Coalition of Ratepayers

A Hurried Agenda

by

On January 6, the Environmental Protection Agency decided to further reduce the emissions of commercial vehicles through a proposed rulemaking for the Cleaner Truck Initiative, which once complete, will establish more stringent regulations on heavy truck and equipment’s nitrogen oxide (NOx) emissions. Two days later, Senator Fenberg (D-Boulder) and Representative Jaquez Lewis (D-Boulder) introduced SB20-038 “Statewide Biodiesel Blend Requirement Diesel Fuel Sales,” which could inadvertently increase Colorado’s NOx emissions.

SB38 mandates biodiesel blends of up to 10 percent. Beginning in 2021, fuel stations will have to sell B5 biodiesel (5 percent biodiesel blend) during the summer months of June through September. The following year, the blend will increase to B10 (10 percent biodiesel blend). When it was first introduced, the mandate applied to statewide diesel sales. Knowing how this would impact industry, the Colorado Wyoming Petroleum Marketers worked with Senator Fenberg to amend the bill and make it “implementable.” As a result, instead of a statewide mandate, it will only apply to Colorado’s nonattainment areas.

Nonetheless, it’s still anticipated that SB38 will impact consumers at the pump. Without the proper infrastructure built yet, and the fact that the nearest biodiesel refineries are outside of Colorado, the cost of shipping and blending the fuel will be passed along to end-users. The estimated price per gallon increase is around five cents for the B5 blend and 10 cents for the B10 blend. It is important to note that prices will most likely increase once the federal biofuel producer tax credit, which was extended in the recently signed omnibus appropriations measure, ends in 2022.

Admittedly, biodiesel blends emit less carbon monoxide, unburned hydrocarbons, particulate matter, and sulfide oxides than petrodiesel. Moreover, the science on whether it increases NOx emissions isn’t settled. Sources differ on the matter — a National Renewable Laboratory Paper found that there is no average increase in nitrogen oxide emissions, while an Environmental Protection Agency study concluded that NOxemissions do increase from 1-7 percent with biodiesel blends up to 20 percent. Keep in mind that the amount of emitted nitrogen oxide also depends on specific circumstances, ranging from the age of the vehicle, type of engine, and the type of unsaturated fuels used in producing the biodiesel.

Despite the decrease in GHG emissions, though, the fact that biodiesel may emit more NOx is cause for concern since it can severely impact people’s health. Whether exposure results from inhalation or skin contact, both short and long-term exposure can lead to serious health effects. Irritation to the respiratory system, nausea, and abdominal pain can occur due to short-term exposure, while more serious issues like asthma and respiratory infections can arise from long-term exposure.

An increase in NOx emissions can also impact Colorado’s environment (see PDF below article for more information). There is already a concern about excessive amounts of nitrogen being swept into Rocky Mountain National Park, where it mixes with moisture and falls with rain and snow. Unfortunately, the Rocky Mountain National Park’s ecosystems do not need very much nitrogen to survive, so as a result of excess nitrogen, non-native plant species thrive and overall forest health decreases. Fortunately, the amount of excess nitrogen has been decreasing, but SB38 could endanger that trend.

Additionally, because there are no biodiesel refineries in Colorado, and since biodiesel cannot be transported via pipelines, it will have to be trucked or railed into the state, emitting GHG emissions and possibly offsetting the anticipated reductions from the use of biodiesel.

Environmentalist groups like the National Wildlife Federation (NWF) have also historically opposed the adoption of biofuels on environmental grounds. For instance, a NWF blog cites a study that discovered renewable fuel development has contributed to 27.1 million metric tons of carbon dioxide being released yearly and has led to almost two million acres of grassland, shrubland, wetland, and forestland being converted to cropland between 2008 and 2016.

Worse yet, the industry proponent of SB38 is the Iowa-based company Renewable Energy Group. It should go without saying that out-of-state interests should not be dictating public policy that will hurt Colorado industries.

If not the fiscal impacts of the bill, the environmental issues with biodiesel should at least give pause for Democrat lawmakers. Nitrogen oxide pollution is a known concern for Colorado, and according to a prominent environmental organization, developing and using biodiesel is not as good for the environment as has been purported.

But if Democrats are unwilling to kill the bill, in the very least, the concerns laid out above indicate they should slow-down and consider the indirect consequences of a biodiesel mandate—both environmental and fiscal. There is no need to be hasty. After all, delaying the adoption of SB38 in order to conduct an environmental impact analysis may just prove that the environment is better off without biodiesel flooding into the state.

NOx Regulation – Helping to REduce Nitrogen Impacts at Rocky Mountain National Park

Electric Vehicle Mandate: An Expensive Policy that May Actually Increase Global GHG Emissions

by

The Coalition of Ratepayers agrees with the Pacific Research Institute (PRI) that the initial economic impact analysis of the proposed electric vehicle (EV) mandate for Colorado contained flawed and overlooked critical assumptions.

Dr. Winegarden, a Ph.D. economist with PRI, criticized the economic analysis, which was presented to the Air Quality Control Commission, with California’s vehicle emissions standards and their negative impact on the state in mind. His assessment added to, seconded, and solidified our own fears regarding Colorado’s adoption of an EV mandate. One of his points was that there may be other routes to achieve a reduction in greenhouse gas (GHG) emissions, since they’re already declining in Colorado as newer, cleaner vehicles continue to be bought and driven on our roads. Making one wonder: Is the mandate really necessary?

