Colorado’s multi-billion dollar savings plan

Coloradans are fortunate to have a statewide savings plan, but I fear many have forgotten it. After Amendment 66, the billion dollar tax increase, was soundly defeated in the November 5 election, it’s time to remember the only reason we voted on the tax bill: The Taxpayer’s Bill of Rights. Over the years, it has saved us untold billions. But something far greater than money has been saved: The Taxpayer’s Bill of Rights (TABOR) saves our freedom.

First, a bit of history. Long ago, people began living in groups, which allowed them to divide labor and send the men to hunt while the women gathered nuts and berries. With more hands to lift heavy objects, they built larger and better huts. Eventually, some groups started attacking and plundering other groups. The need for protection of the group arose, and some members were given the responsibility. They made weapons, developed patrols and built headquarters. Thus government was born.

Government was better armed than the hunters and gatherers, so they were given the added responsibility of policing their own community, and acting as judges in disputes within the community. They developed reputations for being dispassionate, uncaring wielders of power, much like Republicans. To soften that reputation and protect their superior positions, they began to abuse their power by taking property and giving it to people it didn’t belong to, much like Democrats.

Protecting and enhancing power became a routine function of government. The original purpose of the government  - protecting property and solving disputes – became secondary.  Government built larger headquarters, because it needed more room for rapidly expanding cadres of armed enforcers, judges, politicians and bureaucrats. The hunters and gatherers had now become farmers, factory workers, builders, and social workers (the latter were needed to help spread confiscated property in a way that seemed caring and helpful for society.)

With every expansion, more taxes were needed to support government. The citizens were still poorly armed compared to the government, having only a vote to defend themselves. Voting allowed for a peaceful transition of power, but it did little to suppress government’s desire for growth and power.

In 1992, Coloradans recognized the threat of un-restrained government. They had seen government buy power with money it taxes away from citizens.  Their only tool to stop the unrelenting growth of government was the vote. But voting for or against politicians who rarely restrain themselves is woefully inadequate, so they approved a Constitutional amendment that gave taxpayers exclusive authority to approve tax increases. The Taxpayer’s Bill of Rights (TABOR) was born.

The Taxpayer’s Bill of Rights limits government growth to inflation plus population growth. Should government need more than that? Government services are designed to serve the population. If the population survived in 1992 with the government it had at the time, do the citizens of Colorado need more government per person today than we had then? Some would say yes, that Coloradans have become lazy, weak, inept, and incapable of survival without government’s generosity to the weakest among us. And a few others.  Plus their friends. And politically favored industries that pay for campaigns. And…well, you get the point.

But this is Colorado. We’re made up of Coloradans, people with a long history of rugged self-reliance, the ability to endure the harshest conditions Colorado’s nature can throw at us. We conquer mountains. We drive in the snow. Against all odds, we got Peyton Manning. We can do any damned thing we set our minds to. I’m just not sure we can survive the destructive force of unrestrained government.

Which brings us to Tuesday, November 5, 2013. Our government put us on a path to a billion dollar annual tax increase. Nearly 1.4 million taxpayers told government what they thought of the idea. Without the Taxpayer Bill of Rights, Colorado’s multi-billion dollar savings plan, they would never have had that opportunity. Our right to approve of our government would be less. Freedom would be lost in the not-so hallowed-halls of the state legislature, not saved. The People, through TABOR, protected ourselves from government encroaching on our freedom and livelihoods. I hope that Coloradan's never lose sight of that.

The One That Matters

The Recall Elections?

In a few days, we will learn the immediate outcome of the recall elections of State Senators Morse and Giron. We may not know the final outcome, as there will undoubtedly be lawsuits, accusations of fraud, and political maneuvers that are yet unimagined by most of us. But rest assured, there are political innovators champing at the bit.

