Adding utility rate increases one on top of another is called “pancaking” and Wednesday Colorado regulators tossed another flapjack on the stack, granting Xcel Energy a $64.2 million increase in gas rates.
The increase in the basic rate follows increases in gas rates for rising fuel prices this year and to cover $500 million in costs due to a winter cold snap in 2021 that sent fuel prices soaring.
The rate hike granted by the Colorado Public Utilities Commission will increase the average residential bill each month by $2.90, about 2.9%, and the average small business customer’s monthly bill by $12.95 or 3.1%.
The increase will go into effect in November.
“This rate proposal supports essential investments that will improve system reliability, strengthen safety and inspection programs, and take meaningful steps to operate the cleanest natural gas system possible,” Tyler Bryant, an Xcel Energy spokesman, said in an email.
The average residential bill has already increased temporarily by $5.67 to cover costs related to 2021’s Storm Uri and by another $6 to pay for the rising cost of natural gas in 2022.
While those figures are for the average bill over 12 months, Xcel Energy has already warned that during December, the highest natural gas usage month, bills could jump by 54% compared with the same month in 2021.
“We understand our customers are experiencing price increases in all areas of their lives,” Bryant said. “We’re committed to doing all we can to keep costs low for our customers while delivering the safe, reliable energy they depend on.”
Xcel Energy originally asked for a $188 million rate increase for investments over three years. The commission rejected the three-year plan, granting a single-year increase.
“The request for future investment was denied and that was good,” said Meera Fickling, a senior climate policy analyst with the environmental group Western Resource Advocates.“Granting it would have only given Xcel an incentive to spend more money.”
For the single-year increase Xcel Energy wanted $94.2 million. The commission trimmed that by about a third.
In its filing on the rate case, the state Office of Utility Consumer Advocate, which represents residential and small business customers, had calculated that Xcel Energy needed only a $12 million increase.
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AARP, which represents senior citizens, had actively opposed any rate increase at all, delivering 9,000 cards from its members to the utility commission and running an ad campaign.
“Our initial feelings are twofold: we are disappointed; we would have preferred a rejection,” Angel Cortez, the group’s associate director for communication in Colorado, said in an email.
“But we also believe that the activism of our members and the public in general made an impression on the PUC because they only got about 34% of the $188 million Xcel wanted, so in a sense, it’s better than no reduction,” Cortez said.
The utility commission did reduce the fixed monthly service charge all residential customers pay regardless of how much natural gas they use to $10 from $12.
Western Resource Advocates had raised questions about whether it was prudent to make investments in natural gas infrastructure at the same time the state was pressing to reduce greenhouse gasses and what the financial fate of such investments would be.
Those issues were not directly addressed. “The commission approached this much more as a traditional rate case, so from our perspective it was a mixed outcome,” Fickling said.