A bill to repeal Colorado’s “phantom carbon tax” was heard today in the Republican-controlled House Agriculture, Livestock, and Natural Resources Committee. It’s the second time in as many years that State Representative Spencer Swalm (R-Centennial) has sponsored the pro-ratepayer legislation. Both times it was heard in the House Ag Committee. Last year, we documented how some Republicans in the committee voted to keep the carbon tax in tact, which is de facto support for the theory of man-made global warming.

The usual suspects, including Xcel Energy, the Colorado Department of Public Health and Environment (CDPHE), and the Public Utilities Commission (PUC), lined up against relief for ratepayers this year.

Fortunately for ratepayers, the Independence Institute stood by their side and against corporate welfare. As I stated in my testimony in support of HB 1172:

It’s true that the carbon tax is not a line item on a ratepayer’s bill, but is in included in the modeling of costs for resource acquisition. Costs dictate rates. The higher the costs, the higher the rates. The higher the rates, the more Xcel Energy makes.

The “phantom carbon tax,” as we call it, increases costs and therefore rates. Xcel customers pay Xcel for a tax that doesn’t exist. It is a redistribution of wealth from ratepayers to shareholders. (Full testimony is below)

Conventional political wisdom suggests that most Democrats would support carbon taxes while most Republicans would oppose them, especially in an election year, and that a party-line vote would have moved this bill out of committee. But after close to two hours of testimony, no vote was taken. Vice-Chairman Randy Baumgardner laid over HB 1172 until a later date. Colorado ratepayers will have to wait a little longer to see which lawmakers have the courage to provide relief from needlessly high electric rates.

Two members of the committee were absent from today’s hearing, Republican Chair Jerry Sonnenberg and Democrat Wes McKinley, which didn’t shift the balance of power. The bill still should have moved out of committee on a 6-5 vote, unless someone doesn’t want this bill to go to the floor of the House for an open debate.

So the real question is how will the House Ag Committee vote on HB 1172? Will some Republicans turn their backs on ratepayers and throw their support behind carbon taxes, the theory of man-made global warming, and corporate subsidies as they did last year? And if some do, which ones?

Republicans members of the House Agriculture, Livestock, and Natural Resources Committee:

• Jerry Sonnenberg, Chair
• Randy Baumgardner, Vice-Chair
• J. Paul Brown
• Don Coram
• Marsha Looper
• Ray Scott
• Glenn Vaad

Democrat members include:

• Randy Fischer
• Matt Jones
• Wes McKinley
• Su Ryden
• Edward Vigil
• Roger Wilson

Any guesses on how the vote will go?

Testimony on behalf of

HB 1172 No Imputed Carbon Tax

February 8, 2012

House Agriculture, Livestock and Natural Resource Committee

Mr. Chairman and Members of the Committee:

My name is Amy Oliver Cooke. I write on and direct the energy policy center for the Independence Institute, 727 E. 16^th Ave, Denver, CO 80203

Thank you for allowing me the opportunity to testify today on behalf of HB 1172.

At the Independence Institute, we are agnostic on energy resources. It is our strong belief that the choice of energy resources should come from the demands of the free market, and not from the preferences of policymakers, lobbyists, or special interest groups.

HB 1172 is simple in nature, unless a carbon tax is passed at the federal level, ratepayers should not be disadvantaged financially by paying the phantom carbon tax to an Investor Owned Utility such as Xcel Energy.

History

We haven’t been able to find any other state that has a carbon tax in statute. Colorado’s is based in HB08-1164, which says the Public Utilities Commission:

may give consideration to the likelihood of new environmental regulation and the risk of higher future costs associated with the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.

HB 1172 would change the wording ever so slightly to the PUC

may give consideration to the existence of new environmental regulation and the costs imposed by current federal law or regulation on the emission of greenhouse gases such as carbon dioxide when it considers utility proposals to acquire resources.

When the 2008 bill passed, Colorado Conservation Voters explained it HB 1164 this way:

By giving the PUC the ability to use carbon as a value in resource planning decisions, HB 1164 represented the first time that the Colorado General Assembly took a substantive step forwards in giving regulators the tools they need to explicitly address global warming.

