Electric rates will go up for Xcel Energy customers starting Sept. 1 following state regulators’ approval of a roughly $97 million increase in revenue for the utility.
The Colorado Public Utilities Commission on Wednesday approved a settlement agreement among the various parties, including cities and consumers’ groups, that slashed Xcel’s original request for a $312 million increase.
The new rates will increase the average residential bill by about $4 a month and $5.58 a month for small businesses.
Speakers in hearings leading up to the decision contended that Xcel Energy didn’t need a rate hike because of previous increases and a jump in its net profits in Colorado to $727 million in 2022 from $660 million in 2021.
The PUC rejected a proposal by the Colorado Office of the Utility Consumer Advocate that the director, Cindy Schonhaut, said would have reduced monthly bills by about 4%. The office, which represents the public before the PUC, proposed deferring costs that Xcel wants to recover for closing coal plants early by pooling the expenses to be paid later through a refinancing mechanism known as securitization.
The objection was that deferring the costs for plants being used now would unfairly burden future customers, Schonhaut said. The consumer advocate’s office argued that its plan would have avoided adding the recovery costs to Xcel’s rate base now, the basic rate all customers pay, and would have ended up costing customers less in a few years when more renewable energy, which is less expensive, is on the system.
Under an agreement, Xcel Energy plans to close the Comanche 3 coal-fired power plant in Pueblo by 2031, ending the utility’s use of coal to generate electricity in Colorado. The chronically malfunctioning plant, which began operating in 2010, was originally scheduled to run until 2070.
“We take the question of affordability very seriously. It’s our priority issue,” Schonhaut said. “The only way you can address affordability is not just to not allow any increases, but also to have some decreases, even small ones, here and there.”
The consumer advocate’s office has been critical of a recent series of rate increases by Xcel, what staffers have called “pancaking.” A special legislative committee investigated why natural gas bills were so high in late 2022, resulting in a law aimed at protecting customers from big price swings.
In 2022, the PUC approved a $182 million increase in Xcel Energy’s electric revenue. Schonhaut said the utility has indicated it will seek a natural gas hike in 2024.
Officials with Xcel Energy, Colorado’s largest electric utility, said they requested the $312 million electric rate increase to cover investments in such projects as expanding transmission lines and other improvements while cutting greenhouse-gas emissions and expanding the use of renewable energy sources to meet state and company goals.
Xcel Energy spokeswoman Michelle Aguayo said in an email that for every dollar the company earns, it invests $3 to $5 back into the system.
“The system is broken,” said Leslie Glustrom, a Boulder resident with the nonprofit Clean Energy Action. “Xcel asks for an outrageous rate increase, having already been granted a sizable rate increase in 2022, and while the PUC pared the rate increase down, it is still outrageous.”
Glustrom, who has testified through the years in Xcel rate cases, said ratepayers should not be responsible for all of the utility’s costs associated with its coal plants. “They should be responsible for most of the risk that accompanies stranded assets, as any other business is.”
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