Xcel Energy, its corporate customers and unions are at odds with consumer advocates over a proposed settlement that would grant the utility the largest electric rate increase ever — $225 million.
The proposed agreement between Xcel Energy and parties including the Colorado Public Utilities Commission staff, the International Brotherhood of Electric Workers, Walmart and Climax Molybdenum would raise the average household bill by $6.13 to $110.81 a month — a nearly 6% increase.
Colorado Energy Consumers, which represents large industrial and commercial customers, also signed on to the agreement.
The settlement, submitted to the PUC Monday, is opposed by the Colorado Office of Utility Consumer Advocate, or UCA; the city of Boulder; AARP Colorado, representing people over 50; and Energy Outreach Colorado, which provides aid to low-income families.
“What it looks like to us is that the company, PUC staff and corporate interests have made an agreement that saddles residential customers with the largest rate increase in Colorado history,” UCA Director Joseph Pereira.
Opponents are asking the commission to reject the settlement and move ahead with hearings slated to start June 11 on Xcel Energy’s proposed rate increase.
“After years of repeated rate hikes, it is unacceptable to ask older Coloradans to shoulder another egregious electric rate increase, especially when that increase passes the buck to consumers in the form of unjustified charges, unproven investments, and costs associated with struggling power plants,” Sara Schueneman, AARP state director, said in an email.
Xcel Energy filed the rate case in November seeking to raise the base rate by $355 million with $327 million in new revenue from customers. (The rest was moving individual charges on the bill into the base rate for a kilowatt-hour of electricity.)
The proposed $225 million settlement represents 69% of what the company asked for.
Over the past five years public utility commissions have approved about 64% of the dollar value of rate requests, according to a study by the Lawrence Berkeley National Laboratory. In 2025, it was 65%.
In the previous 20 years the average approval rate was 52%. “Higher approval levels could imply: higher-quality utility requests; lower levels of scrutiny; or changes in operating, regulatory or legislative environment,” the study said.
Rate hikes add up to 28% in three years
The preliminary filings by the UCA and the PUC staff raised questions about rising electric rates and their impact on households and the Colorado economy.
”A common concern was that families are already struggling with rising living expenses, and higher utility bills add to that pressure” Cory Skluzak, a UCA analyst, said in April testimony.
“This concern extends to small businesses, for which electricity is a major operating expense,” Skluzak said.
Under the proposed settlement, the cost of an average monthly bill for small commercial business would rise 5.6% to $168, an $8.90 increase.
Xcel Energy said it had not filed a rate request since 2023, but PUC staff said that statement “masks an ongoing trend in Colorado ratemaking — a sharp increase in recovery through rate riders.”
In the last three years, increases in bill charges and adjustments have raised rates 22%, according to a PUC staff filing. The settlement would bring the three year increase to about 28%.
Xcel Energy in its testimony stressed that it is facing a host of challenges including meeting a rising demand for electricity, modernizing and hardening the grid, wildfire mitigation and a host of legislatively mandated environmental and electrification programs.
At the same time the company is facing supply chain issues, rising costs and interest rates. Construction costs, for example, are up on average by 67%, a company filing said.
“All of this will require capital from investors. With the industry being in a heightened investment cycle, competition for capital is fierce, and investors will require returns that adequately compensate them for the risk they undertake,” Steven Berman, a company executive, said in a PUC filing.
UCA’s Sluzak argued that in this approach Xcel Energy’s subsidiary Public Service Company of Colorado was trying to “imprint “ on the commission “the obligation to maximize profits and shareholder value.”
“The commission, of course, does not have a fiduciary duty to PSCo, or any utility,” Sluzak said.
The $102 million reduction in the proposed rate increase was largely due to a few financial tweaks to the rates.
For example, the return on investments the company gets on new projects was reduced to 9.3% from the company’s proposed 9.8%. The current rate is 9.3%.
The project cost of capital for projects was reduced to 7.14% from the company’s proposed 7.46%.
While these may look like small changes they add up to many dollars.
One of the things both staff and the UCA called for was moving the Comanche 3 coal-fired power plant out of the rate base. Even when the plant breaks down and is out of service for long periods customers still pay for it.
The 750-megawatt plant in Pueblo has suffered repeated breakdowns and has been out of service for repairs since last August.
Under the agreement, Comanche 3 will stay in the rate base, but Xcel could be liable for up to $30 million in penalties for poor performance. Similarly, if the company’s other dispatchable generation underperforms the company could face up to $10 million in penalties.
The money from the fines would be refunded to customers the following years.
The settlement would also expand the programs to help financially strapped households pay their electric bills. This includes the company itself putting $5 million into the programs.
Most of the funding comes from an energy assistance charge customers pay each month. In 2024, that added up to $26.6 million, according to Xcel Energy’s Percentage of Income Payment Program report.