Three current members of this committee (Reps. Sonnenberg, Vaad, and Looper)  voted against that bill in 2008. I commend them for doing so. It is a selective, regressive tax – selective on resource (coal) and selective on customers (IOUs such as Xcel Energy), although pass through costs affect almost everyone in the state.

To tax or not to tax?

While it’s prudent for the PUC to consider the risks of Congress passing a cap-and-trade scheme that would put a price on carbon, it is, in equal measure, rash to include the cost of a federal carbon tax in resource planning that covers a time frame in which these costs don’t exist.

To its credit, the PUC staff registered second thoughts about the application of a carbon tax. Alluding to the $20 ton carbon tax during hearings for Xcel’s 2010 renewable energy compliance plan, PUC staff witness William Dalton expressed concern about “including costs that do not exist.”

Even Xcel Energy doesn’t believe that a carbon tax will be passed at the federal level any time soon.

As early as June 2010, Xcel petitioned the PUC for permission to renege on a commitment to build a 250 megawatt solar thermal power plant due to “changed circumstances,” among which the utility cited “the expectation that carbon legislation won’t be enacted for several years,” which would, “erode the economics of solar thermal” [Direct Testimony James F Hill, Xcel Witness, 4 June 2010, Docket 10A-377E]

In the 2012 Renewable Energy Compliance Plan, In Section 7 — Retail Rate Impact and Budget, Xcel acknowledges that I was correct in February 2011 when I testified in front of this committee on HB 1240, there would be no national carbon tax in the near future:

The carbon assumptions approved by the Commission in Docket No. 07A-447E assumed carbon regulation would be enacted in 2010; such regulation was not enacted and the prospects for near term carbon regulation appear to be slim.

Because Xcel assumes there will be no carbon tax in the near future, it presents a cost model that excludes the carbon tax and another model that does include the tax but not until 2014:

Due to the uncertainties related to the timing associated with possible carbon emission regulation, the Company did not include any carbon cost imputations in the model runs and other calculations set forth on Table 7-3. However, as discussed later, Public Service also presents with this Compliance Plan, as Table 7-4, a sensitivity case that assumes the same carbon imputation costs ($20 per ton, escalating at 7% annually) as approved in the 2007 Colorado Resource Plan but on a delayed implementation schedule of 2014.

The cost differences are substantial.

Colorado Legislative Council Staff wrote in the fiscal note for HB 1164, “the bill will not affect state or local revenue or expenditures, and is assessed as having no fiscal impact.” But including a non-existent $20 per ton carbon tax that adds millions of dollars to the cost of otherwise inexpensive fuels such as coal, has an impact on ratepayers. Currently, according to DOE statistics Colorado has the highest electric costs of any neighboring state, second highest in the Rocky Mountain West.

Conclusion

It’s true that the carbon tax is not a line item on a ratepayer’s bill, but is in included in the modeling of costs for resource acquisition. Costs dictate rates. The higher the costs, the higher the rates. The higher the rates, the more Xcel Energy makes. The “phantom carbon tax,” as we call it, increases costs and therefore rates. Xcel customers pay Xcel for a tax that doesn’t exist. It is a redistribution of wealth from ratepayers to shareholders.

If the state legislature wants to tax Coloradans to pay for global warming, they should make their case to voters  — all voters – and not just penalize Xcel Energy ratepayers, who have no other place to go, no recourse.

As I stated at the beginning it is the strong belief of the Independence Institute that the choice of energy resources should come from the demands of the free market, and not from the preferences of policymakers, lobbyists, or special interest groups and we believe that HB 1172 is consistent with that principle.

We just released a new Issue Paper that tackles the perennial question: how much are we taxed here in Colorado? Many on the Left presume it’s not enough. When our researcher Anthony Gonzalez really dug into it and looked at the whole picture (state AND local taxation), Colorado it turns out sits right in the middle of the nation at 26th. Take a look at our first Issue Paper of 2012, How Colorado’s Tax Burdens Rank Nationally.