Although there will be many volunteer hours spent, hundreds of thousands of campaign dollars and taxpayer money, who wins and who loses won't really matter.  If the recall is defeated, the statists will continue on their current path to rapidly expand government. Some say that they will accelerate their efforts to tax and control the citizens of Colorado, but after the last legislative session, I can't imagine how any acceleration would be meaningful - the pedal is already to the metal.

If the recalls are successful, Republicans will still have a minority in the senate, and both new senators will have to defend their seats in 2014.  Most importantly, those elections will be held under the new election law passed by the Democrats, HB1303, which I've dubbed the "Voter Fraud Encouragement Act."

The Voter Fraud Encouragement Act

This new law governs the recall election, and will undoubtedly lead to massive voter fraud, at least in terms of what you and I call fraud. The law weakens any legal definition of fraud to the point that no meaningful prosecution of perpetrators will be possible. Thanks to the Democrats, elections will be won by whichever party has the most buses, according to Jon Caldara. The Independence Institute has a website to help people understand the vagaries of the new law. I would add that it will also be won by the party most willing to commit fraud.

There is still a difference between the two parties. One party believes that our citizens can not create, innovate, prosper, or succeed without the intervention and assistance of government. That party believes that without government elitists to determine what is best, our society will fail. The other party believes that the independent actions of millions of people pursuing their own interests, while respecting that pursuit by others, will always result in a better outcome than elitist control.

Given the Democrat's lack of respect for us, the feeble-minded citizens, which party is more likely to do whatever is necessary to put the power in the hands of their party elites?  The democratic process necessary for a representative republic has been forever undermined by the new law. Any future election will be governed by the Voter Fraud Encouragement Act.

Restoring the Democratic Process and Protecting Our Votes

This law can be repealed, and there are three ways to repeal it. First, the legislature can repeal it. Fat chance - the Democrat majority passed the law to ensure their continued power. They won't give up that power.

Second, a citizen initiative could repeal it. There is a new organization called Improve Colorado that seems capable of taking that on. However, to be successful, a citizen initiative must win an election governed by the Voter Fraud Encouragement Act. Meanwhile, Democrats will have another legislative session to make citizen initiatives even more difficult to pass. Another session of Democrat majority in the legislature, a spineless, leftist governor, and rampant voter fraud will end our ability to stop government's onslaught on liberty.

Third, the Governor can threaten the legislature. Repealing this law is so critical to the restoration of our rights to participate in our Government that the governor should tell the legislature that he or she will veto every one of the 500+ bills the legislature passes every year, until they repeal the law.

And while the Governor is at it, he or she should also insist on the repeal of the new citizen control laws passed by the Democrats under the guise of "gun control."

Obviously, I'm not suggesting that Hickenlooper is the right man for this job. He has bowed to the most vile interests of his party, billionaire Bloomberg, gun wielding criminals who prefer an unarmed citizenry, and scum like Nathan Dunlap.

The Last Restraint on the Legislature - The Election That Matters

We need a candidate for Governor in 2014 who can explain to the voters that there is one last opportunity to restore the checks and balances on government envisioned by the Founding Fathers - the Governor.

It's time for those who love liberty to understand that this is our last chance. We can win one more election if we put every resource of Republicans, Libertarians, constitutionalists, conservatives, and independents into one important race, the right candidate who will hold the legislature responsible for its irresponsible governance and repeal the Voter Fraud Encouragement Act. No senate or house race matters.

Many Democrats also value the democratic process, and will vote for the candidate that vows to restore their rights in participatory government, especially after the fiasco we are about to witness in the recall elections.

As long as the Voter Fraud Encouragement Act stands, we have nothing to lose. Repealing the law is paramount. The Governor's race is the one that matters. We just need the commitment of Republicans to lead the way...And the right candidate. 

Electricity is confusing...

I learned that when I was a project manager for a general contractor in Chicago. Electrical contractors used it to their advantage. If they said an expensive change order was required, they usually won, because electricity is confusing. Of course, that was Chicago, where corruption permeates every level of society. That wouldn’t happen here in Colorado, would it?

