Xcel Energy-Colorado is seeking an increase in natural gas rates to boost its revenue by nearly $171 million, which the utility said will help pay for improvements to the gas distribution system as well as upgrades to the electric grid.

The company said in a document filed Monday that a typical residential monthly bill would increase by 7.4% if the Colorado Public Utilities Commission grants its request to defer any increases on bills until mid-February 2025. That’s when a temporary rider on customers’ bills to pay costs from a 2021 severe winter storm will expire.

A typical small business would see a 4.74% monthly hike. Xcel said a portion of the increase would be rolled back on Feb. 15, 2026, reducing the impact to residential customers to 2.5%.

If the rate increase took effect this February, the average residential bill would jump by $5.94 a month, or 9.5%, and the bill for a small business would rise by 8.46%.

The PUC approved a $64.2 million increase in Xcel Energy’s gas revenue in October 2022. The utility had sought a $138 million raise.

In its latest request, Xcel wants the PUC to authorize a 10.25% return on its investments, or the amount of profit it could make from what it spends on infrastructure.

Customers, some legislators and the Colorado Office of the Utility Consumer Advocate have criticized Xcel Energy for seeking higher rates of return on its investments and the frequency of its rate hike proposals. In 2022, the PUC rejected Xcel’s request for a natural gas rate hike over three years.

Xcel has said approval of multi-year rate increases would provide more certainty and result in fewer rate cases at the PUC. However, commission members questioned the utility’s projected costs over three years.

Updated at 9;35 a.m. Jan. 31, 2024, to add that the rate increase would roll back in 2026 under the deferred payment proposal.

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