In his latest blog post, our Constitutional scholar Rob Natelson shares his thoughts on the recently signed into law National Defense Authorization Act (NDAA). Many believe the NDAA codifies the Executive Branch’s ability to indefinitely detain American citizens without trial. What does Rob think? Check it out here.

Keep your eyes on this developing story: Democratic lawmakers are putting RTD’s toes to the fire on building out the Northwest corridor. RTD made a promise many years ago and the folks up in the Longmont area have been paying for a rail system that has yet to be delivered. How long can RTD hold out? How long will the Northwest corridor take it? Time will tell…

Finally, there is a really cool economics fundamentals class being held at our building this Saturday the 11th. I encourage all of you to take a look at the details here. For those still not on Facebook, here is some information:

Are you a liberty activist who loves free markets, capitalism and limited government – but have a difficult time describing its myriad benefits and merits when talking with others?

Then this is the educational training course for you!

Liberty on the Rocks is looking for leaders in the liberty movement (current or future) who are interested in obtaining insights into the basic fundamental principles of free market economics by attending a half-day educational course in Denver. **Tickets to attend are $10**

On Saturday, February 11th from 1:30-6:30pm, Liberty on the Rocks will present an exclusive hands-on, discussion and activity-driven economics session. During this half-day course, attendees will learn and/or better understand:

-The role economics plays in the advancement of liberty

-How to make the case for freedom from an economic and philosophical perspective

-How prices work in a market place

-Different ways of looking at public policy from an economic perspective

-The essential arguments for why socialism can’t work

RSVP today by purchasing tickets at: http://denver.libertyontherocks.org/economic-freedom-session/

Email Amanda Muell for even more info.

Rick Santorum defeated Mitt Romney in the later two states. In Colorado, it was closer but Santorum edged out Romney with a five point victory. In Minnesota, Romney finished third behind Ron Paul with Newt bringing up the rear and Santorum won every county in Missouri.

My home county went for Romney but Santorum had a pretty good showing. Gingrich only beat out Paul by three votes. Admittedly, Alamosa County isn't large so it doesn't matter much in the grand scheme of things but, hey, it's home.

Winning all three states will be a big boost to Santorum's profile. There's a slim chance that it could force Newt to reconsider but I doubt it. He'll hang in for a while especially since no delegates were awarded tonight. If he does, he and Santorum will continue to split the conservative vote while Romney walks off with the delegates. On the other hand, if Newt drops out, Mitt could be in for a fight and could quite conceivably lose. We saw that in Missouri where Newt wasn't even on the ballot. Santorum beat him by 30 points.

I'm not a huge fan of Rick Santorum's big government approaches to social issues but there's no doubting his conservative stances on Federal spending. I'll take him over Mitt Romney any day.

On to the links.

Colorado

• The ethics investigation of Laura Bradford began yesterday. I expect it to go through quickly with little actually coming of it.
• SB 35 would limit the liability of companies ferrying passengers into space.

Everywhere else

• How about a "Morning After" pill from a vending machine on college campuses?
• Oh, good. We're four months into the new fiscal year and we're already $349 billion in the hole.
• Who's up for a map of earmarks? (via Hot Air)
• Hey! Let's give control of the Internet to Homeland Security!
• Obama may be backing down on the his contraception mandate.

Updated 2011-02-08: Fixed stupid typo. Thanks gospelnews.

The long-awaited announcement of another bout of money printing in England on this Thursday will prove once again that experience doesn’t modify behavior on the other side of the pond either. The initial round of money expansion, called Quantitative Easing (QE) in the States, of some $320 billion last year in the United Kingdom had little measurable effect.

And so another boost of $80 billion is expected in Thursday’s announcement. This round, according to George Buckley, a UK economist at Deutsche Bank, might not be the last: “If sentiment and activity hold up this could…be the last round of QU, although the fragile nature of the recovery and the situation in Europe could mean [that] the programme continues after May.”

