Power plant bill raises issue of consumer cost
Xcel Energy customers would see a utility rate increase even if the Colorado Legislature didn’t approve a measure to convert coal-powered plants to natural gas, company officials told lawmakers Thursday.
House Bill 1365 has wide support on both sides of the Continental Divide, but questions have arisen over what it might cost consumers.
But Frank Prager, managing director of environmental policy for Xcel, told the Senate Agriculture & Natural Resources Committee that the state’s largest electric utility could request a 4 percent to 6 percent increase in rates over the next few years because the cost of coal and natural gas are going up.
Coal is generally much cheaper than natural gas, but the bill would allow the utility to lock in rates years longer than it can now, which would lead to more stabilized natural gas prices in the state and lower costs to consumers, he said.
“Our goal in this bill is to find a more cost-effective solution for our customers that enhances the environment while achieving reliability and emission-reduction goals,” Prager told the seven-member panel, which approved the bill 5-2.
Colorado Public Utility Commission rules prevent the utility from recovering costs to convert the plant until after it’s done whatever work is needed, so speculation that it would try to do so sooner are untrue, added Karen Hyde, Xcel’s vice president of resource planning and acquisition.
Coal companies and unions, however, are opposing the bill, saying that while it might boost drilling jobs, it will do so at the expense of miners and railroad workers who transport the coal.
Mike Cerbo, director of the Colorado AFL-CIO, said union workers weren’t even asked to the table when the bill was being drafted.
“Working families whose livelihoods depend upon the state of Colorado’s economy as it is right now were not consulted, nor were their issues addressed,” he said. “For starters, we’d like some assurances on where the workers that would be displaced will land. And how will the issues in their communities be addressed?”
Colorado Mining Association president Stuart Sanderson told the committee there are more than 2,000 miners in the state who make an average of $96,000 a year in wages and benefits. He said the bill comes at a time when coal production is down nationwide, and the measure would exacerbate that by about 10 percent.
“It makes no sense to pass a bill that would eliminate much of the coal-generating electric capacity along the Front Range, especially not during a recession,” Sanderson said. “This bill sets a dangerous precedent not only from its intervention in fuel markets, but it also, I think, threatens to diminish the role of coal, our most abundant and affordable fuel. This is an anti-coal bill.”
Under the measure, which cleared the House 53-12 last week, up to 900 megawatts of power generated by coal-fired plants in the Denver metropolitan area would be converted to burn Colorado-produced natural gas instead.
Sen. Josh Penry, R-Grand Junction, said that would translate to about a 15 percent increase in natural gas production in the state. He said that would lead to drilling jobs returning to the Western Slope, which lost many of those positions during the recession because of a dramatic decrease in natural gas prices.
Penry, who’s carrying the bill with Sen. Bruce Whitehead, D-Hesperus, said the measure doesn’t pit natural gas against coal and won’t lead to layoffs for coal miners.
Penry said pending stricter air quality rules expected from the U.S. Environmental Protection Agency next year are very real and will cost the state more if nothing is done.
“If this bill doesn’t pass, or if no action were taken on the part of the General Assembly, the EPA of this administration would have unprecedented power to repower the state of Colorado,” Penry said. “Either we can come up with a plan ... or the EPA will. As a Republican, and Republicans and Democrats agree on this issue, where states can solve their own problems without the heavy hand of federal intervention, we can and we should.”