Colorado Consumers Paying Steep Price for Renewable Power Mandates

Colorado Consumers Paying Steep Price for Renewable Power Mandates
January 15, 2014

James M. Taylor, J.D.

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)

Colorado consumers are paying a steep price for the state’s renewable power mandates, U.S. Energy Information Administration data show. Electricity prices in Colorado have risen 20 percent faster than the national average since Colorado enacted renewable power mandates in 2004. Prices rose even more steeply after Colorado made the mandates stricter in 2007, 2010, and 2013, with the state’s electricity prices rising more than twice as fast as the national average since 2007.

In 2004 Colorado voters approved an initiative requiring larger utilities to generate 10 percent of their electricity from renewable sources. Since 2004 the state legislature has approved a succession of bills making the mandate stricter. Current law requires electricity providers serving most of the state’s customers to generate 30 percent of their electricity from renewable sources by 2020.

Sharply Rising Prices
Since 2004, U.S. electricity prices have risen 33.8 percent, and Colorado prices have risen 40.4 percent (data through October 2013, the most recent month for which the U.S. Energy Information Administration published data when this paper went to press).

Since 2007, U.S. electricity prices have risen 10.8 percent, while Colorado prices have risen 27.5 percent.

Since 2010, U.S. electricity prices have risen 3.1 percent, while Colorado electricity prices have risen 7.0 percent.

Notably, the increase in Colorado’s electricity prices masks an even faster rise in electricity costs in the Centennial State. Federal taxpayers (including Coloradans) provide substantial subsidies to renewable power producers, most notably through the wind power production tax credit. These additional costs do not appear in retail electricity prices.

Directly Traceable to Renewables
The rise in Colorado’s electricity prices is directly traceable to the increasing generation of costly renewable power. Wind power comprises nearly all renewable power generation in Colorado. During March 2013 testimony before the Ohio Senate Public Utilities Committee, Andrew Ott, senior vice president for markets at PJM Interconnection, which coordinates electricity transmission in 13 states, testified the real cost of providing and delivering usable wind power to consumers is at least double or triple that of conventional power.

These renewable power cost premiums apply in Colorado and throughout the nation.

Households Taking Financial Hit
The rapid increase in electricity prices is imposing real financial hardship on Colorado families.
Had Colorado electricity prices risen at merely the national average since 2007, when the state legislature first passed a renewable power mandate, Colorado electricity consumers would have saved $4.2 billion in electricity costs. Averaged out over Colorado’s nearly 2 million households, the average Colorado household has already paid an extra $2,100 in electricity costs (more than $350 per household per year) beyond what each household would have paid if the state’s electricity prices rose merely at the same pace as the national average since 2007.

James M. Taylor (jtaylor@heartland.org) is managing editor of Environment & Climate News.

James M. Taylor, J.D.

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)