Electricity is also political.  Governor Hickenlooper recently signed Senate Bill 252, which increases the amount of renewable energy produced for Colorado. Seems like a good idea. After all, once you build a wind tower or solar panel, the electricity is free, right? Why should there even be a question? Is there something more to it?

Let’s try to unpack some of the mystery and reduce the confusion.

Renewable Portfolio Standards (RPS)

Colorado’s investor-owned utilities (Xcel Energy and Black Hills Energy) are required, by 2020, to produce 30% (the Renewable Portfolio Standard or RPS) of their electricity by renewable means. Renewable energy, as a political matter, means wind and solar. As a practical matter, it should also include nuclear and hydroelectric. But as I said, electricity is political.

To meet the RPS, Xcel Energy has been installing lots of wind towers. They have 17 wind farms and are preparing to build another one. Because of federal subsidies, improving manufacturing processes, and an abundant supply of wind towers, the next wind farm is going to be relatively inexpensive to build. The federal subsidy is a major factor in wind’s affordability, reducing the cost by almost half. But the federal government doesn’t have any of its own money. It gets it from taxpayers. Us. We Coloradans send a portion of our earnings to Washington, and the politicians send it back to Colorado as a subsidy for wind towers. Do we get a fair share of it back? Perhaps. Xcel Energy has been very aggressive at getting those subsidies. Do you, as a ratepayer benefit? Not a chance.

Legislation generally caps rate increases for renewable energy at 2%. If renewable energy were actually cheaper, there would be no rate increase for it.  Your electric bills are increasing because of the RPS. Further complicating the matter, not all of the costs for renewable energy are included in that 2% cap.

Selling your old car

Let’s say that you wanted to get a new car. When you do that, you might want to sell your old car. After all, if it’s not the one you prefer to drive, why keep it?

When the legislature demanded that Xcel build new renewable energy sources, they didn’t take into account that we didn’t need enough new electricity production to account for the new wind towers and solar panels. In other words, we’ve got a bunch of new plants and can’t get rid of the old ones. Xcel still pays for the old ones, running or not. The cost to build them is amortized over several years, and ratepayers continue to pay that cost. It’s in a part of your bill that isn’t capped at 2%. In fact, in 2011, Xcel requested a $53 million rate increase to cover the carrying costs of 300 megawatts that it couldn’t use. You’re paying for idle plants. And Xcel is about to build 550 megawatts more. Xcel will do the math for us, but I’m willing to bet that it costs more to idle 550 megawatts than 300 megawatts.

You and I, the ratepayers, end up paying to build the new wind farms, and for the old plants. It’s like having old cars that work, but that you aren’t allowed to sell or drive, but you still have to pay off the loans, taxes and insurance. Great, if you’re a car collector. I’m not a power plant collector.

Limited options and excess capacity

The Renewable Portfolio Standard (RPS) limits the other kinds of electricity production available to us. Once the RPS is fully implemented at 30%, barring a hoped-for advancement in electricity storage technology, about 2/3 of our electricity will come from natural gas. Nuclear and coal will not be an option. Here’s why:

There is no technology available to store huge amounts of electricity. Once those electrons start moving, they gotta go somewhere and get to work.

The output of coal and nuclear plants can’t be varied quickly. It takes a while to ramp up, or back off. Nuclear and coal are typically used for baseload electricity demands, the level at which demand never goes lower. Demand above that level must come from sources that can be turned on and off quickly. That’s natural gas.

Now here’s where it gets a bit tricky.

Wind and solar sources produce roughly 1/3 of their rated capacity over time, because the wind don’t always blow, and the sun don’t always shine (see US Energy Information Administration, 2013 Early Release Overview.)  So a wind farm rated at 100 megawatts only produces 33 megawatts. To produce 30% of our electricity from wind and solar, Xcel will need to have renewable capacity at 90% of anticipated demand. That means they must also build a complementary 90% capacity in natural gas. And that’s all stuff they’re gonna build, and you’re gonna pay for.

