Sunday, April 4, 2010

Tough Choices - HB1365

The Front Range of Colorado is faced with an unpleasant reality. The EPA is poised to implement clean air standards that have been building since the late 1990’s that will regulate nitrous oxide (NOx), ozone, mercury, sulfur dioxide (SOx) and regional haze (the brown cloud).

The standards go too far and should be fought with all of our might. It is time that Colorado and the other states stand up to the federal government and re-assert our authority over all of the issues that pertain to the state instead of the central government.

I think the people are ready for that too. More folks know what the 10th Amendment is all about now than at any time since the founding. It is time to push back against the heavy hand of DC.

It is a battle that needs to be fought, the question is: do we sacrifice Colorado businesses and citizen’s pocket books in that fight or do we take on Washington in a way that poses less financial risk to us? If the Feds implement their plan to clean up our air, look for car emissions standards like California, new formulations for our gasoline (like California has), restrictions on all power plants, tighter restrictions on local refineries, those funky gas nozzles like you see in California, and even no mowing your lawn during the day or barbequing. They have a whole laundry list of bad ideas to throw at us.

HB1365 is designed to hold off those federal requirements by crafting an alternative solution to meet the new air quality standards. It directs the Public Utilities Commission and the Colorado Department of Health to work together to devise a strategy to meet all of the standards in a few bold moves instead of waiting for each of the new standards to be introduced by the EPA. This is the first time both departments have been told to work together and been given the authority to do so.

It is likely that their plan will recommend the mothballing and/or conversion of three or four really old, 1950’s era, coal fired power plants to natural gas fired power plants. These facilities are located right on the Front Range. They’ll most likely recommend some additional cleaning technology on the newer coal facilities, like Pawnee at Brush.

All of this will cost Coloradoans some money, slightly higher utility bills, but probably lower if done as part of a global strategy than on a piece-meal approach as directed by the EPA. And don’t forget what all those other things on the list of “ideas” the EPA has would cost if implemented.

The bill also corrects a preference in the way the PUC views coal fired power plants over natural gas fired power plants. Currently, utilities can recover costs and earn a rate of return on the value of the coal fired plant which costs multiple times more to build than natural gas fired plants. Under the bill, utilities can make long term price contracts with natural gas providers and earn a rate of return on the value of those contracts.

With the new discoveries of gas in shale formations, natural gas companies are eager to agree to long term contracts and prices are low, so low that electricity produced from natural gas is now slightly cheaper than that produced from coal plants.

The benefits include a lot of drilling for natural gas, primarily on the Eastern Plains. The new demand will require 250 new wells a year over and above current production. Cleaner air is a benefit as natural gas burns much cleaner than the older coal fired plants do. Less train traffic and significant investment in the power plant at Brush are also good for Eastern Colorado.

You’ve probably heard a lot about this bill; the environmental groups like the bill for the air quality improvement and the natural gas companies like it because of the new business.

The coal producers hate it because it takes business away from them, the railroads for the same reason and the unions because coal workers are unionized and natural gas workers aren’t.

The total bill for fuel alone in one year for the 900 megawatts of electricity under scrutiny in the plan that will be crafted by this bill is $250,000,000. Now you know why you’ve heard so much about the bill; both sides are willing to spend quite a little money to influence the fuel choice when a quarter of a billion dollars a year is on the line.

I voted for it because no one has ever held off the EPA on clean air standards, there is a better way to meet those standards than letting the EPA devise the plan, and drilling for natural gas is good for Eastern Colorado.

I’d rather fight the Feds over health care and other issues.