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Colorado RES Impacts 4-12-13 (1)

Colorado RES Impacts 4-12-13 (1)

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Published by Amy Oliver
Dr. Roger Bezdek draws on 30 years of experience in research and management in the energy, utility, environmental, and regulatory areas, serving in private industry, academia and the federal government to explain the economic impact of SB13-252.
Dr. Roger Bezdek draws on 30 years of experience in research and management in the energy, utility, environmental, and regulatory areas, serving in private industry, academia and the federal government to explain the economic impact of SB13-252.

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Categories:Types, Business/Law
Published by: Amy Oliver on Apr 15, 2013
Copyright:Attribution Non-commercial

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11/27/2013

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THE ECONOMIC AND JOB IMPACTS OF THE PROPOSED COLORADO RES
Management Information Services, Inc. April 12, 2013 A Bill has been introduced in Colorado that would require rural electriccooperatives in the state, such as theTri-State Generation and Transmission Association, to increase the portion of renewable electricity generated starting in 2020from 10% to 25%.
1
The direct cost to Tri-state alone has been estimated to be as higha $4 billion, and the resulting rate increase would be about 20%.
Rate Impact on Rural Colorado
Rural electric coops in Colorado directly supply electricity to rural residences,farms and ranches, cities, towns, and suburban communities, as well as large and smallcommercial businesses and industries
 –
Figure 1 illustrates the member of Tri-state.The immediate, direct rate impact of the RES requirement would be especially severeon the one of every five Colorado citizens served by these cooperatives:
Rural electric coops in Colorado supply electricity primarily to ruralcustomers, and the communities served are relatively low-income.
Many of the tribal customers served by these coops reside in someof the poorest economies in the entire country.
On average, these member systems serve five consumers per mile,compared to 37 consumers per mile served by investor ownedutilities
 –
thereby greatly increasing service costs.
 
The RES would cause the average electric bill for the coops’
 residential customers to increase from about $95 per month toabout $115 per month
 –
Figure 2.
This increase would pose real hardships for many of the customers
 –
low income, rural, and living on fixed incomes
 –
who lack thediscretionary income to afford it. The trade-offs they would beforced to make include spending less money on medicine,healthcare, food, and clothing.
Economic and Jobs Impacts in Colorado
Electricity price increases act like a tax increase, reducing incomes of energyconsumers and ratepayers. The supply-side impacts from electricity price increasesdepress business development and economic output and destroy jobs.Energy and energy prices
 –
specifically electricity and electricity prices -- matter to the economy and, in general, more abundant, efficient, and less expensive electricityis desirable and preferred and provides significant economic and jobs benefits.
2
 Electricity is a mainstay of the U.S. economy and a critical factor of production, so this isstraightforward and noncontroversial.
3
To quantify the relationship between electricity
 
2
 
prices and the economy, MISI utilized the elasticity of GDP with respect to electricityprices. There is a quantifiable relationship between economic activity and jobs
 –
 between the level of GDP/GSP and jobs. Basically, GDP and jobs are closely,positively correlated.
4
 
Figure 1:
Colorado’s 18
Tri-state Member Rural Electric Associations
 
Figure 2: Average RES Rate Impact on Affected Customers
Our findings are illustrated in Figures 3 and 4. Figure 3 shows the impact onColorado electric rates of the RES. It illustrates that:
 
 At present, Colorado’s average electric rate is below the U.S.
average.
 
With the RES, the state’s overall average would increase t
o abovethe U.S. average.
However, with the RES, the average rate to the predominately ruralcustomers served by the electric coops would increase significantlyand would be about 14% higher than the national average.
Figure 3: RES Electric Rate Impact in Colorado
$80$85$90$95$100$105$110$115
CurrentWith RES
   A  v  e  r  a  g  e   M  o  n   t   h   l  y   E   l  e  c   t  r   i  c   B   i   l   l
 
3
 
These increases in Colorado electricity prices would have severe impacts on the
state’s economy and jobs. Total state gross product would decrease by
about $5 billion
 –
an average loss of nearly $3,000 to every Colorado family. In addition, about 40,000Colorado jobs would be destroyed. While the entire state would suffer, the economicand job impacts would be especially harmful in the predominately rural areas served bythe electric coops. For example, as shown in Figure 4:
 
 At present, Colorado’s
unemployment rate is below the U.S.average.
 
With the RES, the state’s
unemployment rate would increase toabout 15% above the U.S. average.
However, job losses resulting from the RES, would be largelyconcentrated in the predominately rural areas served by the electriccoops
 –
many of which are already suffering economically.
The unemployment rate in these areas would increase substantiallyand would be more than 1/3 higher than the state average andmore than 50% higher than the national unemployment rate.
Figure 4: RES Impact on Colorado Unemployment RateEndnotes
88.599.51010.51111.5
CO CurrentCO WithRESCoops WithRESU.S. Current
   C  e  n   t  s   P  e  r   k   W   h
5%6%7%8%9%10%11%12%
CO CurrentCO With RESRural COWith RESU.S. Current

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