But isn’t it cheaper?

Cost comparisons between various types of electricity generation can be misleading, because they don’t take into account the money that was already paid or committed (sunk costs) for a facility that has already been built. To compare new wind power to existing coal powered plants, one should subtract the amortized capital cost of the existing power plant. According to the US Energy Information Administration, wind power costs $86.60 per megawatt hour. Traditional coal costs $100.10. But consider, for example, a coal plant that is halfway through its economic life. When you subtract half of the amortized capital cost, the cost is $67.25. (Capital costs, or the cost to build the plant, are amortized in all figures.)

It’s like buying a pair of practical shoes. You probably only need one pair, because they are just practical shoes – not your party shoes or Sunday go-to-meetin’ shoes. You can buy a new pair for $86.60, or keep using your half worn but serviceable shoes that originally cost $100.10. If you’ve got a budget, you’ll just keep using the old pair that you’ve already paid for.

Don’t forget the profit

I like profit. I think it’s a great way to encourage efficiency in free markets. But it isn’t necessarily good in a monopolized market, where the consumer is forced to pay what the producer demands. Xcel Energy commands a monopolized market, and makes 10% on everything they do. Everyone benefits - except most people. Xcel stockholders benefit, and politicians benefit because they spin this as something they are doing that’ s good for us. And because electricity is confusing, they get away with it. Keep in mind, that Xcel is not to blame – seeking profits is their obligation to their stockholders. The blame lies with the legislature.

Other ways we pay

“Anything that requires a subsidy probably doesn’t deserve it.” I’m not sure who first said that. I wish it had been me.

I already mentioned the federal wind production tax credit, without which the wind industry probably wouldn’t survive. Even with it, they’ve been having their fair share of troubles. Subsidization often spells disaster for a company.

A business succeeds and grows because it creates some kind of efficiency that makes it more valuable than its competitors or alternatives. But a company that needs a subsidy obviously lacks that efficiency in the first place. Then the subsidy reduces the urgent need to become more efficient.

Let’s also look at whence the subsidies come. As mentioned earlier, you and I pay for it. Government and businesses merely handle the transaction. Xcel Energy lists 36 categories of subsidies available through them. THIRTY SIX! These subsidies (rebates) are not complete giveaways – you have to spend more money than the rebate provides. For instance, a $120 rebate is available for installing a high efficiency furnace in your home. Such a furnace will cost several thousand dollars. Ratepayers that can’t afford that pay more on their utility bills to provide a subsidy to those who can afford it.  Even though it’s not called a tax, it functions very much like a regressive tax, a tax that creates a larger burden on those who can least afford it. And with the legislature’s support, Xcel makes 10% profit on it.

Subsidies can lead to waste

Xcel’s subsidy program is meant to encourage energy conservation.  However, that high efficiency furnace means homeowners can get more heat for the same utility bill. It does not necessarily follow that they will use less gas or electricity – they might just decide to be more comfortable in cold weather. Conservation may not happen if giveaways encourage greater consumption.

Reliability is at risk

The electrical grid has a sort of “shock absorber” built into it. As long as electrical production matches demand within a certain range, the system works. If a production facility shuts down suddenly, immediate action is required to ramp up other systems to prevent overloads that can cause blackouts. I’ve toured the “command center” where a staff monitors the output and demand, watching numbers to make sure the system stays within that narrow band. Unfortunately, renewable energy is unreliable. Winds can die quickly. Solar panels don’t work when it’s cloudy or at night time.  As more of our electricity comes from these unreliable sources, our entire system is at risk.

So to recap:

We pay for renewable production capacity we don’t need. We pay for more production capacity we don’t need to complement the renewable production capacity we don’t need. We lose the ability to use less expensive clean sources of electricity. Poor ratepayers subsidize wealthier ratepayers through Xcel’s subsidy program. We send our tax money to Washington so they can send it back to us as wind towers we don’t need. And your appliances and air conditioner don’t care where those electrons came from.  They just want them to keep coming. If the grid becomes less reliable because of its dependence on unreliable renewable sources, those electrons may not move when they are most needed.