The trouble is that “sentiment and activity” is slowing, pushing England’s GDP into negative territory with downward revisions for the balance of the year expected. The British Office for National Statistics reported “negative growth” (American translation: decline) of 0.2% in the last three months of 2011, and there is little hope for any change in direction for at least the next two years.

Roger Bootle, writing for the British paper The Telegraph, wondered out loud what good additional printing would do. He asked rhetorically three weeks ago, “Once it has completed the current authorized dollop, the Bank of England (BoE) may soon conduct yet more QE. But

Continue reading Printing Money Doesn’t Work in Britain Either

In other words, the proposal that represents a small, positive step for parental empowerment stepped out from beneath the groundhog’s shadow. And not a moment too soon, for such a commonsense piece of legislation.

Yes, it’s sad to see only Republican representatives showing a modest support for the education consumer. Is it just Colorado where Democrats seem so universally wed to protecting K-12 institutions of power (the Colorado Association of School Boards and Colorado Education Association both testified against HB 1149) at the expense of a little extra parent voice in the school turnaround process?

Interestingly, California Democrat Gloria Romero today expounded on her support of a more comprehensive parent trigger bill coming out Florida:

This is not a Democratic or a Republican fight. It’s a fight for parents, by parents. This is also a civil rights issue that is personal to me. My mother had a sixth grade education; I have a Ph.D. I know what education means for ending poverty, and I know how hard we are making it for millions of children to get the quality education they need and deserve.

If you are poor, African-American, Latino or a member of any other underserved constituency, too often your success in school is tied to your zip code and to government officials who make life-altering decisions for you. Those with financial means move to a different school, but those who stay need a way to make the schools work for their children.

Or as Colorado’s Rep. Beezley was quoted in the Ed News story:

Help me offer a little bit of hope … to parents with children in some of our lowest performing schools…

The far-from-conservative Metro Organizations for People came out in support of HB 1149, noting that the existing five-year turnaround process is “far too long.” If they were in California or Florida, they may have found support from the Democratic caucus so far. There’s still time for the Colorado legislature to debate and vote on this bill in a bipartisan (or better yet, nonpartisan) fashion. I hold out hope that it can be the case.

When the Citizens’ Budget first dropped, we found it was extremely popular with the Tea Party and limited government crowd. We ordered hundreds of physical copies and could hardly keep those puppies in stock! But when it came to our state legislature, there was hardly a peep. 2011 came and went and we wondered why no legislators jumped on any of our suggestions. Yeah, some of them are politically unpopular, but many of them are not. What gives?

But now in 2012 some brave state legislators have taken up the cause for fiscal responsibility! For a great overview of 3 bills working their way through the legislature thanks to our project, look no further than Wayne Laugesen’s op-ed in today’s Colorado Springs Gazette. Wayne praises our Citizens’ Budget and goes on to explain how our suggestions to shore up the Public Employees Retirement Association (PERA) made their way into 3 bills thus far.

The first is a bill carried by Rep. Chris Holbert of Parker. The bill “would cap the health benefit for early retirees at $230 a month and eliminate health care payments for retirees who have reached the age of eligibility for Medicare.” Secondly, we have Senate Bill 119 carried by Sen. Tim Neville of Littleton. His bill “would force the board of directors of PERA to adjust benefits in order to “maintain the long-term actuarial soundness of each trust fund.” Our Fiscal Policy Center director and lead author of the Citizens’ Budget Penn Pfiffner gives a great explanation of exactly what that means,

“Today, the PERA board tells state government to get the money it needs. This bill says they have to adjust benefits accordingly. Once taxpayers have made their contribution, it will be up to PERA to make it work. We would no longer be responsible for how PERA handles the money.

Finally we have a Senate Bill 82 carried by Sen. Ted Harvey of Highlands Ranch. His bill “would increase the age at which new public employees would be eligible for retirement benefits.” For example, today some new hires can plan on retiring at 58 years old thanks to PERA. Sen. Harvey’s bill would increase the age to 68 – the same as Social Security.

