• Original Reporting
  • Sources Cited
  • Subject Specialist
Original Reporting This article contains new, firsthand information uncovered by its reporter(s). This includes directly interviewing sources and research / analysis of primary source documents.
Sources Cited As a news piece, this article cites verifiable, third-party sources which have all been thoroughly fact-checked and deemed credible by the Newsroom in accordance with the Civil Constitution.
Subject Specialist This Newsmaker has been deemed by this Newsroom as having a specialized knowledge of the subject covered in this article.
Xcel Energy leases water from Pueblo Water to operate its Comanche Generating Station coal-burning power plant. It pumps water from the Arkansas River via an underground delivery system. (Mike Sweeney, Special to the Colorado Sun)

Electricity bills for 1.6 million Colorado customers of Xcel Energy will rise 4.4% — about $3.99 on the average residential bill — on Sept. 1, under a settlement approved Wednesday by the state Public Utilities Commission.

In 2022, Xcel Energy, Colorado’s largest electricity supplier, filed for a $312 million rate hike, but under the settlement it will get an increase of $96 million.

The reduced revenue figure was reached in a settlement between Xcel Energy and state agencies and major industrial and commercial customers.

That follows a $182 million rate increase in April 2022, which raised the average electricity bill $5.24 a month, or about 6.4%.

The September rate increase could have been even smaller under a proposal made by the state Office of Utility Consumer Advocate that would have deferred $48 million in costs associated with closing five coal-fired power plants until the last plant, Comanche 3, in Pueblo, is shuttered in 2031.

When Comanche 3 closes, all the costs could be rolled into a securitized bond, which would be a cheaper way to pay off the closures.

The PUC staff opposed the financial mechanism, arguing that it was pushing current costs onto future ratepayers and that there was insufficient financial analysis. The commission agreed.

“It is a creative attempt,” PUC Chairman Eric Blank said. “The proposal is underdeveloped.”

Where does affordability fit in

The decision to add the coal cost adds about $1.09 a month to average monthly bills.

“Even though it is a small amount, it adds up when you add it to all the other increases people are facing,” said Cindy Schonhaut, director of the consumer advocate office. “The commission rejecting our proposal on coal assets ends up with us at the status quo.”

“We have a history with this commission of knocking down everything we propose,” Schonhaut said. “So the question is where does affordability fit in?”

In February, Gov. Jared Polis sent a letter to state energy officials and utility executives to take every possible action to reduce utility bills.

“The commission has been directed by the governor as the rest of us have to consider affordability,” Schonhaut said. “It behooves the commission to come up with their own plan for affordability rather than just criticizing others.”

In approving the rate hike, the commissioners did express concerns about some Xcel Energy performance and cost issues that surfaced during the rate hearings.

“I am very troubled by the Cabin Creek performance,” Commissioner Megan Gilman said. “There is an ongoing issue of performance analysis.”

Cabin Creek is a hydropower facility above Georgetown that was supposed to be in service in 2020, but has suffered repeated construction and operational problems. 

Xcel Energy estimated the cost of the Cabin Creek project at $88 million. As of Dec. 31, Xcel had spent approximately $78.1 million, or 88%, of the budget, but is now projecting the project will cost $98.6 million.

Blank said he was troubled by more than $289 million in higher costs for eight projects from Xcel Energy’s initial estimates bringing to total $544 million — a 109% increase. 

Xcel Energy said those initial project estimates are merely markers and that a true assessment of costs comes when the utility applies for permission to build the project.

“There are huge cost overruns and huge performance problems,”  Blank said. “When the company wins, ratepayers should win … that clearly didn’t happen here.”

CORRECTION: This story was updated at 4:10 p.m. Thursday, Aug. 17, 2023, to correct Colorado Public Utilities Commissioner Megan Gilman’s name.

Special to The Colorado Sun Twitter: @bymarkjaffe