State regulators should grant Xcel Energy far less than the $210 million electric rate increase the company is asking for, ratepayer advocates say.
The state Office of Consumer Counsel, which represents residential users, and the Colorado Energy Consumers, a coalition of large industrial users, school districts and advocates for low-income ratepayers, challenged Xcel’s need for such a large increase in filings Friday with the state Public Utilities Commission.
The OCC recommends the commission approve an increase of no more than $55 million. Colorado Energy Consumers wants the PUC to reduce Xcel’s request to no more than $121 million.
Xcel spokesman Mark Stutz said the company needs the full increase to provide quality service, make major investments in its plants and upgrade the power grid.
“From our brief review of the proposals of other parties, we do not believe they will allow us to meet these important objectives,” Stutz said.
Since its last rate case, Xcel has spent more than $1 billion on its generation, transmission and distribution systems in Colorado. The company says those costs are not now reflected in its rates.
The $210 million rate increase would amount to an extra $10.44 a month on average for each Xcel residential customer.
In separate filings, the OCC and Colorado Energy Consumers challenged some of the same aspects of the proposal.
Both oppose Xcel’s plan to charge residential customers a late fee if their bills aren’t paid on time. The late-payment fee would be 1.5 percent of the total bill.
“The penalty charge is simply punitive for residential customers and would result in a windfall for the utility,” said Thor Nelson, a lawyer for the Colorado Energy Consumers.
Xcel wants to recover its costs quicker from customers in order to bolster its appeal to investors, improve its credit rating and reduce its financial risks.
The company has asked for an increase in its rate-of-return from 10.5 percent to 11 percent.The OCC would cut that rate-of- return to 8.5 percent. Colorado Energy Consumers recommends the allowable return be set at 9.5 percent.
Xcel also wants a change to an accounting method called depreciation to speed up the amount of time it can recover its investment in its facilities and transmission system.
But the OCC objects.
“We don’t agree with their calculation on depreciation on various facilities,” said OCC Director Jim Greenwood.
In fact, said Greenwood, his office is recommending the utility refund ratepayers $21 million over the next 10 years that it has already collected to decommission electric plants and other facilities.
“We say there is no legal obligation for them to retire these facilities,” he said.
Xcel filed its request for a rate increase in April. The Minneapolis-based utility, which serves 1.3 million electric customers in Colorado, wants the rate hike to go into effect in January.
As a regulated entity, the company must get the PUC’s approval for an increase.
The OCC and a dozen or so other interested parties had until Friday to weigh in on the proposed rate hike.
The commission is scheduled to take testimony on the rate case this fall.
Xcel has also filed for electric rate increases in at least two other states where it operates. In Minnesota, it has asked for a $131 million increase. In Wisconsin, it wants to increase rates by $22.6 million.
Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com.
