Colorado is consistently ranked as one of the best places to live, with its plentiful outdoor activities and beautiful views. However, those views are sometimes compromised by haze and ozone, and these issues have caused the U.S. Environmental Protection Agency to keep a close eye on the state, and the Denver Front Range in particular, to ensure compliance with haze and ozone standards.
While the state has made great progress over the last 10 years, the EPA has proposed to strengthen its national ambient air quality standards for ground level ozone, the main component of smog.
This means that a nine-county area along the Front Range is likely to be out of compliance with ozone standards, triggering a State Implementation Plan.
An exhaustive SIP, where the Colorado Department of Public Health and Environment looks at every permitted source, most of which have already been squeezed to their limits, will cause significant cost increases to businesses and impact the quality of life for consumers. The last ozone SIP considered, but did not include, such control mechanisms as reformulated gasoline, Stage II vapor recovery, additional volatile organic compound controls on breweries, small gas stations, automobiles and home painting products. There is no guarantee that these won’t be included in a future plan.
Additionally, Colorado, along with over 30 other states, has not yet submitted its regional haze SIP due to a number of complicating factors. Nonetheless, EPA has indicated that it may take over Colorado’s regional haze SIP as early as January 2011, providing a federal solution to a Colorado issue.
This is why House Bill 1365, the Colorado Clean Air, Clean Jobs Act is so important to the state. This bill is not a global warming bill or cap and trade, but a mechanism for the Colorado Legislature to comment and provide input regarding how the Public Utilities Commission and the Air Quality Control Commission work together to meet pending SIP requirements.
The goal of the bill is to get in front of these federal regulations, avoiding the heavy handed regulation of a federally driven State Implementation Plan, and put in place an overall framework that is business-friendly and cost efficient.
This bill will not add costs to consumers. Colorado must improve air quality, so the emissions from these power plants are going to have to be reduced one way or another, potentially including very expensive add-on controls for the existing plants. Without HB 1365, the likelihood of add-on controls, coupled with the difficulty in coordinating planning across state agencies, would drive increased consumer costs. This legislation outlines suggested alternatives that have the least potential cost to businesses and energy consumers; it asks the PUC and the AQCC to look at a wide variety of fuel sources and document their conclusions, thereby ensuring that their decisions will have the least cost impact on consumers. And while the bill asks that natural gas be given “primary consideration,” the bill also recognizes that coal is the “standard” or “baseline” upon which the use of other fuel sources must be compared from a cost perspective.
Gas prices will not drive increased consumer costs. The Clean Air, Clean Jobs Act allows long term, fixed-priced contracts with gas producers similar to coal contracts today. This will move Xcel Energy away from indexed contracts that allow the price to follow the volatility of the market place. Additionally, the dramatic increase in known domestic gas reserves now provides over a 100 year supply of natural gas, with world class resources here in Colorado. Increased domestic reserves and improved pipeline infrastructure ensures a stable and steady supply of domestic, clean burning natural gas.
Lastly, HB 1365 is good for Colorado’s economy. The natural gas industry is one of the state’s leading creators of jobs and state and local tax revenues, supporting 137,000 Colorado jobs and $18.3 billion in annual contribution to the economy. Specifically, this bill could create 400 new natural gas industry jobs, and an additional $24 million in estimated ad valorem, severance, and conservation taxes annually from natural gas production. For the past decade, oil and gas has paid 90 percent of the severance taxes collected in Colorado.
The Clean Air, Clean Jobs Act is good for Colorado’s air, Colorado jobs, and Colorado consumers.
Tisha Schuller is president of the Colorado Oil and Gas Association.