policy Archives - Page 2 of 15

A Decoupling Update

So, it’s been quite a while since our last long policy post, focusing on utility revenue decoupling in connection with Xcel’s current rate case (14AL-0660E) before the Colorado PUC. That’s because we’ve been busy actually intervening in the case!

A Climate Intervention

We filed our motion to intervene in early August. As you might already know, in order to be granted leave to intervene, you have to demonstrate that your interests aren’t already adequately represented by the other parties in the case. Incredibly, CEA’s main interest — ensuring that Colorado’s electricity system is consistent with stabilizing the Earth’s climate — was not explicitly mentioned by any of the other parties!

In our petition we highlighted our mission:

…to educate the public and support a shift in public policy toward a zero carbon economy. CEA brings a unique perspective on the economics of utility regulation and business models related to mitigating the large and growing risks associated with anthropogenic climate change. In addition, CEA has an interest in transitioning away from fuel-based electric generation in order to mitigate the purely economic risk associated with inherently unpredictable future fuel costs.

…and we were granted intervention. So far as we know, this is the first time that concern over climate change has been used as the primary interest justifying intervention at the PUC in Colorado. In and of itself, this is a win.

A Long and Winding Road

Throughout the late summer, we spent many hours poring over the thousands of pages of direct testimony. Especially Xcel’s decoupling proposal, but also (with the help of some awesome interns), the details of the company’s as-of-yet undepreciated generation facilities — trying to figure out how much the system might be worth, and so how much it might cost to just buy it out and shut it down (were we, as a society, so inclined).

Early on in the process, the PUC asked all the parties to submit briefs explaining why we thought it was appropriate to consider decoupling in the rate case, whether it represented a collateral attack on decisions that had already been made in the DSM strategic issues docket, and how it would interact with the existing DSM programs. We pulled together a response, as did the other intervening parties, and kept working on our answer testimony — a much longer response to Xcel’s overall proposal. The general consensus among the parties that filed briefs, including CEA, SWEEP, WRA, and The Alliance for Solar Choice (TASC, a solar industry group representing big installers like Solar City) was that decoupling was not an attempt to roll back previous PUC decisions related to DSM — and that addressing it in a rate case was appropriate. Only the Colorado Healthcare Electric Coordinating Council (CHECC, a coalition of large healthcare facilities and energy consumers) told the PUC that decoupling ought to be considered an attack on previous DSM policies.

The PUC staff unfortunately came back with a reply brief that disagreed and suggested, among other things, that maybe it would be better if we just went with a straight fixed/variable rate design to address utility fixed cost recovery. Never mind the fact that this kind of rate would destroy most of the incentives customers have to use energy efficiently.

And then we waited.

With baited breath each Wednesday morning we tuned in to the Commissioners’ Weekly Meeting, streaming live over the interwebs from the Windowless Room in Denver. We watched regardless of whether anything related to our dear little 14AL-0660E was on their agenda. Just in case they tried to sneak it by. Weeks passed. And then a month. The deadline for submitting our answer testimony approached.

Finally on October 29th, six weeks after submitting our brief, the commissioners finally brought up the issue of decoupling at their weekly meeting and in a couple of minutes, indicated that they’d be severing it from the proceeding, with little explanation as to why. However, because there were no details, and the order isn’t official until it’s issued in writing… we continued working on our answer testimony. The final order came out on November 5th, and prohibited submission of testimony related to decoupling. Answer testimony was due on November 7th.

Where to From Here?

Xcel might come back to the PUC with another decoupling proposal before the next Electric Resource Plan (in fall of 2015) . Or they might not. This means that a good chunk of the work that we’ve been doing since this summer will have to come to light in a different way. So for the next few posts, we’re going to explore some of the issues that came up in the preparation of our answer testimony, including:

Decoupling and Distributed Energy:
How would decoupling interact with distributed energy resources like rooftop solar? What are the implications for utilities as the costs of those resources continue their precipitous decline?
Decoupling and Demand Side Management:
How would revenue decoupling interact with demand side management programs in general — both utility and privately or locally funded — and what particular issues with Xcel’s DSM programs could decoupling address? What issues can’t it help address?
Can Revenue Decoupling Scale?
Why doesn’t revenue decoupling as a policy really scale up to the point of taking existing generation facilities offline, or preventing new facilities from being built?
Decoupling as a First Step:
Even if it can’t scale, why might decoupling still serve as a useful starting point for the decarbonization process? Can it give us a little bit of breathing room while we start the real negotiation? Or is it just another layer of financial protection for utilities who want to delay change as long as possible?
Realism and Equity in Carbon Budgets for Colorado:
What is the true scope of the decarbonization challenge, in the context of the carbon budgets recently published by the IPCC in their Fifth Assessment Report (AR5), but localized to Colorado so we can actually wrap our heads around it. Why is this conversation so hard?

