly toxic and exposure to this metal is known to cause cancer and targets the body’s cardiovascular, renal, gastrointestinal, neurological, reproductive, and respiratory systems.
Requirements to protect workers from cadmium exposure are addressed in specific OSHA cadmium standards covering general industry (1910.1027), shipyards (1915.1027), construction (1926.1127) and agriculture (1928.1027).
In conclusion, Cadmium is critical to the solar cell and rechargeable battery industry but extreme care must be taken to prevent cadmium from getting into the air, water or plant life. Cancer, lung damage and kidney failure are real risks for cadmium exposure.
 Wilburn, D.R., 2007, Flow of cadmium from rechargeable batteries in the United States, 1996-2007: U.S. Geological Survey Scientific Investigations Report 2007–5198, 26 p., available at http://pubs.usgs.gov/sir/2007/5198/.
 Common environmental contaminant, cadmium, linked to rapid breast cancer cell growth. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/04/120423184203.htm
American Association for Cancer Research (AACR) (2012, March 15). Dietary cadmium may be linked with breast cancer risk. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/03/120315094506.htm
Cell Press (2012, September 12). Studies shed light on how to reduce the amount of toxins in plant-derived foods. ScienceDaily. Retrieved February 14, 2013, from http://www.sciencedaily.com /releases/2012/09/120912125517.htm
According to the most recent Form 10-K that Xcel Energy, Colorado’s largest investor owned utility (IOU), filed with the Security and Exchange Commission dated December 31, 2011, electricity generation from natural gas was more than double the price of electricity generated from coal in Colorado.
A table on page 18 of the report shows that in 2011, Xcel produced 76 percent of its electricity from coal at a cost of $1.77 per MMBtu while natural gas cost $4.98 per MMBtu while providing 24 percent of Xcel’s electricity.
As more and more of Xcel’s electricity is mandated to come from natural gas thanks to HB 1365, the fuel switching bill and the cornerstone of what former Governor Bill Ritter coined the “new energy economy,” along with additional regulations and out right bans on hydraulic fracturing, Xcel ratepayers should get used to spending more and more on their electricity bills.
A 2011 Independence Institute paper was the first to suggest that the Governor’s Energy Office (GEO) needed a serious dose of transparency due to its inability to clarify how it spent millions of dollars of taxpayer money. Colorado’s State Auditor validated our findings in a recently released audit.
Colorado’s Office of the State Auditor blasted the Governor’s Energy Office (GEO), now called Colorado’s Energy Office (CEO), for shoddy accounting and management practices within the formerly off-budget agency.
Among the criticisms the report levels at the CEO:
- CEO was unable to demonstrate that $252 million spent over the past six years was spent cost-effectively.
- CEO does not calculate or maintain a comprehensive, annual budget or budget-to-actual data for any of the 34 programs administered during Fiscal Years 2007 through 2012. As a result, CEO could not determine the total cost or the total amount spent for any of its programs.
- CEO program managers have not been required to manage programs within a budget, though they are responsible for requesting and justifying program expenditures.
- Of the eight programs we reviewed in-depth, staff responsible for three programs could not identify the program’s goals or say whether the goals had been achieved.
- Of the 22 contracts we reviewed, 20 had incorrect or missing information in CMS, the state contract database; six were missing required performance elements; and 13 were missing required contractor progress reports.
- Of the 59 payments to contractors we reviewed, 10 totaling $1.5 million were not supported by adequate evidence of contractor progress on contract deliverables.
- Of the 40 travel and other expenditures we reviewed, 16 lacked appropriate approval and justification documentation. For example, in one instance CEO incurred $25,000 for a cost supported only by the statement, “2008 Membership.” In another instance, CEO paid $1,500 for an ex-employee to attend training after termination, without documentation demonstrating how the cost was reasonable or necessary.
- CEO does not maintain consistent, centralized data-keeping systems to support programmatic work, and has not established an operational framework that includes guiding policies and procedures, or staff training and supervisory review.
Toward the end of the nearly 50-page report, the State Auditor concludes:
Overall, we found deficiencies in CEO’s management policies and practices, including deficiencies in CEO’s internal accounting and administrative control systems. All together, the issues we identified lead us to question CEO’s ability to implement programs and projects successfully.
The State Auditor’s finding are consistent with, perhaps even worse than, what former Independence Institute intern Kyle Huwa discovered in Summer 2011 when he researched three years worth of spending within the Governor’s Energy Office. In his paper titled “Governor’s Energy Office Needs a Dose of Sunshine,” which served in part as the catalyst for the audit, Huwa wrote:
- The Governor’s Energy Office (GEO) of the State of Colorado spent a total of $121,652,884.75 from January 2008 to November 2010. This report aims to clarify and provide transparency to the GEO’s spending. Despite best efforts, the exact nature of many of the expenditures remains unclear.