Moreover, according to Winegarden, forcing Coloradans to drive electric vehicles is more likely to cause a net increase in emitted GHG. The manufacturing of EVs generates more emissions than producing gas-powered cars, resulting in a deficit that takes time to overcome – in Germany, it’s as high as ten years. Making matters worse, a conservative estimate of an EV battery’s lifespan is approximately eight years. Hence, if we are to assume Germany’s timeline is correct, the break-even point is unlikely to be achieved, and the result will actually be a net increase in greenhouse gas emissions.

Colorado’s power generation mix is still dominated by coal as well. Democrats hope to change that reality, but for the time being, EV owners are simply using what Democrats call “dirty coal” to charge their vehicles. Their tailpipes are simply outside of town.

Mandated switching to renewable energy sources will not be cheap either, and there is no guarantee it will be successful. Any attempt will impact low- and static-income ratepayers the most, and if the move towards renewables is unsuccessful, “the expected reduction in emissions will overstate the actual emissions reduction achieved.”

Electric vehicles also cost $7,000 more than gas-powered cars after calculating the down payment and loan repayment costs. Admittedly, they’re cheaper to operate annually by about $660, but EV owners, on average, need to own one for 11 years to make up the $7,000 difference. Considering batteries typically last eight years, saving money, or breaking even isn’t likely.

Before adopting an electric-vehicle mandate, Colorado’s elected and non-elected officials need to know that the initial economic impact analysis presented to the Air Quality Control Commission was faulty and failed to consider serious assumptions. Winegarden’s report gives a much clearer perspective on what will most likely be a costly and detrimental policy.

If he is correct, changing the minds of elected officials and AQCC members on the proposed EV mandate may be critical to lowering Colorado’s GHG emissions even further.

 

The information and data contained in this post can be foundin Dr. Winegarden’s Issue Brief. The link to which is below. 
Pacific Research Institute, Issue Breif, CO ZEV Mandate Analysis

 

Tri-State Charts Own Course: Angers Democrats and Delta-Montrose

by

Tri-State Generation and Transmission Association released a statement on Tuesday indicating its move to become regulated by the Federal Energy Regulatory Commission (FERC).

This decision has drawn harsh criticism from Colorado legislators and Delta-Montrose Electric Association (DMEA). Democrat state legislators are urging Tri-State to slow down and reconsider the decision, since it was only two months ago that the legislature passed a bill (SB19-236) that requires Tri-State to submit its energy resource plans to the Public Utilities Commission (PUC). According to Tri-State’s statement, FERC regulation will not affect how it complies with Colorado’s carbon reduction and renewable energy regulations. However, according to Bloomberg Environment, Democrats are concerned about the potential for FERC regulation preempting it from the state’s carbon emission goals.

Delta-Montrose Electric is concerned and upset about how FERC regulation will impact its decision to separate from Tri-State. Jasen Bronec, CEO of DMEA, said in a press release that he believes Tri-State’s decision to pursue FERC oversight is simply a way to undermine DMEA’s separation case before the PUC. After all, if Tri-State is successful, DMEA’s separation case will have to start over and be heard by federal officials. DMEA has filed a temporary restraining order in Adams County District Court to try and stop Tri-State from getting out from under PUC jurisdiction.

Criticisms aside, Tri-State has a fiduciary duty to its members, and its desire for stable rates isn’t unwarranted. Colorado has decided to relentlessly pursue progressive environmental policies. Democrat leadership in the Senate, House, and Governor’s Office have made reducing carbon emissions a major priority. So much so, they were willing to codify Xcel Energy’s plan to reduce its carbon footprint 80 percent by 2030 and 100 percent by 2050, scorning at the idea that the Public Utilities Commission is a neutral governing body.

In the past, Tri-State was exempt from FERC oversight because it was wholly owned by electric cooperatives. However, at the board meeting in July, Tri-State executives decided to incorporate new members that will eliminate its federal oversight exemption. Chairman Rick Gordan made it clear that he believes members will benefit immensely from the efficiency gained by a single rate regulator (i.e., FERC), and that the utility will continue building a cleaner generation portfolio.

The Coalition of Ratepayers remains committed to supporting DMEA’s desire for autonomy. However, we also believe Tri-State has a right to self-determination as well.

If DMEA is upset with Tri-State, maybe it should shift its gaze to the Gold Dome and Colorado’s regulatory agencies. Democrats made sure Tri-State knew it was under scrutiny and amended SB 236 to ensure it would be regulated by the PUC. Moreover, the PUC made sure that Tri-State understood that even if Democrats failed to pass legislation authorizing oversight, it would start scrutinizing and looking into the wholesale power supplier’s business dealing on its own.

This is the background information often overlooked or disregarded when criticizing Tri-State for wanting to be regulated by FERC. Time will tell whether FERC oversight impacts Tri-State’s compliance with Colorado’s carbon emission reduction goals and clean energy regulations. But one thing is for certain, Tri-State decided to chart its own course and stand up to those Colorado Democrats ramming through progressive environmental bills. As a wholesale power supply cooperative serving members in four states, it should be able to decide the course of action that serves its interests the best. And for that, the Coalition of Ratepayers applauds Tri-State’s decision to move forward in pursuing FERC oversight.