Current Direction of Energy Policy and the Energy Market in Colorado

While Colorado seems to have relatively high success in energy production and efficiency, this is not represented to ratepayers in Colorado. According to Michael Sandoval, an energy policy analysist in Denver, “Across all sectors of Colorado the cost of electricity has skyrocketed more than 67 percent between 2001 and 2014, easily exceeding median income growth and the expected rate of inflation for the same period”. The cost of electricity is going up in Colorado, which is not only being pushed onto residential ratepayers, but also industry ratepayers. Increasing electricity and energy costs means that the price of living goes up in that particular region without any particular rise in standard of living. According to Citizens Advice, a network of policy workers and charities in the United Kingdom, increasing prices in energy has grave impacts on “people’s ability to maintain a decent standard of living”.

Furthermore, according to the Colorado Energy Office (CEO), “Colorado is a leader in renewable energy, with investments in wind, solar, biomass, geothermal, small hydroelectric, and other renewable energy resources increasing over the last decade”. The Colorado Energy Office, which is the direct advisor to the governor and state policy makers on energy policy, has the vision to “help Coloradans live more prosperous and healthy lives by promoting innovative energy production and efficient energy consumption practices that are beneficial to the economic and environmental health of the state”.

However, the Colorado Energy Office lists nuclear energy as traditional energy, and not a renewable or clean energy, thus disqualifying it from various state and federal programs and subsidies. The Governor of Colorado, John Hickenlooper, makes many comments and actions in promoting different energy sources and energy policy within Colorado. In August of 2016, when introducing new orders for carbon emission reduction he said “the one thing that we have to accept as a state and a country is that we are going to continue to move toward cleaner energy”. In a Denver Post opinion piece, he says that Colorado, in the spirit of the Obama Administration’s energy agenda, needs to have a diverse and various energy production market, which would include oil, gas, wind, and solar, but makes absolutely no mention of nuclear energy.

Colorado’s current energy focus as of March 2017 has been largely to increase wind and solar farms. One of the largest projects focused on has been Xcel Energy’s Rush Creek Wind Farm. The project consists of a wind farm that has a top capacity of 600 megawatts and a 90 mile transmission line to move the generated electricity. The project will take up about 95,000 acres and cost around $1.1 billion. Xcel plans on being heavily subsidized through production tax credits from the federal government under the Obama Administration’s Omnibus Appropriations Act.

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TransCanada Sues for $15 Billion: Environmentalism and Eminent Domain

On January 6th, TranCanada announced that it would be filing suit under the North American Free Trade Agreement (NAFTA) and would be seeking $15 billion in damages. The pipeline was introduced in 2008 but was rejected in November of 2015, and with the rejection President Obama gave three primary reasons for the rejection:

  1. The State Department does not foresee this being as beneficial to our economy as others presume.
  2. The pipeline will not make gas cheaper.
  3. The pipeline does not enhance our “energy security,” and we must focus on generating a clean energy economy.

In response, a TransCanada spokesperson made the following statement: “TransCanada has been unjustly deprived of the value of its multi-billion dollar investment by the U.S. Administration’s arbitrary and unjustified denial. It is our responsibility to take the actions we deem appropriate to protect our rights.”

While free trade and arbitrary regulation are something that should be avoided in the marketplace, I believe the Obama Administration has rightfully denied TransCanada’s Keystone Pipeline, but for all the wrong reasons. To say that the government should pick the winner and losers of an energy market to focus on a clean energy economy is cronyism at is essence. To say that the government should reject a project because it does not foresee economic benefit or cheaper gas prices is central planning and cronyism at its essence, as well.

However, this is not the big issue with the proposed pipeline. If the pipeline were to be accepted, we would not be escaping cronyism within our government in the least. TransCanada proposed a pipeline that will be 1,179 miles long and ending in Nebraska where it will meet up with already existing pipelines. However, there is very little mention from the Obama Administration or TransCanada about the private property that would be seized under eminent domain because of the pipeline.

The project would seize the private property of other landowners across several northern states, namely South Dakota, Nebraska, and Montana, if deals were not reached with the owners of the property. This is undoubtedly anti-market behavior from the side of the federal and state governments for the sake of the TransCanada company.

According the company, it has reached agreements with private property owners in South Dakota and Montana, and would not have to use eminent domain. Yet, this is not the case for landowners in Nebraska.  Furthermore with eminent domain seizures above the heads of so many South Dakotans and Montanans, did these landowners really have much choice? If they were to deny the company of sale, TransCanada would most likely use eminent domain to their advantage, which would not be opportune for the landowners.

Conservatives and libertarians should be skeptical of the reasons this Administration has rejected the Keystone Pipeline, but they should also take another look at what is being proposed. This proposal is not inherently free-market and further degrades private property rights for individuals within the United States.