- Total Expenditures (minus some salaries) during this period: $121,652,884.75
- Expenditures that could not be identified and GEO did not clarify: $9,021,060.23
- Expenditures on cell phones: $51,629.22
- Expenditures on travel: $455,656.06
- Expenditures to corporate entities: $27,337,389.78
- GEO received $15,797,032.91 from the Colorado “General Fund – Unrestricted”
- “Off-budget” status means little legislative oversight
Based on his research, Huwa suggested that:
The Colorado State Legislature should ask the Office of the State Auditor to conduct an audit of the GEO to ensure proper use of funding and adherence to its stated purpose; and the Legislature should also consider structurally changing the long-term oversight measures in place to guarantee continued accountability and transparency in the GEO.
Shortly after the paper’s release in 2011, State Representative and Legislative Audit Committee member Cindy Acree told CBS4 in Denver that she would call for an official audit “to uncover everything the office is doing” especially in light of the unaccounted for $9 million of taxpayer money.
These problems occurred during Governor Bill Ritter’s administration when former state legislator Tom Plant headed up the agency. Plant released a statement at the same time defending his tenure: “There are not missing funds. All funds, revenues and expenditures can be fully accounted for.”
Based on the State Auditor’s findings the energy office under Plant was mismanaged in every area.
Plant still works for the state and his old boss Bill Ritter. Both men are at Colorado State University (CSU) in Fort Collins where Ritter earns $300,000 as the Director of the Center of the New Energy Economy, while Plant pulls in roughly $72,000 as a part-time Senior Policy Advisor according to CSU’s faculty salary database.
The numbers are in, and they aren’t pretty. Four of the largest cost driving pieces of legislation enabling Colorado’s New Energy Economy cost Xcel Energy ratepayers nearly half a billion dollars in 2012 alone. Adding insult to injury, some of the electricity produced wasn’t needed in the first place according to a just released report from the Independence Institute’s energy policy analyst William Yeatman. So Xcel ratepayers paid handsomely for electricity that ended up as surplus.
Using Xcel’s regulatory filings Yeatman determined:
- In 2012, the New Energy Economy cost Xcel ratepayers $484 million – more than 18 percent of Xcel’s total electricity sales. Based on 1.4 million ratepayers, the New Energy Economy cost $345 per ratepayer in 2012.
- Due to a depressed economy, there is an oversupply of electricity generation onXcel’s system, which means Xcel ratepayers spent $484 million on the New Energy Economy in 2012 in order to obtain electricity that they did not need
Yeatman also breaks down the cost by each of the four pieces of legislation, which includes the renewable energy mandate and its massive $343,000,000 cost. It’s clear that State Representative Max Tyler’s and former Governor Bill Ritter’s fanciful promise of a two percent rate cap is much different in reality.
Prior to the New Energy Economy, Colorado worked on a least cost principle meaning utilities were to deliver reliable power to ratepayers in the most cost effective manner. When it comes to renewable mandates and the New Energy Economy, state lawmakers would be wise to remember economist Milton Friedman’s words, “there’s no such thing as a free lunch.”
For the last four years, the state of New York has imposed a moratorium on hydraulic fracturing supposedly to give Governor Andrew Cuomo time to study the process before making a decision on whether or not to lift it.
Four years seems like a long time to study a process that has been around for decades and used safely and successfully in multiple states during that time. Now we may have some evidence as to why it has taken that long.
Last week the New York Times reported Gov. Cuomo, a democrat, buried a state analysis concluding that hydraulic fracturing can be performed safely in the empire state. According to the Times, Cuomo “has long delayed making a decision, unnerved in part by strident opposition on his party’s left.”
Coming from a politically savvy family (his father Mario Cuomo was Governor from 1983-1994), Cuomo is no stranger to party squabbles, which makes this situation even worse. A seasoned politico, Cuomo is so frighten by his eco-left flank that instead he chose to bury the facts, bury the science that came from his own state agency.
Based on the degenerating fracking dialogue in Colorado, Cuomo’s fears are justified. He may have read how the eco-left has attacked Colorado democrat Governor John Hickenlooper, a former geologist, for his support of fracking. Or Cuomo could have watched this scary video of protesters getting in Hick’s face and surrounding his car. Or maybe he saw the “Faces of Hate” in Boulder.
These tactics are meant to intimidate and squash free speech. They seem to work in New York.