Learn more about utility revenue decoupling on our resource page…

Featured image of binders (full of PUC filings…) courtesy of Christian Schnettelker on Flickr. Used under a Creative Commons Attribution License.

Is profit driven affordable housing possible?

Last week at the Better Boulder Happy Hour (B2H2) we tried to talk about affordable housing. The little nook at the Walnut Brewery was so packed that it was hard to even have a face-to-face conversation with folks, let alone do any kind of presentation that didn’t sound like an attempt at crowd control. Which is good I guess… but not exactly what we’d planned. I think a good chunk of the attendance was due to all the buzz generated by last Tuesday’s City Council meeting, and the talk of a citywide development moratorium. Anyway, it was a learning experience. We want these events to be informative, but also to get people talking to each other, and have it be more fun and social and network-building than a brown bag seminar or lecture that’s mostly going to appeal to the Usual Suspects, who are already engaged. We need to get more “normal” people to show up and engage on these issues.

In any case, Betsey Martens, director of Boulder Housing Partners (the city’s housing authority) got up and said a few words to the assembled crowd. She made a point which is in retrospect obvious, but that got me thinking anyway. The costs of creating additional housing in Boulder (or anywhere, really) can be divided up into three categories:

Hard development costs — the cost of actually building the housing.
Soft development costs — e.g. the financing and permitting costs, carrying costs associated with regulatory delay, organizational overhead, etc.
The cost of land.

She pointed out that you can do all the work you want to reduce hard and soft development costs — using standardized designs, prefabricated buildings, streamlined permitting for affordable housing — but ultimately those optimizations just nibble around the edges of affordability. The real driver of housing costs in a desirable place is the cost of the land, which is pretty irreducible. If you’ve got a funding stream (as we do here from our inclusionary housing policy), then you can buy up a bunch of land and create housing on it, but there’s still an opportunity cost to be had for using the land inefficiently — the same money might have created more affordable housing.

The obvious way to attack this problem is to spread the fixed land cost across more dwelling units. You may not be able to reduce the price of the land, but you can share it with more people, decreasing per unit costs, and increasing density. Naysayers are quick to point out that all the density in Manhattan and Tokyo has not made them cheap. A common response is that they’re cheaper than they would have been if they hadn’t been more densely developed, but I’m not sure this is really the right answer (even if it’s true).

Continue reading Is profit driven affordable housing possible?

Managed Lanes in Colorado

Will Toor and Mike Salisbury at the Southwest Energy Efficiency Project have put together a good paper called Managed Lanes in Colorado (it’s a PDF) that looks at the policy rationale behind (and a few issues with) creating additional highway capacity in the form of managed lanes with tolling, that also allow high occupancy vehicles and transit to take advantage of the investment, addressing some of the “Lexus Lane” criticism of using tolls in the public right of way (on projects that are still mostly publicly funded). It’s not quite as fun to read as my magnum opus from this winter on the same topic (US 36: For Whom the Road Tolls) but might be more appropriate for forwarding to policymakers.

America’s Cities Are Still Too Afraid to Make Driving Unappealing – Emily Badger – The Atlantic Cities

It’s the relative attractiveness of different modes of transportation that shapes our choices, and American cities are still terrified of making driving less attractive. This really puts a cap on what fraction of trips we can get over to biking, walking and mass transit. Partly because driving is such an ingrained cultural norm (even if it’s just as easy to drive as to bike, the default behavior amongst most people will be to drive), and partly because accommodating cars well means degrading the walking, biking and transit amenities. In a place like Boulder where people actually have alternatives to driving — no, not everyone, and not for every trip, but many people for many trips — we have to start putting some downward pressure on driving, or we’re never going to get much past our current bike/ped/transit shares. And it’s not like this has to be punitive — a lot of it is just removing historical crutches that have been provided to cars, like free parking. Cities like Bern and Freiburg and Zürich have 70% or more of their trips being done outside of personal motorized vehicles. It’s doable (in the fullness of time). Let’s do it!

Granny flats flourish after fee waiver… in Portland

In 2010 Portland, Oregon made it cheap and easy for people to build ADUs (Accessory Dwelling Units — also known as “granny flats”, “in-law apartments”, “carriage houses”, etc — small secondary dwellings that are on an existing property), and to nobody’s surprise, the tiny homes boomed. This kind of housing adds density without changing neighborhood character, lets people live lighter on the land, and helps makes housing affordable both for the renters, and the homeowners who now have a rental income that was impossible before. And they do it all without any public subsidy.

Boulder can do this too.

