The threat of huge increases in winter utility bills is leaving Coloradans angry, scared and with no legal or regulatory recourse.
Xcel Energy’s filing this week to pass $116 million in higher fuel costs on to consumers is allowed by state law, giving state regulators, politicians and residents no leeway to fight or reject the increase.
“I’m kind of outraged. There is no reason why prices should go up other than the utility company being greedy,” Denver resident Sam Stevenson said. “I’m tired of the reliance on public utilities.”
Skip Arnold, executive director of Energy Outreach Colorado, an assistance agency, said: “The people I’m hearing from are in a state of disbelief about what will happen to them this winter. This winter will be catastrophic in terms of low-income families.”
Even for many middle-class households, the steep price increases this winter will turn utility bills from a costly obligation to a forbiddingly expensive hurdle, said state Rep. Jerry Frangas, a Denver Democrat who said he again will seek to earmark state funds for utility-bill assistance.
“I read the newspaper (Thursday) with anger,” Frangas said, referring to Xcel’s plan for a electric-rate hike. “It’s just another bite out of families, and it’s starting to cut to the bone.”
An Xcel spokesman said the utility is not profiting from the rate increase.
“The market prices of natural gas are well beyond our control,” spokesman Tom Henley said. “The $116 million is a pass-through cost, and there is not a profit mechanism attached to that.”
The combination of sharply higher rates for both electricity and natural gas is expected to send winter utility bills soaring 33 percent over last winter’s record levels. Xcel projects that December bills will be $240 for a typical residence, compared with $180 last December.
“Thirty-three percent seems like a big amount all at once,” said Craig Williams of Parker. “I can understand small increases over time.”
Xcel earns a profit from delivering electricity and natural gas to customers, but if the utility must pay more for its purchases of coal and natural gas, state law allows the higher costs to be passed directly to consumers with no additional markup. The same pass-through system is used if fuel costs go down.
Xcel’s higher costs stem from sharp increases over the past two years in natural-gas costs. The nation’s traditionally high- producing gas fields, primarily in the southern U.S., are starting to slow down. They’re being replaced by discoveries in the Rocky Mountains, where gas is plentiful but in formations that are difficult and costly to drill.
Natural-gas prices nationwide have tripled over the past 22 months – a period in which many gas producers have been booking record profits.
For the first half of 2005, Xcel had profits of $204.9 million, compared with profits for the same time period last year of $235.2 million. Its stock closed Thursday at $18.70, up from a low of $5.12 in July 2002.
Some residents said they would deal with the price hikes by insulating their homes, using wood fireplaces more and wearing sweaters. Others see the rising cost of gasoline, natural gas and electricity as a wake-up call for renewable energy.
“This is a wake-up call to Americans to start to be more conservative,” said Jesse Young of Conifer. “We’re the most wasteful nation in the world. This is going to prompt us to be innovators.”
One resident said the current crisis is reminiscent of the energy shortage in the late 1970s.
“What I’m angry about is that the last energy plan we had was in the Carter administration. We should have been planning for this all along,” Williams said. “We’ve stopped funding alternatives. This was all predictable.”
One option, Xcel says, is a budget billing plan that helps even out the highs and lows of monthly bills over the course of a year.
With what Xcel calls the “averaged monthly payment” plan, the utility uses past bills to estimate a customer’s total gas and electric costs for the next year, then sends a monthly bill for the same amount for 11 months. On the 12th month, actual costs are reconciled and customers make up the deficit or receive a refund.
Because natural-gas costs have risen rapidly over the past year, some customers have received large bills on the 12th month, prompting a handful of complaints to the Public Utilities Commission, said PUC spokesman Terry Bote.
Applications for the averaged monthly payment plan are up 7 percent this year and are expected to grow faster as customers realize the magnitude of winter bill increases, said Xcel spokeswoman Margarita Alarcon.
Energy experts say other methods of dealing with high utility bills are tried and true conservation measures.
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
