Energy Policy Center Report: Electricity rates skyrocket across all Colorado sectors

Across all sectors of Colorado the cost of electricity has skyrocketed more than 67 percent between 2001 and 2014, easily exceeding median income growth and the expected rate of inflation for the same period, an extended analysis of government energy records by the Independence Institute has revealed.

Energy_Increase_AllSectors_Percent_a

Energy_Increase_AllSectors_kwh

For all sectors between 2001 and 2014, the cost per kilowatthour jumped from just over 6 cents to more than 10 cents, or 67.11 percent.

Data obtained by the Independence Institute from the Energy Information Administration and the U.S. Census Bureau showed an increase in electricity rates for residential, commercial, industrial, and transportation sectors throughout the state contributing to the across-the-board growth in prices. In November, the Energy Policy Center reported a staggering increase of 63 percent for residential customers in Colorado.

“Retail residential electricity rates increased from 7.47 cents per kilowatthour in 2001 to 12.18 cents per kilowatthour by 2014, a 63.1 percent hike. Coloradans’ median income, however, went up just 24.1 percent, from $49,397 to $61,303. Median income in Colorado actually declined between 2008 and 2012,” the report concluded. It also noted that the U.S. Bureau of Labor and Statistics projected just a 34 percent increase in inflation for the 14 year period, using the agency’s CPI inflation calculator.

And while the data for late 2015 from the BLS indicated a modest decline of 2.9 percent in electricity prices for the Denver-Boulder-Greeley census area, this drop in rates did not offset the 3.8 percent increase seen one year earlier. While global commodity prices have given Colorado energy consumers a brief respite (and wild fluctuations in prices), electricity generation and costs have proven less volatile.

“The energy index, which includes motor fuel and household fuels, decreased 19.0 percent from the second half of 2014 to the second half of 2015, following an increase of 0.3 percent in the same period one year ago. Falling prices for motor fuel (-26.0 percent), all of which occurred in the first half of the period, were largely responsible for the decline in the energy component. Lower prices for utility (piped) gas service (-18.9 percent) and electricity (-2.9 percent) also contributed to the decrease. During the same period one year ago, motor fuel costs declined 3.1 percent, while the indexes for utility (piped) gas service and electricity rose 5.8 and 3.8 percent, respectively,” the BLS report concluded.

Energy_Increase_Residential_Percent

Energy_Increase_Residential_kwh

Analysis from the earlier November report on residential electricity rates stands confirmed and, indeed, underscored:

It’s clear from the data that Coloradans’ income is not keeping pace with almost continuous electricity price increases over the past 15 years, consistently outpacing the rate of inflation. Colorado’s ratepayers have had to endure two economic recessions over that period, while feeling no relief from escalating energy prices driven by onerous regulations driving energy costs ever higher.

From fuel-switching and renewable mandates to other costly regulations imposed by state and federal agencies, Colorado’s ratepayers and taxpayers alike have been subject to policies that do not consider energy affordability or reliability as a primary concern. The most vulnerable communities–elderly, minorities, and the poor–are the most sensitive to even the smallest increases in energy costs.

Not to mention the state’s many business owners, including small business owners, who face the same hikes in energy costs that could force decisions like layoffs or relocation to nearby states, where energy costs are lower. This reduces job growth and harms the state’s economy twice, with increased business costs passed on to consumers–the same ratepayers who already are paying more at the meter.

Upshot: the data for the remaining sectors emphasizes the double impact that increased energy costs have in the form of rapidly escalating electricity rates on Colorado ratepayers, who see not only their own personal energy costs rise, but are hit a second time by commercial, industrial, and transportation charges that are “baked into” the cost of providing goods and services that are passed on to consumers.

William Yeatman, senior fellow of environmental policy and energy markets at the Competitive Enterprise Institute and author of the Independence Institute’s 2012 Cost Analysis of the New Energy Economy, said in the November report that given the current regulatory climate, things “could get much worse.”

Some of the costs already baked in to electricity prices came directly from policy initiatives undertaken in the last decade.

Yeatman analyzed 57 legislative items included in the push for a “New Energy Economy,” determining that as much as $484 million in additional costs were incurred by the state’s Xcel customers–an additional $345 per ratepayer.

“The best explanation for this confounding upward trend in utility bills nationwide is the Obama’s administration’s war on coal. Colorado, alas, was well ahead of the curve on the war on coal, which explains much of why the state’s rate increases are presently so much greater than the nationwide average,” Yeatman said.

Part of the war on coal, the Environmental Protection Agency finalized the Clean Power Plan in August 2015.