Still confused?

My list of requirements for Governor

We’re hearing lots of speculation now about who might be the Republican candidates for Colorado Governor. It’s really a moot point, because the Democrats passed legislation that would ensure their candidates win. And Hickenlooper signed New York mayor Michael Bloomberg’s citizen (gun) control bills, ensuring that Hick will have more than adequate funding for his campaign, and his fellow democrats in the legislature.

 Nevertheless, there are a few things I’d like to hear from candidates for Colorado governor (I can dream, can’t I?) I'd like a candidate to tell us that he or she will do or attempt the following:

1.     Make it clear that you will use your veto on legislation that expands government, restricts citizen’s freedoms, or further infringes property rights (increases taxes).

2.     Tell the legislature that you will absolutely veto any bill that passes before these bills pass:

a.     Repeal the citizen (gun) control laws that were passed in 2013.

b.     Repeal the GOP sponsored bills from 2012 and 2013 that enable tax discrimination (because Republicans do stupid stuff, too).

c.      Repeal the voter fraud legislation passed in 2013.

d.     Repeal the legislature enacted Renewable Portfolio Standards and return to the standards enacted by citizens.

3.     Require the PUC to set reasonable standards for electric utility emissions, and then require utilities to operate under the least cost that meets those standards.

4.     Push the legislature to end all new tax increment financing (often called economic development, it is a process whereby our tax dollars are given to government favored businesses and industries) at any level of government throughout the state.

5.     Announce to businesses worldwide that the only government-funded incentive to locate in Colorado is that we will never ask taxpayers (or businesses) to fund your competition (see tax increment financing, above.)

6.     Veto any legislation that extends regulatory agencies without first providing a cost-benefit analysis with dynamic scoring. Regulatory agencies sunset periodically and only survive because lawmakers pass legislation to keep them going, usually without determining actual benefits, and without considering what would happen without the agency.

7.     End this silly debate about sales taxes for internet purchases. Internet purchases are already taxable through the consumer use tax – it’s the same tax base and rate.  Every citizen is currently required to report every purchase on which they did not pay sales tax, on their state income tax return. Not just internet sales, it’s on purchases of used goods, too (think garage sales). There is a huge pile of revenue already owed and just waiting to be paid.  All that’s needed is enforcement of the reporting. For a measly $10,000,000 per year, the state could hire an additional 1000 revenue agents to audit Colorado citizens for consumer use taxes. It wouldn’t require a vote of the people, just a budgetary adjustment. The revenue generated would far exceed the cost to collect it. And the uproar from citizens who have escaped this tax for years would be deafening.

The best way to reform our tax system and reduce excessive state spending is to wake citizens up and make more of them participate in the funding of government. Legislators on either side of the aisle are not going to ease the burden on taxpayers until there is a cry from a large majority of constituents to do so.

8.     In the event that state revenue recovers and exceeds TABOR limits, veto any bill that proposes retention of the excess revenue, or does not refund it to taxpayers in proportion to the amount they paid.  (For those who complain that TABOR limits government revenues, remember that TABOR limits have not been reached for years – it is taxpayer’s ability and willingness to pay that limits revenues.)

9.     Urge the legislature to move elections for the Colorado legislature to April 15, tax day. The additional cost for another election will likely be recaptured when people start voting in a way that will reduce the check they write on the same day.

10. Veto any additional funding for Fastracks. If the system can’t survive on the taxes we are already paying plus passenger fees, it can be relocated. Put it somewhere near United Airlines’ automated baggage handling system at DIA.

11. Ask the legislature to pass a resolution urging the federal government to pass the Red Card Solution (RedCardSolution.com) to start fixing our broken immigration system.

Well, that’s a rough start, off the top of my head. And as I said, it’s probably moo.  I can’t imagine who might have a chance to defeat the election laws and Bloomberg’s money.