Rent-Seekers and Environmentalists Lied; Coloradans Pay the Price

In mid-April, I testified before a Colorado Senate Committee that was considering whether to approve a Regional Haze State Implementation Plan (“RHSIP”) to improve visibility at National Parks. The purpose of my testimony was to inform Committee Members that the RHSIP before them violated Colorado’s statutory prohibition on pollution controls pursuant to the Clean Air Act that are more stringent than what the federal government requires. That is, I told them that the RHSIP was illegal. I explained to the Senators that correcting the illegal components of the RHSIP would save Colorado ratepayers more than $120 million. (For background on the RHSIP, click here. Video of my testimony is available here.)

The Committee heard an entirely different story from lawyers representing natural gas producers,  Xcel Energy, and environmentalist ex-Governor Bill Ritter. These lawyers’ clients were staunch proponents of the RHSIP, because it included a strategy to switch fuels from coal to natural gas for almost 1,000 megawatts of electricity. For the gas and utility sector, billions of dollars were at stake; for ex-Governor Ritter, the fuel switching plan enhanced his national profile among environmentalists. These special interest lawyers refused to address my allegations of illegality (because I was right). Instead, they told the Committee that unless the General Assembly approved the RHSIP immediately and without alteration, the federal government would swoop in and usurp Colorado’s air quality planning authority.

In my direct and rebuttal testimony, I explained that these special interest lawyers were being disingenuous (again*). To be sure, there was a January 2011 deadline for the Environmental Protection Agency to either approve Colorado’s plan or impose a federal alternative. However, EPA deadlines are frequently missed, often by many years, due to the Agency’s limited time and resources. This was evidenced by the fact that the General Assembly had yet to approve Colorado’s RHSIP at the time of my testimony—in mid-April, four months after the January deadline—and the EPA had not seized the State’s air quality planning. Moreover, I explained that it takes time to craft a Regional Haze “Federal” Implementation Plan, and that the Environmental Protection Agency had not yet even started formulating an alternative. Under the Clean Air Act (Section 110(c)), States can alter an implementation strategy (“correct a deficiency”) up until the time that the federal government promulgates an alternative. In light of the fact that the EPA had not yet started on an alternative plan, there was plenty of time for Colorado to properly vet the RHSIP, so as to ensure that ratepayers didn’t get ripped off by an illegal plan. Nonetheless, the Democrat-controlled Senate Committee sided with the special interest lawyers, on a party line vote.

Last Wednesday, the lawyers were proven wrong, when the EPA announced that it would get around to deciding on Colorado’s RHSIP…in March 2012. Thanks to the lies peddled by special interests, Colorado ratepayers are $120 million poorer.

*In April 2010, ex-Colorado Governor Bill Ritter’s administration, the gas industry, and Xcel Energy pushed through the General Assembly H.B. 1365, legislation that effectively mandated fuel switching from coal to natural gas for almost 1,000 megawatts of electricity generation. Usually, it takes about 18 to 24 months for the Colorado Public Utilities Commission (PUC) to deliberate a major resource acquisition plan for new power plants. HB 1365, however, gave the PUC only 4 months to deliberate a billion dollar plan that would retire 4 coal power plants, fuel switch at another, and build a new gas plant. The shortened timeline shortchanged the vetting process, such that the PUC Staff conceded that the cost and engineering analysis of the plan was “preliminary.”

Why the rush? The official reason, provided by Ritter administration, was that the H.B. 1365 fuel switching plan had to be developed at war speed, so that it could be incorporated into the RHSIP by the January deadline. Otherwise, they claimed that the federal government would seize Colorado’s air quality planning programs.

Consider this HB 1365 direct testimony from Ritter administration air quality official Paul Tourangeau (p 3), director of the Air Pollution Control Division,

Q: What if the Regional Haze SIP is not submitted to EPA by January 2011?

A: If the Regional Haze is not submitted to EPA on time, EPA will take over the Department’s regional haze program and regulate utilities and other large sources of nitrogen oxides and sulfur dioxide in the state through an EPA-promulgated Federal Implementation Plan. An EPA FIP would impose federal mandates on the large NOx and SO2 sources in the state, including Xcel facilities.

Notably, the alleged threat of a federal takeover also was essential for the bi-partisan support that HB 1365 enjoyed in the Colorado General Assembly. In an opinion piece titled, “The Conservative Case for Supporting HB 1365,” Republicans lawmakers wrote that they supported fuel switching so as to avoid “Barack Obama’s air quality policy in Washington.”

As I explained above, this January deadline was apparitional. Proponents of fuel switching were smart enough to know this. Which means they were lying. Why would they lie? The likely answer is that they didn’t want to leave anything to chance. After all, HB 1365 was a major component of ex-Governor Bill Ritter’s awful New Energy Economy. My guess is that the Ritter Administration and its industry conspirators didn’t want to risk a GOP candidate winning the Governor’s mansion (Governor Ritter left office in January 2011) and inhibiting HB 1365, so it engineered an artificial deadline to ensure that a HB 1365 implementation plan was finalized before Ritter left office.