The policy battle over the EPA’s Clean Power Plan, and the future of Colorado’s electricity rates, rests upon multi-state legal challenges to the agency’s authority that just last week resulted in a stay from the U.S. Supreme Court. That decision was overshadowed, however, by the subsequent death of Justice Antonin Scalia days later, leaving the legal challenge in turmoil given the SCOTUS’ delicate and likely 4-4 ideological split and the contentious election year battle over nominations to replace Scalia.

Meanwhile, Governor John Hickenlooper remains committed to pushing for a “prudent” continuation of planning for Clean Power Plan implementation, with the Colorado Department of Public Health and Environment proceeding with its pre-stay timeline. Colorado Senate Republicans, however, called ignoring the court’s stay “unacceptable.” Legislation addressing CDPHE’s ability to proceed with CPP planning will likely be introduced before the end of the 2o16 Colorado legislative session.

The Independence Institute’s analysis of electricity costs, broken down by the other sectors, shows commercial electricity rates for Colorado have seen a 77.78 percent increase from 2001 to 2014, jumping from 5.67 cents per kilowatthour to 10.08 cents.

Energy_Increase_Commercial_Percent

Energy_Increase_Commercial_kwh

Industrial rates have tracked with the overall rate increase of approximately 67 percent, from 4.48 cents to 7.47 cents per kilowatthour.

Energy_Increase_Industrial_Percent_a

Energy_Increase_Industrial_kwh

Transportation figures from EIA data do not extend back to 2001. Instead, the trackable data begins in 2003, with a sharp decline by 2005, before prices more than doubled, from 5.01 cents to 10.79 cents per kilowatthour, or a 115 percent increase in the last full 10 years of EIA measurement.

Energy_Increase_Transportation_Percent_a

Energy_Increase_Transportation_kwh_a

Overall increases for comparison (with the adjustment for transportation noted):

Energy_Increase_Combined_Percent_a

For a complete description of EIA definitions of electricity consumers and data collection, click here.

July 2 Colorado Energy Roundup: New Belgium signs ‘Brewer’s Climate Declaration’

More reaction from the ongoing Colowyo Mine saga in northwest Colorado, as Colorado Public Radio profiled residents from the community on what the possible mine closure would mean:

It’s been nearly two months since a judge required the federal government to take another look at a 2007 mining plan it approved for the Colowyo Mine outside Craig. Reaction in the small town of 9,000 was swift with much of the frustration directed at WildEarth Guardians, an environmental group that initiated the lawsuit.

Brent Malley moved from Phoenix, Arizona, to Craig 10 years ago to work at the mine, which supplies fuel to the nearby Tri-State Generation and Transmission Association power plant. Tri-State also owns Colowyo.

“It’s a much cleaner coal, low sulfur. I deal with that on a daily basis,” said Malley, who analyzes the coal at Colowyo. “There’s a bias against coal and I think it comes from pre-World War II where you saw really dirty conditions and miners getting hurt.”

Another resident, Rev. Jason Wunsch, called the actions against the Colowyo Mine–and the community–by WildEarth Guardians an “abuse.”

“The way it went about things through litigation and not through organic community dialogue I think was both an abuse to the public, but I think it will be a loss for authentic environmentalists,” Wunsch told CPR.

***

In a week filled with blockbuster Supreme Court decisions, the court’s ruling on the Environmental Protection Agency’s mercury rule flew somewhat under the radar, but the agency’s illegal rule had already done the damage intended, and even offered the EPA an “out” in future rulemaking:

A measure of the Environmental Protection Agency’s radicalism is that on Monday even this Supreme Court shot down one of its regulatory abuses. The agency’s extraconstitutional law-writing was too much even for the Court willing last week to tolerate the rewriting of laws for ObamaCare subsidies and housing discrimination.

In Michigan v. EPA, several states and industry groups challenged a 2012 EPA rule related to mercury emissions, which was really a pretext to force most coal-fired power plants to shut down as part of the Administration’s climate agenda. Though the rule was then the most expensive the federal government had ever issued, the EPA said it had no obligation even to consider costs when deciding whether it was “appropriate and necessary” to regulate.

“One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits,” Justice Antonin Scalia writes. “EPA’s interpretation precludes the agency from considering any type of cost—including, for instance, harms that regulation might do to human health or the environment.”

But imposing those economic costs and forcing the closure of coal-fired power plants in the process of the rule’s implementation had already occurred in between the 2012 promulgation of the rule and the Supreme Court’s finding this week. Too little, too late.

But while the initial reaction appeared to have a silver lining in forcing the EPA to consider costs, the agency got a reprieve from not only the minority who sided with the rule, but from the majority as well:

But here’s the, er, catch. Justice Scalia’s opinion says the agency can’t regulate without considering costs, but his decision also says the EPA can still decide what counts as a cost. Uh-oh.