Colorado Wildfire Climate Change Fail

The past couple of years have been rough on Colorado, in terms of climate change related disasters. First a couple of record setting wildfire years, and then floods of “biblical” proportions. At a gut level we know we have to respond, but our public discourse is having trouble addressing the root cause directly. Instead we’re dancing around the issue, and failing to either adapt adequately to our new reality or to mitigate further climate change.

Adaptation?

Bills related to both the wildfires and last fall’s floods have been wending their way through our state legislature, and last week legislators and the governor held a press conference to highlight some of them, and a lot of the resulting commentary seemed to focus on the safety and well being of the firefighters and other emergency services workers that risk their lives on our behalf. Largely absent from the discussion were the strong measures that the Governor’s wildfire task force put forward in the fall. They included:

Creating a wildfire risk map, and rating all properties on a scale of 1 to 10, requiring that risk designation to be disclosed before any property sale, and making it available to insurance companies for use in setting their rates.
Charging those living in the “wildland urban interface” a fee based on their risk exposure, that would be used to defer some of the additional public costs incurred in protecting their private property.
Creating fire-resistant building codes for high risk areas, affecting both the materials used in construction, and requirements for defensible space around buildings.

Make no mistake: these are climate change adaptation measures, and Colorado has rejected them.

Colorado Waldo Canyon Fire [Image 19 of 24]

As the Denver Post reported in September: developers didn’t like the idea of increased construction costs; the real-estate industry didn’t like the idea of making a lucrative market much less attractive; homeowners in high risk areas certainly didn’t like the idea of paying for the risks they’ve taken on, or making those risks transparent to potential buyers of their property.

Would the discussion be any different if people understood that the wildfire frequency and intensity is likely to just keep increasing as climate change marches on? This is about as close as the article from September gets to mentioning climate change:

Colorado terrain ravaged by wildfire has quadrupled from 200,000 acres in the 1990s to nearly 900,000 acres in the 2000s. “Scientists tell us this pattern isn’t going to change,” Hickenlooper said.

Why is the “pattern” there in the first place? What kind of scientists was the Governor was talking to? None of the press articles linked to from this post mention climate change even once, despite universally pointing out the trend. For example: As Colorado wildfires continue to worsen, only moderate laws proposed. And why are they worsening? No comment. Even the wildfire task force’s report mentions climate change only once in 80 pages.

The only big risk factor we’ve talked about directly is where we choose to build our homes. This is an important discussion too. The overall wildfire risk — at least to human lives and property — is something like:

(human risk) = (area burned) x (pop. density in high risk areas)

Climate change will in large part determine how much of our state burns each year, but we have a choice about how many people and how much property to put in areas subject to burning. Reducing our exposure to the increasing wildfire risk is an adaptation to climate change — an alteration of our behavior, in light of the expected risks going forward. For the moment at least, we seem unwilling to listen to the warnings.

But hey, at least the state had a conversation, and decided not to do anything.

Cause and Effect

So what are the causes? According to the US Forest Service, the enormous bark beetle kill is due in part to warmer winters, resulting from climate change. These forests filled with dead trees are warm and dry for longer each year, lengthening the western US fire season by about 2 months. So it’s perhaps unsurprising that the number of large wild fires per year has already increased from 140 in the 1980s, to 250 in the first decade of the 2000s. This infographic from the Union of Concerned Scientists is a good cartoon summary:

(see this paper for the references behind the infographic)

The third panel is probably the scariest for Colorado. The dark red swath covering most of the western half of the state means that we expect more than six times as much land to burn each year in the near future, with just 1°C (1.8°F) of additional warming — and as Kevin Anderson and many others have pointed out, it is virtually certain that we will see another 1°C of warming… if not 3°C, or even more.

So our elected representatives are right to be concerned about increased risk from wildfires, and about the safety of the firefighters who try to protect us from those fires. But we’re still missing the point: We control our exposure to risk locally, and we control the magnitude of that risk globally.

Mitigation?

Policies aimed at avoiding or reducing climate change (like putting a price on carbon) are mitigation efforts. We’re not talking about them much, even in the context of an obviously climate mediated risk like wildfires. This is bad. If we can’t have a conversation about what’s increasing the wildfire risks, how can we hope to respond appropriately? Is our refusal to respond to change related to our refusal to accept the cause of the change? Or is it more a kind of landscape amnesia — an inability to even see the change? Are we going to forget what normal fire seasons looked like, in the same way that we’ve started to forget what a normal winter feels like:

Double Climate #Fail

Right now we’re managing to fail doubly with respect to climate change. We are both unwilling to adapt to the foreseeable risks, and unwilling to even mention that these risks are linked to our greenhouse gas emissions, let alone talk about what we might do to mitigate those emissions and the risks that they create.

