Xcel can recover $509 million from customers in coming months’ bills to pay for surging natural gas costs during the southwestern freeze in February 2021, an administrative law judge ruled this week, despite finding the utility should have warned consumers to cut usage and save money during the storm.
The Colorado Office of Utility Consumer Advocate will file another round of objections before the Public Utilities Commission takes a final vote on the recovery plan, but is not optimistic the PUC will make significant changes to the award.
Xcel said Thursday the impact for the average residential customer will be about $5.67 per month for natural gas, or an 11% boost; and $1.43 per month, a 2% increase, for electricity. The gas surcharge will run for 30 months, and the electricity surcharge will run for 24 months. Colorado utilities have the right to pass through fuel cost changes to consumers, though the requests go through a review.
The consumer advocate asked the judge to dock Xcel, the state’s largest utility with 1 million customers, for failing to warn consumers to cut use during the storm, and for failing to plan better by hedging gas prices and storing cheaper gas ahead of time. The advocate wanted $130 million shaved from Xcel’s request.
The administrative law judge agreed, in part, writing “the company failed to act prudently when it did not issue conservation messaging in these unique circumstances.” Still, the judge added, it’s impossible to tell how much energy consumers might have saved with better warnings, and therefore impossible to dock Xcel for a percentage of its requested recovery.
Regulators make a show of worrying in public, but don’t end up lowering the bill for customers, said utility consumer office director Cindy Schonhaut. The PUC commissioners often do the same thing, she said, decrying the consumer impact of multiple rate increases.
“And they always approve them, every time. They basically just talk about it. They haven’t done anything in that regard. I don’t know why. That’s where we are frustrated on behalf of consumers,” Schonhaut said.
Xcel had not responded to a request for comment by late Thursday.
The storm over Presidents Day weekend in 2021 paralyzed Texas and other southwestern states, interrupting natural gas delivery systems and other utility functions. Most utilities store a certain percentage of gas for emergencies, but not enough to completely supply operations over a number of days. Denver set a record low for one day of the storm, which hit Colorado between Feb. 13 and 17.
The judge’s decision noted units of natural gas that went for a few dollars before the storm shot up to $188 each at the peak, then quickly returned to about $6 a unit by Feb. 19.
In the back and forth with regulators over the past year, Xcel has agreed to give up $74 million in interest it could otherwise have charged on the gas recovery costs, the judge noted. Xcel made some other concessions on sharing trading revenue with consumers, and excluding some outage costs at the troubled Comanche 3 plant in Pueblo.
The surcharge for the 2021 storm will add on top of other fuel cost hikes passed through to consumers by Colorado utilities in recent months from rising oil and gas prices. Consumer advocates also note that 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.
More price hikes will be coming in future years as utilities also try to recover the costs of government-mandated moves to cleaner energy, from building solar and wind generating stations to extending the transmission grid and offering rebates for electrifying homes and cars.
“We worry that the burden of the transition to clean energy in all economic sectors in the state is something that is going to end up on electric utility consumers’ bills,” Schonhaut said. Her office must balance the desire of some consumers for a faster transition to clean energy with the needs of many consumers to keep bills affordable.
“We believe strongly that government has to step in with funds” for the transition, Schonhaut said.