It’s exciting to see that the tremendous work our research team did two years ago is bearing fruit in 2012. We encourage all legislators to read their copy of our Citizens’ Budget (yes, you have one. If you can’t find yours, contact us immediately!) and take on the challenge to strike at the heart of our continued budget deficits. What’s the heart of our budget issues? As Penn Pfiffner says, “it’s a structural problem.” In other words, it’s time we discard all the accounting gimmicks we have to use each year to balance the budget. If the Citizens’ Budget were in charge, we wouldn’t need any tricks to fix a deficit because there wouldn’t be a deficit year after year.

Read more about the Citizens’ Budget project here.

When Oklahoma State Senator David Holt discovered that Oklahoma was ranked the “most anti-taxpayer state in the southern United States” by the Competitive Enterprise Institute (CEI), he decided to propose amending the state’s constitution to stop the unions’ gravy train of collective bargaining contracts without taxpayer approval. His amendment says nothing about unions or collective bargaining. All he did was explain, in his press release, that if the amendment were passed, the constitution would allow local taxpayers to approve all spending of their tax dollars by local authorities for any purpose. He stated:

Oklahoma’s Constitution already makes it very difficult to raise taxes, and that’s a good thing. But every new tax starts with a new expense, and the Oklahoma Constitution, remarkably, does not give taxpayers or their local elected representatives the absolute power to spend tax dollars.

There are dozens of examples in recent years of local taxpayers being forced to take on new financial obligations, not only without the consent of either the taxpayers or their representatives, but actually over their objections.

And though he never mentions unions or dues extracted from union members’ paychecks to be spent for political purposes or benefits or pensions or job security—they are his target. Because of collective bargaining agreements, unions have routinely overridden

Continue reading Oklahoma’s Constitutional Amendment Would Pit Taxpayers Against Unions

On to the links.

Colorado

• State Bill Colorado has a handy, dandy list of what the General Assembly is up to.
• A state amphibian? Really?
• Ah, the joys of living in a rural area. Phone service was down for about six hours and Internet service was down for a couple more.

Everywhere else

• Do you "that the government deliberately is stripping Americans of their freedoms and is attempting to establish a totalitarian regime [and] oppose many federal and state authorities’ laws and regulations, (particularly those related to firearms ownership),"? Congratulations. You might be a "militia extremest". (No militia membership required.)
• Obama: The economy still sucks but you should elect me again anyway.
• Good polling companies publish their data so that conclusions can be verified and so that any inherent bias in the sample is made public. The Washington Post and ABC are not good polling companies.
• Rick Santorum is surging going into today's caucuses and primary and Romney knows it.
• Business fees and taxes are always paid their customers. Always.
• Here's your look at what's scheduled in Congress this week.
• 71 percent of Egyptians are opposed to US aid to Egypt. I, for one, am more than happy to honor their wish.

The news released by the Bureau of Labor Statistics (BLS) on Friday appeared to be all good: The unemployment rate was down by 0.2 percent to 8.3 percent, the lowest since the month after President Obama was inaugurated. November and December estimates were revised upward. Most private industries showed growth, including 70,000 new business services jobs, 50,000 new manufacturing jobs, and a remarkable 21,000 new jobs in the construction industry. The labor force expanded by 500,000 which appeared to indicate that more people are coming back into the market looking for work.

But the skeptics were legion: the Wall Street Journal, while accepting the numbers at face value, said, “Even with the recent gains, this is by far the worst jobs recovery since the Great Depression, and the U.S. still has about 5.5 million fewer jobs that it did before the recession began in December 2007.” Across town, the Washington Times said the numbers looked better than they should because of the number of young people dropping out and the paper even found an economist at the Federal Reserve to agree with it. Brian Holter, who works at the Minneapolis Fed, said: “However these factors stack up, the improvement in unemployment is largely the work of declining participation rates and, unfortunately, not job growth.”

, writing at Townhall.com, was blunt in his assessment of the BLS report:

Continue reading Friday’s Unemployment Numbers: Correcting the Corrections