If we really care about our firefighters, if we really are intent on avoiding ever more costly and tragic conflagrations in our state, we need to both adapt and mitigate. We need to start building for a warmer world now, and we need to stop warming the world as quickly as possible.

Kevin Anderson and Getting to 2°C

Reading the the Copenhagen accords of 2009, it would seem that virtually the entire world has signed up to stabilize greenhouse gas concentrations in the atmosphere at levels that will keep warming below 2°C, consistent with the scientific understanding of the climate system, and on an equitable basis globally. Unfortunately, virtually nobody is considering policies that actually lead to that outcome. Among others, the International Energy Agency (IEA) notes that our current emissions trajectory is consistent with 6°C of warming by the end of the century, which is considered by many to be inconsistent with an organized global civilization. In fact, even if we implemented all the “reasonable” policies we’ve talked about so far (which we’re not doing) the outcome looks a lot more like 4°C than 2°C.

Yet almost nobody is willing to either give up on 2°C publicly, or — maybe more constructively — start a serious discussion about what scientifically grounded, equitable policies that are actually likely to result in less than 2°C of warming look like. Almost nobody, but not quite.

For the last several years Kevin Anderson and Alice Bows of the Tyndall Center for Climate Research in the UK have been trying to publicize this massive disconnect, and get policymakers and the public to acknowledge that in reality there are only radical futures to choose from — either a radical alteration of the climate, or the radical emissions reductions required to avoid it. There is no status quo option. Anderson and Bows are critical of both the scientific establishment for playing down this disconnect, and leaders for refusing to acknowledge in public what some of them understand very well in private.

This conversation isn’t going to go away any time soon. Some selections:

Here’s an hour-long invited talk by Anderson at the Cabot Institute from 2012:

Continue reading Kevin Anderson and Getting to 2°C

Exploring a Carbon Price for Colorado

In May of 2013 I gave a talk at Clean Energy Action’s Global Warming Solutions Speaker Series in Boulder, on how we might structure a carbon pricing scheme in Colorado. You can also download a PDF of the slides and watch an edited version of that presentation via YouTube:

The short policy overview:

We should begin levying a modest carbon tax, in the range of $5 to $25/ton of CO2e.
The tax must be applied to the fossil fuels used in electricity generation (coal and natural gas). Ideally it should also be applied to gasoline, diesel, natural gas used outside the power sector, and fugitive methane emissions from the oil and gas industry, but those are less important for the moment.
New electricity generation resources must be allowed to compete economically with the operation of existing carbon-intensive facilities, and fuel costs must not be blindly passed through to consumers without either rigorous regulatory oversight, or utilities sharing fuel price risk.
Carbon tax revenues should be spent on emissions mitigation, providing reliable, low-cost financing for energy efficiency measures and a standard-offer contract with modest performance-based returns for new renewable generation.
Over time the carbon price should be increased and applied uniformly across all segments of the economy, with the eventual integration of consumption based emissions footprinting for imported goods.

But wait… I can hear you saying, I thought James Hansen and others were rallying support for a revenue neutral carbon tax proposal? Even the arch-conservative American Enterprise Institute was looking into it, weren’t they?

A carbon price alone is not enough to get the job done — there are other pieces of our energy markets that also have to be fixed to get us to carbon zero.

Continue reading Exploring a Carbon Price for Colorado

A Carbon Price for Colorado

What follows is a more structured written exploration of the same ideas.

Continue reading A Carbon Price for Colorado

Kevin Anderson and Getting to 2°C

A good seminar by Kevin Anderson (former head of the Tyndall Center for Climate Research in the UK), exploring the conflicts between our stated goal of keeping global warming under 2°C, and the actual energy and emissions policies that the developed world adopts:

The same basic information, in a peer-reviewed format Beyond “Dangerous” Climate Change: Emissions Scenarios for a New World, in the Transactions of the Royal Society. Also in a Nature Commentary (paywall).

The basic point he’s making is, the assumptions that are currently going into climate policy discussions are unrealistic, with respect to what’s required to meet a 2°C goal, even 50% of the time. They require global emissions peaks in 2015 and eventually negative emissions, in order to be able to accommodate the 3-4% annual emissions declines that the economists (which he likes to call astrologers) say is compatible with continued economic growth. But a global peak in 2015 is at this point outlandish from China or India or Brazil or South Africa’s point of view. To give them even a tiny bit of breathing room, and treat our historical emissions even somewhat equitably, the developed world has to peak roughly now, and decline at more like 10% per year for decades, and the developing world has to follow our lead shortly thereafter (maybe 2025).

None of this is compatible with exploitation of any unconventional fuels (tar sands, shale gas, etc.). And, he argues, it also isn’t likely to be compatible with reliance on market based instruments, given that we need to implement drastically non-marginal changes to the economy.