Xcel Energy is proposing to boost rates for electrical service, and the more information that becomes public about the request, the more it is clear that state regulators need to give the request especially careful scrutiny.
Several factors make up a monthly utility bill.
The biggest is the cost of fuel – last winter’s high bills were due to soaring natural gas prices. Xcel is allowed to pass through to customers what it pays for fuel, but the utility doesn’t make any profit on that.
However, Xcel recently got the state’s OK to raise the price for basic natural gas service, so it can upgrade pipelines and other parts of the gas delivery system. The utility made a strong case that the additional cash is needed to maintain reliable service.
Now Xcel wants another price hike, this time to improve transmission lines and other parts of the electrical system. For now, it’s unclear if the increase is justified. The charge to cover those costs, labeled “residential general” on utility bills, now costs most homes $53 a month.
Xcel’s plan contains several pieces, making it one of the most complex rate cases in years. The Colorado Public Utilities Commission must really study the matter to determine the true, total effect on consumers.
It’s even unclear how large the price hike could be. When Xcel said in April that it wanted to raise basic electrical rates, it put out information showing that the increase would be about 6 percent for most residential customers.
But documents it filed with the PUC indicate that these customers actually could see an increase of more than 11 percent, starting in 2007. Unfortunately, the higher figure seems to be the more accurate one. If so, then come January, for the privilege of being connected to the electric grid, most households would pay an average monthly charge of $62 rather than the current $53. The rate hike would be in addition to any rise in the cost of natural gas, which fuels about half of Xcel’s electrical capacity.
The case is further complicated by Xcel’s desire to move certain other costs from the basic price of electricity, which remains steady for years at a time, to a special fee (called a rider) that fluctuates. Xcel buys supplemental juice from independent power producers, but the costs are buried in basic rates so don’t give consumers incentive to conserve. Under Xcel’s plan, customers would pay less when the fees decline but more when they rise. Frankly, the PUC should avoid introducing more uncertainty into consumers’ utility bills.
