The new energy economy is turning out to be a precarious place. Colorado’s many power consumers of modest means are finding themselves hard-pressed to cover the cost of converting to new energy sources, foisted upon them by policy makers who—to loosely paraphrase the old bumper sticker—may have been thinking globally but evidently forgot to act locally.
Of course, that’s more or less what many of us had predicted in the wake of costly new air standards imposed several years ago by the General Assembly. Those standards represented a major policy shift in several ways, most notably in that they essentially encouraged state utility regulators to raise power rates for residential and commercial customers to help usher in green energy. No longer was the Colorado Public Utilities commission charged first and foremost with protecting consumers from runaway rate hikes; instead, it was now its top priority to help reinvent the energy landscape. Even if it meant sticking rank-and-file consumers with the tab.
Now, it’s even catching the attention of the nation’s media. No less than the Washington Post took notice recently in a story datelined Pueblo. Titled, “How not to shut down coal plants,” the story observed, “Colorado is way ahead of the rest of the country on moving towards cleaner energy. But if that’s not managed carefully, energy bills can skyrocket.”
The story goes on to profile the travails of low-income Pueblo ratepayer Sharon Garcia, who can barely afford to get by—and whose power rates have soared 26 percent since 2010. As the story points out, “…no matter how much she rations and cuts, Garcia cannot keep ahead of the fast rise in rates.”
The Post’s reporter then notes:
Garcia’s extreme frugality is, in part, the result of coal plants shutting down as Colorado transitions to renewable energy. But in Pueblo, it happened in a way that has left poor consumers gasping for relief.
…With a poverty rate of 18.1 percent, incomes far below the state average and a third of the population on some sort of public assistance, those few dollars can make a big difference here.
So why have rates jumped so much, so fast? The local utility would point to environmental regulations and the sudden disappearance of supply from its competitor. Local officials and environmentalists would cite the utility’s business strategy.
The customers were caught in the middle.
Soon after buying the local utility, Black Hills Energy opted to replace nearly all its cheap coal capacity with natural gas essentially overnight — which means ratepayers are footing some big infrastructure bills all at once.
And state regulators allowed the utility to recover those costs. That has been the case, as well, with Minneapolis-based Xcel Energy’s 1.4 million Colorado ratepayers, to whom Xcel has been allowed to pass on all the cost of shuttering older power plants in favor expensive new, presumably greener-burning ones. And those costs are just starting to come home to roost
Earlier this summer, Xcel CEO David Eves said Colorado’s Clean Air, Clean Jobs Act of 2010 will come at a cost, and he warned his audience during an interview in Denver, “You’re not paying for it yet.”
Which is why a recent blurb in the media about Colorado’s reportedly low energy rates was bemusing; painfully so. Trumpeted one news medium, “Colorado energy bills are cheapest in the nation, report says.” When including all the natural gas that Xcel sells Coloradans to heat their homes, sure. Yet, break out the cost of electricity, and you have a different story. Rates have been rising steadily for years—all the more so in the wake of the new air standards—and Eves’ recent remarks offered little comfort. “There will be a rate case” before the PUC, Eves acknowledged.
Rather than rejoice at our “cheapest” rates—a nearly meaningless superlative amid overall power rates that have been rising in most states—consumers would do well to brace for the coming crunch.