By Brandon Ratterman
Colorado is having trouble defining hydroelectricity. The Environmental Protection Agency (EPA) considers it to be a renewable resource, and the Colorado Energy Office calculates hydroelectric power’s emission rate as equal to wind and solar. Despite these two distinctions, Colorado’s renewable energy standard defines hydroelectricity as renewable only if the generating facility is newly constructed with a capacity of ten megawatts or less, or constructed before January 2005 with a capacity of thirty megawatts or less.
Colorado has 1169 megawatts (MW) of existing hydroelectric capacity. Of that total, 82 percent is generated at facilities with a capacity over 30 MW—meaning it is not “renewable” unless the facility was built in the past eight years. Unfortunately, most facilities do not meet this requirement
According to the most recently released figures, renewables other than hydro produce 9.8 percent of the total net summer electricity capacity. If the total 1169 MW of existing hydro capacity were considered renewable, hydroelectricity would contribute another 8.5 percent of capacity. Instead, only 4.8 percent of hydroelectric power is considered renewable.
Under the current format Colorado will have to fill renewable portfolio standards largely without the help of hydroelectric generation. Unfortunately, this is increasing the costs of the renewable portfolio standard.
At 11.06 cents per kilowatt-hour, Colorado ranked 21st highest nationally in average residential electricity rates according to the U.S. Energy Information Administration. That may not sound too bad, except that the state is well above the average for all Mountain West states. In fact, Colorado has the second highest rates in the Mountain West, just behind Nevada, which actually saw a decrease last year in its residential electric rates.
Furthermore, Colorado has higher rates than any of its neighboring states. Outside of the East Coast, the only states with higher rates than Colorado are Michigan, Wisconsin, Nevada, California, Alaska and Hawaii.
As was proved in the 2012 snapshot of Colorado’s new energy economy, these high prices are due largely to lawmakers using the RPS to support the wind and solar industries. In 2012 alone Xcel Energy customers paid an extra $343 million for what ended up being mostly surplus electricity.
If high prices are the intent of Colorado’s energy policy, expect those figures to get much worse in the coming years as the state moves closer to the legislative mandate of 30 percent renewable portfolio standard, which is heavily tilted toward wind. However, if self-described environmentalists and the Colorado Energy Office truly care about the environment and economic sustainability then they should embrace hydroelectric power regardless of when it was built, but don’t hold your breath waiting.
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.