Gov. Jared Polis on Monday asked state regulators and his administration to take every possible action to reduce the cost of utilities for Coloradans. But that’s much easier said than done, and no one should expect their sky-high natural gas and electric bills to go down anytime soon.
The majority of the requests Polis made, laid out in an 8-page letter, will take a year or more to take effect, and the Democrat said the only way to make a serious dent in the problem is to move Colorado away from its reliance on electricity generated using fossil fuels, a process that’s slated to take decades.
“We are trying to align the actions we need to take to avoid or reduce future price spikes in time for the next high demand season, which will be next winter,” Polis said at a news conference in his office at the Colorado Capitol in Denver.
Coloradans, however, are feeling the utility pinch now.
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As of Jan. 31, 91,105 people had applied to the state’s Low-Income Energy Assistance Program — or LEAP — for help paying their utility bills, and 59,506 have received grants averaging about $442. In the last few weeks, interest in the program has been running 15% ahead of last year’s pace.
Polis’ main short-term solution to rising energy costs is to boost publicity around the federally funded LEAP program, which many Coloradans aren’t aware of. To qualify for LEAP benefits, a Coloradan can only make up to 60% of the state median income, which for a family of four is $66,468 a year. The program expects to spend $65 million this heating year in Colorado.
For those who don’t qualify for LEAP, there’s the nonprofit Energy Outreach Colorado program that helps people who make no more than 80% of area median income cover utility bills. The program on Monday said it received 15,409 calls for various types of help for the week ending Jan. 29 — a 50% increase over the same week last year. By Feb. 5, EOC had disbursed $528,660 in utility bill aid.
In the long term, Polis called Monday for his administration to:
- Roll out federally funded home energy rebate programs, which won’t kick in until the end of 2023 at the earliest, as fast as possible. “While the federal funding for these programs won’t be available till the end of the year, we’re committed to working with stakeholders to be ready to go when those funds are available,” said Will Toor, who leads the Colorado Energy Office.
- Find ways to “align customer and utility conservation incentives”
- Enact new statewide building energy codes
- Implement microgrid programs with state and federal funding
The governor may need the help of the cash-strapped legislature on several of the initiatives.
Polis also directed the three-member Public Utilities Commission, which regulates utility companies, to reduce customer costs by exploring an expansion in natural gas storage and by making utilities prepurchase gas ahead of anticipated price hikes, like the one caused by extremely cold weather in December.
“The market sets the price, but there’s a lot we can do to make ourselves more immune to that in the future,” Polis said. “Of course, the long-term solution is to continue driving toward 100%, low-cost renewable energy, ending our reliance on costly fossil fuels that also make us vulnerable to price increases.”
The governor appoints the PUC’s members and he can make requests of the commission, but the panel acts independently.
Polis said that when deciding who to appoint to the PUC, he “wanted to make sure we would have independent figures who would push back against rate increases.”
The PUC, however, faces a dilemma. The biggest driver of the current bill shock has been a sharp increase in natural gas prices, which under commission rules, is directly passed through to consumers.
Many of the investments that are waiting to go into rates, such as the $1.7 billion Power Pathway transmission project, are aimed at helping move the utility to 80% renewable generation. Although, the price of renewable power is both steady and less expensive than coal or natural gas now.
Xcel Energy, the state’s largest utility, sought a $300 million electricity rate increase, which the commission cut to $187 million in April. But in December the utility filed another $312 million electricity rate increase, citing the need to replace aging infrastructure.
Still some of the things the governor asked for Monday are already underway. The PUC has called for Xcel Energy to submit an electric and gas volatility mitigation plan for 2023 and 2024.
The commission is also exploring mechanisms to avoid the bill shock of large jumps in gas prices — possibly by spreading the costs out.
On Jan. 31, the commission held a listening session allowing consumers to voice their concerns. “That was terrific because it was people speaking for themselves, unfortunately what they had to say was tragic,” said Cindy Schonhaut, the director of the Colorado Office of Utility Consumer Advocate.
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Schonaut applauded Polis’ actions Monday.
“What he does by putting his name on it, he engages his leadership and his office,” she said. “Now it isn’t only about decarbonization but ratepayers, consumers as well.”
When asked if he has been disappointed in his PUC appointees, Polis said the commission is “an independent regulatory authority” and that his only recourse is to formally lodge complaints.
Coloradans may see some relief in their energy bills in the coming months because of a decrease in natural gas prices, Xcel said earlier this month.
Utility companies, gas organizations donate $1 million
A few hours after Polis rolled out his plan, a group of Colorado utility CEOs and two oil and gas trade groups held a news conference across the street from the Capitol to announce they have formed a coalition aimed at reducing Coloradans’ energy costs.
The coalition said it was donating $1 million Energy Outreach Colorado to help people contend with their rising bills.
“Look, we’re empathetic or sympathetic to the challenges that our customers are experiencing,” said Bob Frenzel, CEO of Minneapolis-based Xcel Energy. (Xcel is donating about $500,000 of the $1 million going toward Energy Outreach Colorado.)
Robert Kenney, who leads Xcel Energy’s Colorado branch, said Xcel is already doing some of the things Polis called for in his letter. He said the company talks frequently with the governor’s office about clean energy and technological initiatives.
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Lynne Granger, executive director of the American Petroleum Institute in Colorado, expressed frustration, however, that the oil and gas industry wasn’t part of the governor’s plans.
“We were pretty disappointed,” she said. “This is a supply and demand issue and supply is low. Our industry is absolutely part of the solution. We have to be at the table.”
But during his news conference, Polis said high energy costs are independent of the amount of oil and gas drilling going on in Colorado.
“There’s no connection there,” Polis said. “There are more permits (being issued in Colorado), but the price of natural gas — it’s a global commodity. Colorado is a producer, but we are not a producer (such) that our policies drive global pricing.”