Bill Levis has tracked the ups and downs of utility bills for the past 14 years, first as director of the state Office of Consumer Counsel and then as a consultant for AARP, which represents retirees and older citizens.
And when it comes to electricity bills, especially from the state’s largest provider Xcel Energy, the trend has gone in only one direction — up.
Since 2019 the average monthly residential bill, for 600 kilowatt-hours of electricity, has risen 38% to $92.12, based on company figures. Utility bills are one of the biggest regular dings to any household’s budget, and with every Xcel announcement, the High Cost of Colorado marches upward.
“We know it is going to go even higher as we go to renewables and they phase out coal-fired plants,” said Levis, whose office was the predecessor to the Office of the Utility Consumer Advocate.
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Timeline
2019
In 2019, the average 600-kilowatt-hour electricity bill was $68.61. That year the average bill rose $4.46 or 6.5%.
The Transmission Cost Adjustment went to $1.22 from 91 cents. The Energy Assistance program rose 6 cents to 18 cents
2022
In 2022, the average bill had risen to $81.86. That year the average bill rose $5.24 on a 6.4% increase.
The monthly facility and service charge rose 13 cents to $5.60. A new electric energy assistance charge of 50 cents was added to the bill.
Later that same year, the average bill rose an addition $1.43 or 2.8% to pay for Winter Storm Uri natural gas purchases — a charge for 30 months.
2023
The average bill started 2023 at $90.90. In September, it rose 4.4%, or about $4, to $94.90.
The increase included the service and facility charge rising 69 cents to $6.29. The electric energy assistance charge rose 25 cents to 75 cents.
TOTAL
That is a 38% increase in the average bill over five years.
Electricity bills aren’t subject solely to the same market forces as food, or even rent.
There are a host of things that go into rising electricity bills from the price of natural gas to run turbines to the cost of building new power stations and transmission lines to a raft of state mandated clean energy programs.
And let’s not forget, in addition to all those requirements Xcel Energy is also a business in search of a profit, which means there are shareholder and bondholder expectations to be met.
The rates customers pay are set by the Colorado Public Utilities Commission based on the investments Xcel Energy makes to run its grid and meet demand. Xcel Energy gets to recover its investment plus a return set by the PUC.
It is growing these investments, the so-called rate base, that raises bills and fuels profits and shareholder dividends. When Xcel Energy built the coal-fired Comanche 3 power plant for $1 billion, customers paid for it. Customers will pay for the $1.7 billion Power Pathway transmission line being built.
Customers will also pay nearly $1 billion closing three coal-fired plants, most of it for the unamortized part of Comanche 3 which has suffered chronic breakdowns since it opened in 2010.
Let’s breakdown a real Xcel bill
A bill for 422 kilowatt-hours of electricity, what the average Colorado household uses in a month, comes to $69.94. Less than half is for the actual electricity used by the customer. Here’s how other fees factor in. The rate structure is slightly different for households using time-of-use rates, where the electricity charge varies depending on the time of day it is consumed.
“It is never the energy company that ends up paying for mistakes, such as Comanche 3,” Levis said. “The frustration consumers have is that the energy company has no downside.”
And if customers are unhappy, they don’t have the option of shopping around for a new provider of electricity or natural gas like they can with cars, insurance or food. Xcel has a franchise that makes it a monopoly in the areas it serves.
Xcel Energy is now proposing another $10 billion in rate base investments as part of its Clean Energy Plan, which will cut the utility’s greenhouse gas emissions 87% over 2005 levels.
“The legislature has also played a role in raising bills,” Levis said. “I don’t think they realize the impact.”
In the last five years the General Assembly has passed at least 14 bills directing the state’s utilities and PUC to initiate programs to do such things as such as promote energy efficient appliances and electric vehicles, and to develop clean energy plans.
Those laws allowed utilities to do things like add charges to customer bills for new programs. Or they enabled Xcel Energy to accelerate recovery of funds or include performance incentives, offering a bonus if the utility contains project costs and meets deadlines.
Xcel Energy in its filings with the PUC points out that base rates have not risen much above the rate of inflation, and that its price per kilowatt-hour in Colorado is lower than the national average. In 2022, the average Xcel Energy residential charge was 12.7 cents a kilowatt-hour compared with a national average of 15 cents, according to the U.S. Energy Information Administration.
Rise in the cost of 1 kilowatt-hour for a household over a five year span
Utilities are also allowed to pass the cost of fuel directly to customers from the Energy Cost Adjustment. That adjustment “goes up and down,” Levis said. “With something like Storm Uri you get a big charge.”
That winter storm in Texas shutdown natural gas fields in February 2021 and sent natural gas prices soaring 300%. Xcel Energy incurred an extra $500 million in charges that Colorado customers are now paying off in installments over 30 months.
Last winter natural gas prices spiked again, doubling and tripling utility bills (mainly for natural gas heating) and sent thousands of families scrambling for help with their bills from government and non-profit organizations.
Xcel Energy corporate profits over a five year span
In 2022, Xcel Energy’s Colorado subsidiary, Public Service Company of Colorado, accounted for 42% of the company’s earnings.
Meanwhile, Xcel Energy has met or exceeded its earnings guidance for shareholders for 18 consecutive years and between 2018 and 2022 corporate profits rose 38% to a record $1.7 billion.
“They never take a write-off against shareholders for something like Storm Uri,” Levis said. “It is always on the ratepayers.”
Those ratepayers, or customers, are left with a cryptic electric bill with 13 different charges pumped up by four rate increases, one on top of another, since 2020 — a phenomenon consumer advocates call pancaking. So, the High Cost of Colorado series serves you a full stack, along with an overdue side of explanations.
Design by Danika Worthington.