Colorado’s Public Utilities Commission on Wednesday discussed addressing bill price hikes in response to Gov. Jared Polis’s utility cost-reduction directive, but it isn’t clear what the first steps will be.
Chairman Eric Blank said that the PUC has been tasked with a wide range of objectives to ease an affordability crisis that made consumers’ utility bills 52% higher on average in December. Some consumers saw their bills double or even triple.
“Among other things, the governor has asked us to identify ways to support customers in the most dire circumstances, improve access to and the capacity of the bill assistance program, find ways to incentivize utilities to reduce customer costs, analyze approaches for limiting bill spikes, and to expand public engagement on these issues before the end PUC,” he said.
Blank said he didn’t know how the PUC would take action on this directive right now, but they would continue addressing affordability in the coming weeks.
One way the PUC can make progress is driving down base rates, Commissioner Megan Gilman said. Under the current rules, a utility seeking to add new infrastructure, such as transmission lines or a power plant, must first convince PUC regulators that it is necessary. If PUC agrees, it issues a certificate of public convenience and necessity to approve the request.
Once the project is in operation, the cost of the investment is passed on to consumers through an increase in base utility rates. PUC also has the power to set a return on investment rate, which determines the profit that utility companies get from these investments. That ROI rate can contribute to higher prices as well.
Base rates have been increasing for years. Higher base rates make periods of extreme price pressure — usually resulting from high fuel costs or unusually cold weather conditions — even worse. The PUC can’t control those factors, but they can drive base rates down in the long run by limiting unnecessary investments by utility companies, Gilman said.
“What are we doing to really try to ensure that rate-payers are protected in the long run and (ensure) that those utility investments that end up being repaid by rate-payers are really the best use of that money, and the best option available?” she said.
Blank said that managing base rates will be part of the discussion on affordability moving forward. Later at the meeting, the commission also approved updates to its policy for service disconnection reporting, which now will include data on areas with the highest proportions of disconnections in order to identify geographic disparities in access to utility services.
Additionally, they made plans to meet with assistance program coordinators and utility companies to improve the effectiveness and accessibility of low-income qualified programs.
Access to sources of assistance like the Percentage of Income Payment Program, which limits utility costs for low income families to up to 6% of their monthly income, must be improved, according to Gilman. The PUC has taken some steps already to make its process open and easy to understand, she said, but there’s still much room for growth when it comes to working in a mode that engages the public on addressing long-term affordability moving forward.
“This is a massive issue, to take this agency and all of the sudden try to humanize, try to improve accessibility, try to improve language access, try to improve these opportunities,” Gilman said. “By no means do we have it all figured out.”