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Governor warns Colorado utilities again over storm-surge fees as Xcel tallies request at $264 per customer

Gov. Jared Polis says Colorado customers should not have to pay for a Valentine’s Day spike if no one told them to turn off the lights. Xcel, meanwhile, is defending its strategy.

The Martin Drake Power plant in Colorado Springs pictured on Dec. 12, 2018. (Jesse Paul, The Colorado Sun)
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 As Xcel Energy alerted the governor they may seek more than $250 from their average user over two years, Gov. Jared Polis demanded again Tuesday that Colorado utility consumers not be stuck with the full emergency-fuel bill boosted by the February cold snap if power companies didn’t do enough to warn about storm surcharges.

The problem goes beyond Xcel, as other providers, from Black Hills Energy to Colorado Springs Utilities, may try to pass on even higher excess costs to gas and electric consumers, Polis said Tuesday at a news conference. Only if the utilities prove during a Public Utilities Commission investigation they scrambled to help consumers lower their usage can there be a “fair conversation” about whether shareholders or customers pay the bill, Polis said. 

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“Consumers should not be asked to shoulder extra costs” if their utility didn’t do enough over Valentine’s Day weekend to show them how to lower use by turning down thermostats and switching off lights, Polis said. He had previously sent written encouragement to the PUC to investigate claims like that of Xcel, which said it spent $650 million more than expected on natural gas spot markets during the storm that ravaged Texas and much of the southwest. 

Xcel and other utilities say that under Colorado rules, they don’t make a profit on natural gas purchased and passed through to customers for home heating, cooking or hot water. Colorado law does allow them to recover the cost of providing the fuel, and for surcharges if they prove that emergencies unavoidably raised market prices. 

In a letter to Polis dated Sunday, Xcel said it would cooperate with the PUC as it looks into surcharge requests expected from five different Colorado utilities. But the company also said it is proud of how its electrical generation and gas distribution systems worked, staying mostly insulated from the freezes and other storm damages that raised the February bills of customers in Texas into five figures. 

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“We built a diverse, balanced and flexible energy system that includes wind, solar, gas and coal. Each one of these resources was valuable during the cold snap and helped support the system,” Xcel said in its letter. 

Xcel said that while it had hedged against price increases as much as possible, its spot gas costs spiked that weekend because of frozen gas distribution equipment elsewhere in the Southwest, and high home heating demand drawing down any surplus. Gas prices went from a steady $3 a dekatherm measurement before the storm to up to $600 at the peak. Xcel sends gas directly to customers, but also needs gas to fire up electrical turbines if other sources like wind and solar are generating less.

Xcel said it tried cost-saving measures like using previously stored gas, turning off service to those who had agreed to an interruptible supply, and issuing consumer notices about saving energy. 

The PUC, which has the power to judge how much of the additional costs can be included in consumer bills in coming years, agreed to open an investigation and asked for records from the utilities to describe their gas hedging strategies, their readiness for the storm, how they bought spot supplies, and more. 

In its letter, Xcel said it would try to soften the impact on customers of the state’s largest utility by spreading the extra costs over 24 months of bills. It said its request would add $7.50 monthly to average gas customers’ bills and $3.50 to electricity users, for a total of $264 from the typical customer in that time. 

Utility regulators can also decide that the companies should absorb some of the losses without passing them on, by borrowing money, issuing equity or reducing payouts to shareholders. 


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