Colorado consumers are seeing double-digit jumps in their gas utility bills this fall as providers pass on the cost of steep natural gas inflation, and the Public Utilities Commission and consumer advocates warn that a “stack” of other add-on charges are too much for customers.
Rising gas charges will push the average Xcel consumer’s cost up more than 14% in the last three months of this year, while gas bills in some areas served by Black Hills Energy will go up 50%. Atmos Energy and Colorado Natural Gas have also filed gas cost increases ranging from 11% to 24% for the average residential consumer in peak winter months.
Utilities like Xcel that burn a lot of natural gas to generate electricity, meanwhile, are also raising their electric rates to reflect commodity increases, with Xcel charging its average electric consumer 3% more than the previous quarter to pay for the gas. Xcel currently generates about 37% of its electricity in Colorado at plants fired by natural gas.
For Xcel, with the most customers in Colorado, bills for a comparable amount of gas will go up an average $11.22 a month in the fourth quarter. Xcel files its gas cost requests every quarter, and their request for the third quarter of 2021 was up 5.6% on the average bill.
In Black Hills’ central area, the cost of the same amount of gas in a peak month will go up nearly $43 a month.
“My biggest concern is on behalf of consumers, especially low income and fixed-income constituents,” said Bill Levis, a former consumer counsel director for Colorado who now advises AARP Colorado on utility issues.
“Because of the great increases, I think the commission is going to have to think again about whether they can just basically rubber stamp these,” Levis said.
On top of the big jumps in gas prices, the utilities have sought approval in recent years for other consumer charges ranging from the cost of adding renewable energy sources, to supporting a low-income assistance fund, to pipeline repair funds, Levis noted.
The PUC has taken notice, and this week asked the utilities to add up their “all-in” costs for consumers predicted for March 2022 compared to the year before, a commission spokesman said. The utilities must report within three weeks, and the PUC will take the reports into account as it considers new potential charges.
“The PUC is requesting that utilities give us a holistic overview of what consumers’ bills will look like later this winter,” said James Cullen, PUC spokesman for the Department of Regulatory Agencies.
State utility laws allow providers to pass on rising commodity costs for gas distribution and electricity generation. The utilities say they don’t profit from the charges for energy sources.
“We’re concerned about the high costs,” said Nick Wagner, Colorado vice president for Black Hills Energy. “We’re not making any money off of it, and we try our best to go out and make sure we’re procuring the lowest price gas we can for our customers.”
Wagner said Black Hills is informing gas customers about energy efficiency help they can get from the utility, and about consumer assistance programs.
Xcel is telling customers in emails and other communication that “we are committed and prepared to help keep your bill low and reduce the impacts of recent nationwide increases in natural gas prices.”
The natural gas hikes are happening worldwide, and the U.S., with high natural gas production in states like Colorado, North Dakota and Texas, is faring better than Europe, where some charges are up five-fold. Gas is a hot commodity right now because more power plants are switching from coal to cleaner gas, industrial and transportation demand are up as the pandemic eases.
The U.S Energy Information Administration estimated most consumers’ gas bills across the country would rise about 30% for the coming winter season. The jumps in Colorado bills will depend on which utility customers have. Some asked the PUC to approve gas price hikes starting Oct. 1, others were for Nov. 1.
Levis has compiled a list of recent charges added to consumers’ bills, or that utilities now have the right to seek approval for at the PUC:
- Renewable Energy Standard Adjustment adds 1% to an electric bill which helps utilities pay for transforming coal-fired plants to cleaner wind and solar projects
- Electrification charges from Xcel and Black Hills totaling up to one-half of a percent of their revenue, to pay for EV charging stations, customer rebates on EV purchase and other infrastructure needs
- 50 cents per consumer bill at electric and gas utilities beginning October 2021 for energy assistance for lower-income consumers
- New utility cost-recovery allowances from recent legislation that will show up on future bills, for the costs of implementing demand-side management programs and reducing greenhouse gas emissions
- The right for utilities to start earning higher returns and accelerating depreciation for programs that exchange gas-fired furnaces and other appliances for cleaner electric versions
Colorado consumers are also still waiting to hear how much extra they will have to pay for their utilities’ increased gas costs during last February’s winter storm Uri, when market rates increased up to a hundred times normal as demand soared and distribution froze up.
After months of legal filings and arguments in front of the PUC, Xcel has now reached a settlement where the typical residential gas consumer would pay $5.60 extra a month for 30 months, for a total of nearly $170, just to pay back Xcel’s extra natural gas costs during the long weekend storm, the settlement motions say. Electric customers will also pay a little more, for the higher costs of gas used for February electric generation.
Levis and the state’s Office of the Utility Consumer Advocate say they hope the PUC will do more to consider all the other potential increases for consumers when they are facing a request from a utility for a new charge or new cost recovery.
It’s “the piling on of all of these rate increases on those who can least afford it,” Levis said.