And sure enough, Justice Elena Kagan’s dissent offers the EPA a soft-landing path for future law-writing. She does not say EPA can ignore costs altogether. But she and the three other liberals would have blessed the mercury rule because the EPA would allegedly scrutinize costs at some indeterminate point, eventually, down the line.

So while Michigan is a welcome rebuke to EPA arrogance, presumably the agency can still do most of what it wants as long as it claims to have considered costs. In any case, most of the utilities targeted by the EPA rule have already shut down those coal plants or spent billions to comply. They won the legal battle but lost the climate war.

In other words, the make-it-up-as-you-go agency’s agenda in bringing forth coal-killing regulations received the green light to conjure up any cost methodology it wanted to justify the rule, and to do so whenever it pleased.

That doesn’t bode well for future rule implementation of the EPA’s upcoming Clean Power Plan (carbon reduction) or ground-level ozone targets.

Sen. Mike Lee (R-UT), in an op-ed at Forbes, illustrated the EPA’s attitude toward the Supreme Court’s ruling, and their attitude in general when it comes to their role in the rulemaking process:

To make matters worse, the EPA sees no problem in a regulatory process that forces electricity companies to comply with an illegal regulation. “EPA is disappointed that the Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance,” an EPA spokesperson said in a statement.

As long as the rule did what was intended, even when dinged by the Supreme Court, the agency’s mission was accomplished.

***

New Belgium Brewing appears to be doubling down on its environmental commitment even as it is still contending with pushback on its support of WildEarth Guardians, the activist group responsible for threatening the Colowyo Mine (see above) through its litigation:

The beer industry is booming, but water resources are becoming scarce while warmer temperatures and extreme weather events are hurting hop production.

“They do say whiskey’s for drinking and waters for fighting out here. And there’s a reason they say that,” said New Belgium’s Bryan Simpson.

Now, brewers are finding ways to integrate green business practices and they want others to do the same. Three Colorado breweries are joining a national call-to-action, signing the “Brewer’s Climate Declaration.”

The declaration signed by New Belgium, along with a couple dozen other companies, sees climate change as a threat to its basic ingredients–water and hops:

Warmer temperatures and extreme weather events are harming the production of hops, a critical ingredient of beer that grows primarily in the Pacific Northwest. Rising demand and lower yields have driven the price of hops up by more than 250 percent over the past decade. Clean water resources, another key ingredient, are also becoming scarcer in the West as a result of climate-related droughts and reduced snow pack.

That’s why leading breweries are finding innovative ways to integrate sustainability into their business practices and finding economic opportunity through investing in renewable energy, energy efficiency, water efficiency, waste recapture, and sustainable sourcing. To highlight the steps they are taking and issue a call to action to others, brewers are signing the Climate Declaration.

***

A Colorado thin-film solar supplier company goes belly-up due to flagging sales:

Faced with slumping sales in its solar inverter business, and no suitors willing to step in to buy it, Advanced Energy Industries, Inc., announced Monday it was getting out of the business.

The move will cost the company millions of dollars and likely hundreds of jobs.

The impact on jobs at the Fort Collins-based business is unknown, but the company said in a statement it expects to spend $260 million to $290 million to wind down the company, including $15 million in employee termination costs and $30 million to $45 million in severance and other expenses related to the decision.

As of Dec. 31, AE, which develops power and control technologies for thin-film manufacturing and solar-power generation, employed 1,583 people globally. Founded in Fort Collins in 1980, AE manufactures inverters in Fort Collins, Canada and China.

Abound Solar, a thin-film solar panel manufacturer, filed for bankruptcy in 2012 despite a $400 million loan guarantee from the Department of Energy. Tracking the declining global share of thin-film solar and difficulties seen in other companies in places like China, it’s easy to see that the once highly touted technology hasn’t caught fire the way proponents once envisioned.

Screen shot 2015-06-25 at 1.39.47 AM

***

Despite top rankings as a manufacturer of wind technology and employment of wind-related workers, Colorado must increase its wind energy efforts, according to a new report from Environmental Entrepreneurs:

But the state needs to do more, according to the report.

The state needs to implement the federal Clean Power Plan, which would cut carbon emissions from “dirty” power plants in Colorado by 35 percent in part by increasing clean renewable energy.

Secondly, the state needs “new policy direction … to expand the state’s renewable energy portfolio.”

“Colorado’s leaders need to take action with policy opportunities that are good for its economy and good for its environment,” the 16-page report concludes.