Xcel Energy is pressing ahead with a proposed $145 million natural gas rate increase despite concerns by consumer advocates and a state regulator about its impact on customers in the midst of the novel coronavirus pandemic.
In a March 18 ruling, Colorado Public Utilities Commission Administrative Law Judge Steven Denman said he “strongly encourages” Xcel subsidiary Public Service Company of Colorado to consider a 90- to 120-day extension in the rate case because of the widespread shutdown caused by the COVID-19 virus.
The state Office of Consumer Counsel, Energy Outreach Colorado, which aids low-income families with utilities bills, and AARP, which represents senior citizens, have all expressed concern about the rate increase.
Utilities or utility commissions in at least five states have delayed rate increases or proceedings for rate requests, according to Moody’s Investor Services.
“Now that we know about COVID-19 and the response to it by government and utilities, the OCC believes that a wise and measured approach would be for Public Service to extend or delay the case” said Cindy Schonhaut, director of the Office of Consumer Counsel, which represents residential and small business customers in rate cases.
Nevertheless, Xcel is moving ahead and on April 6 got PUC approval for a schedule of filings and hearings with a final date of Nov. 12.
“We are concerned about the increase in general and the timing of the potential increase and impact on customers as the heating season begins,” Energy Outreach Colorado said in a statement.
Xcel said in a statement that it recognizes that “this is a challenging time for our customers and have put a number of protections in place to help them through this unprecedented time.”
“Keeping the commission process and our operations moving forward is critical as the economy recovers and people return to work,” Xcel said. “It’s part of what we’re doing to support our customers and communities at this time.”
The Xcel request would add about $6.44 on to an average residential bill and $19.50 on to the bill of a small business.
In addition, the utility also wants to raise the monthly service charge – a flat levy paid regardless of how much gas a customer uses – by $3 to $15.
In the past two years, Xcel has spent about $886 million to maintain the safety and reliability of its natural gas infrastructure and extend it to new homes, according to a company filing.
Xcel said all the parties in the case – including the Office of Consumer Counsel and Energy Outreach Colorado – had agreed to the schedule approved on April 6. AARP joined the docket after the April ruling.
A party could file a motion to extend a motion under state statute, but the company would have to agree to the motion.
Consumer advocates maintain that pushing for a rate increase amid both the public health and economic turmoil is unwise.
“With everything that is happening now why are they doing this now?” said Bill Levis, a rate consultant for AARP and former Office of Consumer Counsel director. “COVID-19 is turning everything upside down.”
Levis said that rates and how they are apportioned have to be based on a test year and Xcel is using 2019 as its test year and projecting that into 2020. “But we know 2020 is not a normal year.”
For example, in New York figures are showing residential use way up while business usage is way down. The national gross domestic product dropped nearly 5% in the first quarter of the year and unemployment has soared.
“By last week, there were 310,000 people unemployed in Colorado,” Levis said. “Let’s slow everything down. There are so many issues. This is not the time to do this.”
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In New York State, the utility regulator, the Public Service Commission, issued orders suspending rate increases, but the PUC does not have that power and by statute must act on a rate request within 250 days. Xcel filed its rate tariff Feb. 5.
Still, utilities on their own have sought delays. In March Duke Energy requested North Carolina regulators postpone their electricity rate case for 60 days. In New Hampshire an electric company agreed to a three-month extension of its rate case and in South Carolina Dominion Energy pushed back a rate request by 60 days.
“Rate-case delays that help stakeholders are not new for the sector,” according to a Moody’s Investor Services report. “We see these regulatory delays as a social benefit and view the actions as prudent corporate governance. Over the long term, these actions often enhance financial strategy, risk management and customer relations.”