Bill to to eliminate tiered electric rates on hold for now
Thursday, March 10, 2011 at 11:46 am
Seventy percent of Colorado ratepayers would see their electric bills increase if a bill laid over in the House Transportation Committee becomes law, according to the Colorado Department of Regulatory Agencies (DORA). HB 1271 would collapse a tiered system, which currently allows low-energy users to pay less per kilowatt hour than high-energy users. Sponsors say the bill is an attempt to lower the energy cost for people using medical equipment.
While bill sponsors said they were looking to create greater equity for energy users, numerous organizations including DORA came out against the bill, which would reverse a Public Utilities Commission ruling made last year to establish a tiered scale for energy usage during the summer months. Bill sponsor Rep. Ray Scott, R-Grand Junction, said the rates had cost his constituents money and had not saved energy as had been hoped.
“Right now with the way the economy is in Colorado, people just can’t afford that,” said Scott in a 7 News report. “When you have a choice between groceries and paying your electric bill, it’s pretty obvious what you’re going to do, and that’s pay for your groceries.”
William Levis, consumer counsel for the Colorado Office of Consumer Counsel (OCC), said that both his office and DORA, which houses the OCC, were against the bill on the grounds that lower-energy users would be forced to subsidize the higher kilowatt usage of others. He said lower-energy users tend to be poorer families.
Currently customers pay 4.6 cents per
kwh for the first 500 kwh and then 9 cents for each additional kWh during the summer. Customers continue to experience reduced rates up to the break-even point of 800 kwh. Last year the PUC said that without tiered rates, the rate of electricity would be 5.1 cents per kwh year round.
About 70 percent of households use 800 kilowatt hours or less.
Pam Kiely, program director at Environment Colorado said those who use more electricity should pay the costs that are associated with driving peak energy costs. She said as energy needs peak, companies like Xcel are forced to purchase high cost peak rate energy on the open market.
If the tiered rate is collapsed, the new average rate for electricity during the summer months would be 6.3 cents per kwh if the bill passes, according to Levis. The increase would amount to about $35 a month for those using close to 500 kwH during the summer while those using more would see a decrease during the same period of time.
Levis said the bill would hurt lower-income households.
“On average, lower income people have smaller homes and use less energy than those with bigger homes and higher incomes,” Levis said. ”So actually as a result of this bill, the 70 percent who are at about 820 kilowatt hours or below, who on average have small homes and smaller incomes would be subsidizing those (who use more power).”
Other advocates for lower-income families agreed with Levis’ concerns and further explained that many of the state’s poor would suffer if rates returned to the past structure.
“Twenty percent of Colorado households have incomes at or below a level that qualifies them for federal assistance and (don’t have) enough to cover home energy costs.” Skip Arnold, executive director of Energy Outreach Colorado, told the Colorado Independent. Any increase to low income customers is disproportionate. A small increase to them creates a dramatic impact on their necessary purchases. They skip meals, they skip medicine, they don’t go to the doctor. The inability to pay for home energy is the second leading cause of homelessness for families with children in Colorado.”
Arnold said he has clients for whom 50 percent of their total monthly income goes to home energy costs.
However, another constituency rose in support of the bill. Those who rely on in-home medical equipment oftentimes use well above 800 kwh, and they say it is unfair that they have to pay a higher rate.
“I am really, really concerned about the people who have no choice (about how much energy they use),” one witness testified.
Democrats pointed to a bill in the Senate that carves our exceptions for those using medical devices from having to pay higher rates during the summer months under the tiered system.
The tiered rate structure is currently set to begin again in June and will last through September unless eliminated by the bill.
The bill was laid over so that all members could vote.