Xcel Energy wants to raise a record $225 in million new revenues, in part by adding $6.15 a month to the average household bill, but consumer advocates say an increasing number of customers would struggle to pay it.
The warning signs, they say, are already there.
“There is a trend of increasing disconnections for all customers,” according to a staff report to the Colorado Public Utilities Commission.
Disconnections of residential customers for nonpayment rose 705% between 2023 and 2025 — to 78,337 from 9,731 — with nearly a third being disconnected multiple times.
One reason for the increased shutoffs, the PUC staff said, is that smart meters make it easier, since households can be disconnected remotely. In the pending rate case customers would pay $72 million for the installation of those meters.
Since September 2023, Xcel Energy’s electric rates have risen 22.2% — more than three times the rate of inflation, according to a PUC staff report.
The average monthly bill, for 601 kilowatt-hours, is now $104.68. It would rise to nearly $111 under the proposed rate increase. In 2022, the average bill was $90.90.
“What we’re seeing is a real stress on families right now regarding energy bills, which is something that we’ve been hearing over and over,” said Jennifer Gremmert, CEO of Energy Outreach Colorado, which helps low-income households with their energy bills.
Low income household spend 10% of income on energy
Xcel Energy doesn’t see it that way. “There is no affordability crisis,” Robert Kenney, CEO of the company’s Colorado subsidiary, told a legislative committee this spring.
Xcel residential customers, on average, pay 1% of their household income on electricity — the so-called wallet share — half of the national average, the company said.
Still, by Xcel Energy’s own estimate as many as 385,000 customers may be paying 2.5% or more of their income on electricity. Low-income households are spending 10% to 12% on energy, Gremmert said.
“We recognize that for some of our customers they’re still going to face challenges paying their bills, and that’s why in this last rate case we proposed enhancements to our electric assistance programs,” Kenney said in an interview.
As part of a proposed rate increase settlement, Xcel Energy would expand its aid to income-qualified families and seniors, reduce shutoffs and make it easier to apply for bill relief.
“We wanted to increase program eligibility, we wanted to get more customers into the program, to reduce the share of wallet, as well as prevent large arrearages from building up,” Kenney said.
“We know once a large arrearage balance builds up, it’s very difficult for a customer to dig out of that,” he said.
While welcoming the proposal, the PUC staff, Energy Outreach Colorado and the Colorado Office of Utility Consumer Advocate, which represents residential and small commercial customers, say they doubt the company is providing enough money to meet the need.
Energy Outreach Colorado calculates that about a quarter of Xcel Energy’s 1.4 million residential customers would qualify for aid. Xcel Energy estimates it could be as much as a third.
“You have a quarter to a third of your customers — by your own numbers — that can’t afford your product, that’s very problematic,” said Joseph Pereira, the director of the Utility Consumer Advocate or UCA.
“If that were in the market, you would have big, big problems with your product,” Pereira said.
The company is providing a total of $42 million for the program with half of that one-time funding. “It would be billions to meet the need,” Gremmert said.
Rising electric bills are becoming a challenge across the country.
Between March 2025 and March 2026 rates rose in 43 states, according to the U.S. Energy Information Administration, or EIA, with residential rates up an average 7.2%, while the March inflation rate was 3.3%.
More than 60% of the households making less than $30,000 have reported energy insecurity and even 31% of families earning $60,000 to $99,999 faced some energy bill challenges, according to the EIA Residential Energy Consumption Survey.
“It’s not just low-income people, it’s also middle-income families, because their budgets are just so tight,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association. “It’s the canary in the coal mine, everyone gets an electric bill.”
Utility rate increases show up in political conversations
In some states it has become a political hot button, Wolfe said.
Electric bills were an issue in the New Jersey governor’s race and on her first day in office Gov. Mikie Sherrill issued an executive order aimed at freezing rates. The New Jersey utility commission approved a $100 million program providing a $50-a-month bill credit to all residents.
In neighboring New York state, the legislature approved a $1 billion program to send “POWER checks” to 8.2 million households.
