Xcel Energy could refund less money to consumers for power outages and target the payments more narrowly under a service- quality plan proposed by Xcel and state regulators.
In a settlement awaiting approval by the Colorado Public Utilities Commission, Xcel’s maximum annual penalty payments to ratepayers for power outages and poor service would fall from the current $26.8 million to $19.5 million, according to Xcel.
Xcel also could avoid paying some penalties unless it violates service-quality standards for two consecutive years – an easing from the current policy in which the utility must pay each year that it exceeds state-mandated limits for complaints and outages.
Xcel officials said that without the proposed reduction in service fines, the utility would be unfairly penalized because its newer monitoring equipment detects more outages that would never have been reported using the old system.
“A lot of … basic data collection is significantly improved now, and we have devised improved performance metrics that are better balanced,” said Fred Stoffel, Xcel’s vice president for policy development.
Proposed revisions that narrow the payment of penalties are fair to ratepayers, Stoffel said, because only customers who have suffered outages should share in compensation.
The proposed changes to service quality have garnered little attention and are virtually unknown to consumer-advocacy groups.
However, Xcel customer William MacFaden of Leadville said he thinks the changes would be unnecessary if Xcel just improved service to levels that meet state standards.
“Xcel can easily reduce its fines by providing service,” he said. “Obviously, the fines are not stiff enough to make Xcel consider hiring sufficient service personnel to conduct business as they should.”
Service quality has been an ongoing issue for Xcel. It’s the subject of a PUC investigation following the Feb. 18 rolling blackouts that left 371,370 Colorado customers without electricity in subzero temperatures.
Last month, J.D. Power & Associates released a customer-satisfaction survey that ranked Xcel last among 12 large Western electric utilities. The Minneapolis-based company provides electric service to 1.3 million Colorado residents.
Under the proposed agreement, if Xcel violated outage standards for two years running, the company would pay customers a maximum of $11.4 million, divided among nine regions in Colorado in which outage standards were violated.
Another set of refunds totaling $3.2 million would be given only to individual households that experienced power outages of certain durations, unlike the current system in which all Colorado customers of Xcel share in the penalty payments through bill credits.
Customers who experience an outage lasting more than 24 hours would receive a bill credit of $50. Customers with more than five outages a year lasting more than five minutes each also would receive $50.
Xcel also could pay penalties totaling $4.9 million, primarily for violating service thresholds for number of customer complaints filed with state regulators and for failing to answer customer calls promptly.
Xcel Energy has met its statewide benchmark for electric-service reliability only once in the past five years, according to quality-of-service reports filed with the PUC.
As a result, Xcel has paid $39.3 million in bill credits to customers over the past six years, primarily for exceeding time limits on power outages.
Under penalty standards currently in effect, Xcel was required last month to issue a credit of $9.59 to each Colorado customer for exceeding outage time limits in 2005.
Initially, Xcel had proposed that state regulators eliminate all service-quality penalties, saying it could provide good service without the threat of fines.
But that plan met with strong opposition from a variety of regulators and consumer groups.
In March, Xcel proposed the modified penalty structure.
The Colorado Office of Consumer Counsel, a utility watchdog agency, has approved the service changes, as has the staff of the PUC.
The PUC commissioners, who ultimately will vote on the proposal, will hold a public hearing on the plan Sept. 8 at 9 a.m. at the PUC offices, 1580 Logan St. in Denver.
The consumer office favored the two-year penalty threshold instead of the current one-year standard because “it is our opinion that it isn’t fair to punish the utility for random variability that we know occurs in a short time frame,” said Jim Greenwood, director of the office.
The PUC staff approved the proposed settlement, spokesman Terry Bote said, because “the staff is supportive of targeting bill credits to customers that have experienced problems.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
Proposed settlement
$11.4 million: Amount that would be divided among Colorado regions affected if Xcel violates power-outage standards for two straight years
$3.2 million: Amount given to individual households that experienced outages of certain durations
$50: Amount a customer would be credited for an outage lasting more than 24 hours or for five outages a year lasting more than five minutes each
$4.9 million: Penalties Xcel could pay for violating a threshold of customer complaints and telephone- call response times
