Come this Christmas, Xcel Energy gas customers will get an unwelcome present from the utility — an approximately 54% increase in their monthly bills compared to Christmas past.
The hike in the average December bill to $177 from $115 in 2021 is being driven by a string of rate increases, which in turn has been spurred by higher natural gas prices, according to the Colorado Office of the Utility Consumer Advocate.
Piling rate hike on rate hike is called pancaking and this year’s stack is unprecedented. “IHOP is going to have to put a new entry on the menu for this,” said Cindy Schonhaut, executive director of the UCA.
“Some of it comes from the impact on what is going on internationally,” Schonhaut said, “but the impact on consumers of this kind of rate increase is astounding. It is more than concerning, it is frightening from the point of view of a consumer advocate.”
The cost of natural gas is passed directly to customers through a quarterly gas cost adjustment. It can go down when gas prices fall and up when the price rises.
Since March the spot price for natural gas at the Henry Hub, one of the country’s main distribution points, had nearly tripled to $8.01 per 1 million British thermal units on Sept. 20. It had reached as high as $8.81 in August.
War in Ukraine is part of the problem
The price has been driven by multiple factors including a drop in drilling new wells during the pandemic, an increase in exports of liquified natural gas as the U.S. became the world’s largest exporter, a hot summer increasing demand, and energy markets roiled by the war in Ukraine.
At the same time the U.S. is on pace to consume a record amount of natural gas in 2022 — 86.6 billion cubic feet a day, according to the federal Energy Information Administration.
“Whatever is happening in Ukraine we have to deal with consumer bills in Colorado and winter is coming,” Schonhaut said.
The price of gas, whatever the forces, gets passed along to customers. On Sept. 20, the Colorado Public Utilities Commission approved another cost-adjustment rate increase — equal to 4.62%, or $6, when compared to the third quarter of 2021.
That, however, follows quarterly commodity adjustment increases of 12% and 6.8%, the UCA said.
On top of that, in June the PUC approved an 11% increase, equal to $5.67 on the average bill, to cover the soaring costs of natural gas during a winter cold snap in 2021, when the price of natural gas briefly shot up 300% to $190 per 1 million BTUs.
Xcel is also seeking an $188 million increase in its base natural gas rates from the PUC, which over three years would add another $8.14 to the average residential bill.
“We are very concerned about the upcoming natural gas price increases for struggling Colorado families and the dangerous choices households could make when trying to afford home heating costs,” Luke Ilderton, deputy director of Energy Outreach Colorado, which helps low-income households with their utility bills, said in a statement.
Ilderton said it is important to promote EOC’s relief programs and the state-run Low-Income Energy Assistance Program, known as LEAP, to “protect vulnerable households from dangerous choices such as using kerosene or old electric space heaters.”
While December is usually the peak month for natural gas usage, Bill Levis, the former Colorado consumer counsel, said he has similar concerns for January and February, traditionally the other two high heating months.
In announcing the rate hikes, Xcel Energy said it “encourages customers to explore ways to conserve energy and lower their bills by finding energy saving tips at xcelenergy.com/tips or learning more about energy efficiency programs and options at xcelenergy.com/programs_and_rebates.”
The company also said customers having trouble paying their bill should contact Xcel to work out a payment schedule.
“We know these are challenging economic times and are committed to doing all that we can to keep costs low for our customers while delivering the safe, reliable energy they depend on,” Michelle Aguayo, a company spokeswoman, said in a statement. “We have developed a variety of programs to allow our customers to use gas more efficiently and save money even in times of high gas prices.”
While the size of the Xcel Energy rate increase is high, other gas utilities around the country are also raising rates due to higher natural gas prices.
Nationally gas bills are projected to be 24% higher this winter heating season compared to last year’s average, according to the National Energy Assistance Directors Association.
The same day Xcel Energy got the green light to raise rates, the PUC approved a rate increase for Atmos Energy, which has about 120,000 gas customers in Colorado, to cover the increased cost of gas.
Atmos Energy has three distinct service areas in Colorado and the increase and rates vary, with the average residential bill rising 9% to 10%. In the Greeley area, for example, the average monthly bill will rise 9% to $95, according to a PUC filing.