Average bills, however, are much higher in the Northeast. While a Colorado Xcel Energy customer pays about $105 for 601 kilowatt-hours, a New Jersey resident is paying about $162 a month.
So, in Colorado energy assistance is largely left to nonprofit organizations, like Energy Outreach Colorado, federal funds and the utilities.
Xcel Energy’s aid program is called the Percentage of Income Payment Plan, or PIPP. All investor-owned utilities in the state are required to have such a plan.
The first qualification is that a customer’s yearly income must be less than 200% of the federal poverty level, $54,640 for a family of three, or below 80% of the area median income.
In Colorado the median varies by county. For the Denver metro area, the 80% threshold is $103,680 for a three-person household.
Energy Outreach Colorado estimates that more than half of Xcel Energy’s customers would meet the income qualifications.
A qualifying customer’s “energy burden” is then calculated by dividing the annual cost of the household energy bill by the annual household income.
Households paying 6% or more of their income are considerate to have a high energy burden, Those paying more than 10% are carrying a severe energy burden.
The current PIPP states that a customer should pay no less than 3% of income and no more than 6%, if electricity is the primary heating source and 5% if it is not.
Under the proposed settlement plan the energy burden threshold would be cut to 2.5% from 6%. In addition, income-qualified seniors who do not meet the energy burden threshold would still be able to get a $20 monthly bill credit.
A participating household would get a hold on any disconnections as long as they are in the program. Xcel would also make it easier to join by allowing customers to self-attest they qualify and verify the claim later.
“There is a deeper benefit for those in the program,” the UCA’s Pereira said. “So, the need for assistance dollars grows … and with rates going up, you will see more customers who could handle it before who can’t handle the bill now, and so they’ll enter the pool as well.”
Pressure from clean energy goals, data centers are in the equation
The bulk of the funding for the program would come from Xcel customers themselves through an energy assistance charge on their bills. For residential customers that comes to about $1 a month.
In 2024, those bill charges raised $26.6 million for the electric program and another $20.5 million for a PIPP for natural gas, according to the company’s 2024 PIPP report.
In addition, the company is proposing to apply $15 million in unused PIPP fees and add a one-time $5 million shareholder contribution.
“The company is offering $5 million which is great,” UCA’s Pereira said. “They should be putting money in. The problem is they’re just doing it one time, so they’re kind of paying $5 million in this case, but those customers don’t go away.”
Applying those one-time funds brings the cost of the enhanced PIPP program to $22 million for the first year.
However, in a rate case filing the PUC staff said that Xcel Energy “has failed to show that there is sufficient funding in the long term to sustain lowering the burden to 2.5%.”
Without the one-time contributions Xcel Energy puts the cost of the electric PIPP at about $41 million.
The more households in PIPP the more expensive the program would be, the utility consumer advocate said in a filing that estimates the residential surcharge could rise to as much as $2.40 on the monthly bill to finance the enhanced bill relief program.
Xcel Energy’s Kenney said the company is continually making outreach efforts to educate customers about a host of programs. One initiative is the RED Truck, which goes to community events and provides information and help with bills.
The company is balancing Colorado’s clean energy goals, the rising demand from the electrification of the economy and data centers and affordability, Kenney said.
“You can’t look at those things in isolation,” he said. “You’ve got to look at them in the entire context of the drivers, what we’re doing, and what value we’re returning to our customers.
The current PIPP proposal is a departure point for continuing discussion on aid, Kenney said,
“We’re all interested in seeing how this goes over the next couple of years,” said Jason Peuquet, Xcel Energy’s regulatory regional vice president, “and how many additional participants we can get into these support programs.”
Still, Peuquet asked, “is it the utility’s responsibility, at the end of the day, to solve socioeconomic challenges, whatever they might be for each household? Probably not…but we want to do our part.”
In the end the aid Xcel Energy provides customers to help them pay bills goes back to the company.
“The company is always made whole, and so they really have no incentive to do anything different to get at the root cause, so rates and bills keep going up,” Pereira said.