Xcel Energy is seeking $950 million in natural gas and electricity rate increases that would raise the average residential utility bill $16.49 by the end of this year with the increase climbing to $18.32 by 2023.
Three proposed rate hikes — one for electricity, one for natural gas and one to recoup money from a spike in natural gas prices in the winter of 2021 — are now before the Colorado Public Utilities Commission.
And that is just the beginning, consumer advocates say. “We are going to see more increases,” said Cindy Schonhaut, director of the state Office of Utility Consumer Advocate. “There are additional increases that have been decided and haven’t been fully implemented.”
It is all part of an ongoing trend, Schonhaut said. An analysis by the consumer advocate office, which represents residential and small business customers in rate cases, found that since 2019 the average residential electricity bill is up 27%.
This piling on — or pancaking — of rate requests has consumer groups worried about bill shock at a time inflation is pushing all prices higher.
“Xcel is asking for the stars, the moon and the sun and they’ll probably just get the moon, but that’s still quite a lot,” said Bill Levis, the former state director of consumer advocacy and now a consultant to AARP, which represents retirees and older citizens.
“The commission really has to be concerned because they see the people who can least afford it — the low-income and elderly — are going to have to pay for it,” Levis said.
As a regulated utility, Xcel must gain the approval of the PUC for any investments in new projects or increases in customer rates.
Denise Stepto, a spokeswoman for Energy Outreach Colorado, which helps low-income households pay utility bills, said in an email, “we know that bills will be higher for all customers. For lower income customers this means a higher percentage of their income is going toward keeping up with their energy bill.”
And in a protest filed by the Utility Consumer Advocate in Xcel’s gas rate case, the agency questioned whether the proposed increase, along with the impact of other hikes and the COVID pandemic, would affect consumers and small businesses “in an unjust, unreasonable, or discriminatory fashion.”
Xcel executives, however, say they are faced with the demands, many embedded in state laws, of transitioning to clean energy and providing electricity and natural gas for a growing economy.
“It’s important to note the increases are paying for a more robust, reliable system and helping us meet our climate and clean energy goals — something that will benefit all our customers,” Michelle Aguayo, an Xcel spokeswoman, said in an email.
“We understand that families are dealing with cost increases across the economy due to inflation,” Aguayo said. “We remind our customers that if they’re having trouble paying their bill, to contact us as quickly as possible so we can help set up a payment plan.”
As to how much of a percentage increase the pending rate requests represent to the average residential customer depends upon which rate case one looks at since Xcel offers different average residential bills in each of the three rate cases it has filed with the Colorado Public Utilities Commission.
“Xcel does a good job of comparing apples and oranges,” Levis said. “There are so many add-ons to the bills it is not possible for people to know what they are paying for. Part of the problem is that they are not comparing the same things.”
One proposed settlement, with parties including the PUC staff and the Colorado Energy Office, would cover the $550 million in extra electric and natural gas costs incurred by Xcel as a result of a severe winter storm in February 2021 — which the utility said led to natural gas prices soaring a hundred-fold.
Electric bills would temporarily rise $1.49 and natural gas bills $5.59 under the settlement. The increases would take effect in April and extend through September 2024.
In that case it said the average electric bill was $74.55 and the average natural gas bill was $47.55
On Jan. 5, Xcel filed a $182.2 million settlement, which included PUC staff and the consumer advocate office, in its electric rate case that would increase the average bill $5.25. Xcel said this represents a 6.4% increase on the average $81.42 electric bill.
Xcel then filed a natural gas rate case on Jan. 24, seeking a net $188.6 million in new revenue, which would raise rates in three steps over three years for a total increase of $8.14.
The first increase, which would go into effect in November, would be $4.16, about a 6.7% increase Xcel said on an average residential gas bill of $62.42.
“In our filings, the commission usually requires that we present average customer bills based on the rates that are in effect at the time,” Aguayo said. “That’s why filings made at different times have different average bills. Bills change primarily because fuel prices change.”
Less in doubt is the dollar amount that will be added to customer bills. When the second step in natural gas rates would go into effect the additional charge increases to $18.32 before falling to $13.40 when the last extreme weather surcharges expire in September 2024.
Based on the latest filings the average gas and electric bill is about $143.84, which would mean the rate hikes would add up to a 12% increase in 2023.
The rise in rates, however, will not stop there.
The PUC is now reviewing the utility’s $1.7 billion Power Pathways regional transmission project — 560 miles of transmission lines encircling eastern Colorado — designed to bring wind and solar electricity to Front Range population centers from rural areas.
Then comes Xcel’s $7 billion electric resource plan with aims to double the amount of renewable electricity generation and storage.
A Utility Consumer Advocate’s analysis estimates that just those two projects will boost the amount customers will have to pay by 44% in 2031 compared with what they are paying today.
“The energy transition is going to be expensive,” Schonhaut said.