An Xcel Energy natural gas pipeline running through Rio Blanco County. Winter Storm Uri caused the utility to purchase natural gas on the open market during a three-day period in February 2021 at a 300% premium. That cost will be passed on to consumers. (The Rio Blanco Herald Times)

The battle over Xcel Energy’s proposed natural gas rate increase isn’t just a dispute over whether the utility gets the $188.6 million it is seeking from its Colorado customers but also in part about the future of natural gas in the state.

The Colorado Public Utilities Commission on Thursday heard from the public on the proposed increase and concerns ranged from the multiple rate increases customers are facing to meeting climate change goals to the risk of stranded assets, for which customers would also have to pay.

“We need to put all our resources into building renewable infrastructure,” Heidi Leathwood, a climate analyst with the environmental group 350 Colorado, said. “New methane infrastructure should not be built at all.”

In addition to this natural gas rate request Xcel reached a settlement for $182.2 million in electric rate increase and in June got a rate increase to cover $500 million in soaring natural gas prices as a result of a severe winter storm in February 2021.

Altogether the rate increases would raise the average residential utility bill by about $16.50 by the end of this year with the increase climbing to $18.32 by 2023.

Lorena Gonzalez, the climate advocate for Conservation Colorado, told the commission the rate increases were putting low-income families “in the painful position” of choosing between putting food on the table or paying their utility bills.

“Xcel needs to have a very strong message that piling rate case after rate case is not acceptable,” said Leslie Glustrom, with the group Clean Energy Action. 

Xcel Energy, which provides natural gas to 1.4 million customers, is seeking the rate increase to pay for projects including upgrading delivery pipelines, adding miles of new residential pipeline hookups in Front Range suburbs and replacing 35,000 natural gas meters.

The proposed rate increase would step up over three years for a total increase on the average residential bill 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.

Previous rate requests would have been primarily judged on whether the investments the utility wanted to make were needed and reasonable, but this rate increase runs into multiple new state laws aimed at reducing the state’s emissions of greenhouse gasses, including those from burning natural gas in homes and buildings.

In 2019, Senate Bill 1261 was passed setting the target of cutting the state’s greenhouse gas emissions 50% from 2005 levels by 2030 and 90% by 2050. 

Xcel is on pace to reduce its  greenhouse gas emissions by 85% by 2030, according to the company.

Jonathan Rogers, an analyst in Denver’s Office of Climate Action, Sustainability, and Resiliency, urged the commission to take into account Denver’s policies aimed at sharply reducing natural gas use in the city, when assessing Xcel Energy’s infrastructure proposals. 

In 2021, Senate Bill 264 established Clean Heat plans for gas distributors.

Xcel Energy has to submit a plan by 2023 that will cut emissions by 4% over 2015 levels by 2025 and 22% by 2030

Several speakers urged the commission not to approve natural gas infrastructure investments in this rate case, but to make their evaluation part of the Clean Heat Plan.

“It doesn’t seem doesn’t seem to register with Xcel that things are changing,” KK DuVivier, a law professor, told the commission.

Xcel Energy, however, contends that the investments are necessary.

“At this time, there are no viable, at-scale, alternatives to natural gas use that both reduce emissions and still provide customers with the energy they require to stay safe and comfortable in their homes and reliably operate their businesses,” Brooke Trammell, an Xcel executive, said in formal testimony that is part of the rate case record.

“In particular, home and space heating in our cold climates is a critical service delivered by our gas supply,” Trammell said.

But Meera Fickling, a senior climate policy analyst for the environmental group Western Resources Advocates said in formal testimony: “We must avoid locking in infrastructure that could hinder long-term decarbonization to the extent possible.”

Glustrom said that Xcel Energy and its customers are already facing  $1 billion in retirement costs for three coal-fired plants. “We have a billion dollars in coal plants that are stranded and now they want to do the same with natural gas,” she said.

Mark Jaffe

Special to The Colorado Sun Twitter: @bymarkjaffe