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Energy

Xcel Energy will drop $3 monthly pipeline fee that has raised three times the amount it was intended to collect

An agreement with utility regulators will still allow Xcel to charge customers for system upgrades, but with more scrutiny than the Pipeline System Integrity Adjustment, which generated $610 million

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A $3 charge on the average Xcel Energy customer’s monthly gas bill that was added a decade ago to pay for safety upgrades largely now in place will be gone starting next year under a settlement approved by the Colorado Public Utilities Commission.

The fee, known as a bill rider, has raised $610 million since it went into effect in 2011, three times the original revenue estimates. Under the settlement agreement between Xcel and the PUC staff, December will be the rider’s last month.

TODAY’S UNDERWRITER

The Pipeline System Integrity Adjustment, or PSIA rider, was originally approved in 2010 for three years to address federal pipeline safety mandates and went into effect the following year.

Xcel used the money collected under the rider to finance a comprehensive program to replace mains and pipelines, upgrade equipment, and inspect and repair lines. The charge to customers is based on how much natural gas they use each month.

The PUC approved extending the rider, and the utility, which serves 1.3 million electric customers and 1.2 million gas customers, was seeking a fifth extension to raise another $438 million.

The Xcel request was opposed by the PUC staff, the Colorado Energy Office and the state’s Utility Consumer Advocate, who argued that the rider has already fulfilled its goals and that future pipeline expenses should be part of overall rate cases, which receive more detailed PUC review.

The state energy office and the consumer advocate broadly supported the settlement agreement.

Under the settlement agreement, Xcel will transition to filing for all its pipeline expenditures in rate cases. The utility will, as part of the agreement, get a guaranteed return on $143 million in ongoing gas pipeline investments.

Riders are used to fund particular projects, like the pipeline safety improvements, the closure of coal-fired power plants or the addition of renewable generation or to adjust for costs, such as the rise and fall in fuel prices. Xcel’s residential customers currently have nine riders on their electricity and gas bills.


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