Opinion: To stabilize home energy prices, let’s shift to multi-year rate plans

Colorado is a national leader in the transition to clean, affordable and reliable energy. The thousands of men and women who work at Public Service of Colorado, Colorado’s primary provider of electricity and natural gas, are proud of our role in helping Colorado meet the clean energy and emissions reduction goals while looking out for our customer’s and community’s financial well-being.

Even so, we know this winter has been difficult. After a decade of stable, low gas costs, prices surged last year after Russia’s invasion of Ukraine, leaving the global energy market in turmoil, and increasing utility bills here in Colorado. While we do not make more money when natural gas prices increase, and Colorado’s utility bills are still among the least expensive in the nation, we know that doesn’t offer much comfort to the families and businesses struggling to pay their bills.

That’s why Colorado and Public Service of Colorado, together, can do more to protect consumers from future price swings.  We cannot control global energy markets, but we can take meaningful steps to lessen the impact of another price surge by working with our General Assembly and regulators on supply planning, increased storage levels, rate stability, increased customer education and community and customer sign-ups for bill pay assistance and energy efficiency.

One way to stabilize rates for all our customers is to move away from rates set annually to rate plans that cover multiple years. This would provide rate stability for consumers while reducing customer costs for lawyers and experts that are required for the approval process. Multi-year rate planning and approvals offer increased transparency into, and alignment with, much of the electrification, clean energy and energy efficiency planning directed by the General Assembly and PUC in recent years. Colorado’s leadership in adding clean energy and driving electrification, changes utility operations, requiring forward planning and stability for both the utility and our customers. A multi-year rate stability plan could help further these goals and objectives while giving customers certainty, giving utilities budgets to perform to, and decreasing legal and consulting fees.

An additional way of achieving certainty and stability for our customers is managing fuel price risk.  Purchasing natural gas when prices are lower – typically in the summer months – and storing it for winter is typically our first line of defense in preparing for potential price spikes. With the right regulatory framework in place, we could develop and acquire more storage space and sign longer-term contracts (more than a year) for purchasing natural gas. This would not only operate as a natural gas insurance policy for unforeseen global or local events but would also give us and our customers the ability to stabilize rates and manage volatility. 

Even with lower bills, those on a fixed income or with lower incomes will still need help. That’s why we are creating a new approach to provide more personal attention to customers struggling to pay their bills. We’ve found that many customers aren’t participating in our programs because they simply don’t know how to find them or use them. To fix that, our Energy Navigator program will work with community-based organizations and local governments to inform customers about available resources – including flexible payment plans and home weatherization – and guide them through the process of taking advantage of these resources. Think of a small squad of Public Service of Colorado employees visiting your neighborhood on a Saturday morning where you can ask questions and sign-up for programs and assistance real-time.

Finally, a more diverse energy portfolio helps minimize impacts to customers’ bills from any single volatile fuel source. For instance, our investments in clean energy projects saved our customers nearly $700 million since 2017. We will continue to be better positioned to handle changing natural gas prices due to the clean energy and emissions reduction goals we set in 2018.

We know how hard this winter was for many Coloradans. We are doing everything in our power to keep bills low while providing safe and reliable electric and natural gas services. Even though many of these economic circumstances are outside of our control, we are constantly looking for opportunities to make our services more cost-effective and affordable for customers.  For example, as soon as natural gas commodity prices started to abate in recent months, we proactively initiated multiple interim rate reductions, which resulted in a 40% reduction in the average residential gas bill.

 We look forward to doing more, including working with the legislature and regulators to help stabilize utility rates and protect customers from future natural gas volatility.

Robert Kenney , of Lone Tree, is president of Xcel Energy’s Colorado Operating Company. Public Service of Colorado is an operating subsidiary of Xcel Energy Inc.