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Colorado regulators face a new challenge: the cost of environmental justice in energy rates|

Colorado regulators face a new challenge: the cost of environmental justice in energy rates|

The Colorado Public Utilities Commission will be changing its traditional mandate to regulate utilities in order to ensure that Coloradans have safe, reliable, and affordable services.

This mandate often means that the primary factor in utility proceedings is the cost of electricity.

A broad measure passed during the last legislative session imposed many new duties on PUC. It ordered state regulators to promulgate rules that require the commission to, in all its work, including its review and determination of adjudications, to consider how best to provide equity and minimize impacts and prioritize benefits for disproportionately impacted communities. It also required that historical inequalities be addressed.

This significant modification or expansion in goals was the focus of Thursday’s workshop by the utilities commission. It was the first of many workshops that aimed to clarify how to navigate legislative mandates arising from another law relating to the creation of clean heat plans.

One of the questions raised in a virtual workshop is what does environmental justice entail and how much it will cost.

It’s an interesting question. Joe Pereira (Deputy Director of the Office of Utility Consumer Advocate) said that this is a question we’re still working through. Cost has always been a major factor in the UCA and consumer advocates in general. So, we are now in an environment where not only is cost important but also these other elements. We are faced with an environmental justice concern that costs more.

These complex questions are being addressed by the utilities commission as millions of Coloradans will face steep increases in their energy bills this winter. Some may have to pay up to 50% more than last winter. These rate increases are occurring at a moment when residents struggle with inflation and the COVID-19 epidemic continues to hammer the country and the state.

Another issue that was raised was the economics involved in large upfront investments needed for the transition from natural gas to other forms. Also, because utilities don’t provide energy or equipment upgrades for free utilities may have to pay more to compensate them. This is because lower-income customers who spend more energy than those with higher incomes can be more vulnerable.

According to Nathalie Eddy, of the Colorado Department of Public Health and Environments, the Act requires us to think about new ways of innovating with communities.

SB 21-264 was the issue. This requires gas distribution utilities with over 90,000 customers to file clean heat plans showing how they will meet state decarbonization targets.

Megan Gilman (PUC Commissioner) noted that the number of representatives from disproportionately impacted areas is very small right now.

She said it’s something we tried very hard to achieve, but were unable to accomplish in this workshop.

Recognizing the technical nature and complexity of the PUC and its operation, Gilman and other PUC representatives discussed the need to make the PUC more user-friendly, transparent, and accessible.

Gilman stated that we are still working to improve our role in engagement, and specifically engagement related disproportionately impacted community. Today is an important step in trying to hear from all of you to chart a course forward in this proceeding and to help broaden the aperture of how proceedings are viewed more generally.

Other issues include a perceived lack in interest on the part the utilities commission to demonstrate that public comments are given any weight and real consideration.

Participants expressed concerns about consumer privacy, the competing need for data collection with granularity to achieve decarbonization goals, and how utility companies might not want or be legally prohibited to provide data about individual customers.

As Colorado strives to become a carbon-free state, some groups are raising concerns about the transition’s cost and who would pay it. AARP Colorado recently criticized Colorado’s General Assembly for funding the state’s transition from fossil fuels on the backs Coloradans.

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“Our greatest concern is the pancaking of rate increases, many of which were put on by legislatures to transition into clean-energy,” Bill Levis, former chief of Office of Consumer Counsel, said to Colorado Politics last month. Levis was specifically responding on behalf of Xcel Energy to increase energy rates by almost $200 million.

He also pointed out SB 21-272 which was a comprehensive energy bill, passed during last year’s legislative session. This mandates that the utilities commission examine how its actions might affect disproportionately affected communities.

Levis stated that the legislature was sending two contradictory messages. One, consumers will have to pay all of the transition to cleaner energy. Two, the commission must ensure that disadvantaged communities don’t absorb the cost.

He stated, “The Commission is in a conundrum because it has to enforce the law passed by the legislature.”

Natural gas heating is a major source of greenhouse gas polluting greenhouse gases. SB 21-272 states that switching from gas space heating and water heating to high efficiency electric heating will reduce greenhouse gas emissions and improve indoor air quality.

The bill sets ambitious targets of reducing greenhouse gas emissions by 4% by 2025 and 22% by 2030. The cost of achieving these goals is capped at 2.5% of annual gas bills for all of agas distribution utility’sfull-service customers.

The utility will have to convince customers to give up their gas heating appliances and use beneficial electrification instead.

Future commission workshops are not yet scheduled. The PUC is available for anyone who is interested. Docket documents available here.

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