Xcel Energy recently announced its new “two-tier” pricing structure for its residential customers during the summer months from June through September. I’m afraid most of us will shed many more than two tears when those bills start rolling in. Sugar-coating the changes, the Colorado Public Utilities Commission claims that summer electricity bills “overall” (that means on average) will go up by about 2 percent compared to last year. The trouble with averages is that you can drown in a stream with an average depth of 12 inches.
The new pricing system is designed to discourage excessive energy use. That’s not a bad idea, but a more reasonable approach would have had multiple tiers, with gradually increasing gradients. This scheme is heavily skewed in favor of lower-income households with very small apartments and no air conditioning. They’ll pay less. Middle- and upper-income households, on the other hand, will be skewered by the new rates. This is Obama- style “progressive” redistribution of income by a public utility. The break point between the two tiers is a ridiculously low 500 kilowatt-hours of monthly electricity use for what Xcel calls “Residential General” service. Below that level, the charge is 4.6 cents per kilowatt-hours (kWh). Above that level, the charge per kWh nearly doubles to 9 cents.
A radio listener put this in perspective when describing her daughter’s electricity profile. She lives in a 1,000-square-foot rowhouse with a gas stove, furnace, water heater and dryer. Her electricity runs mostly the lights, TV, ceiling fan, computer and hair dryer. She has no air conditioning and still generates up to 440 kWh a month.
I live in a 1,700-square-foot condo apartment with air conditioning. Last year, I used 1,235 kWh in July. Friends with 2,500- to 5,000-square-foot, air conditioned homes have summer kWh usage ranging from 2,500 to 4,000 kWh. Everyone will pay the same $23.02 on the first 500 kWh. In my case, the next 735 kWh would cost me $66.15 in 2010. At 4,000 kWh, it’ll cost $315 for increments over 500 kWh on top of that same $23.02. In both cases, this is more than double what we paid for that increment last year.
And this doesn’t include the commodity price adjustment and other “riders,” franchise fees and sales tax on your Xcel bill. Xcel explains that it’s difficult to make an apples-to-apples comparison of the basic rate from last year because the pricing and allocation of additional charges has changed. OK. I’ll wait and see what my actual bills look like this summer and report back in a few months. Something tells me that you and I will be nailed for considerably more than the “2 percent” increase.
This plan was encouraged by the PUC as part of Xcel’s $128 million rate increase. Instead of uniformly spreading the bill, Xcel will burden the more affluent with what amounts to a punitive air conditioning surcharge. Its justification for the sharply higher summer prices is that energy spikes associated with air conditioning use on torrid days drives up costs, and that there’ll be an offsetting reduction in prices in other months when Xcel reverts to the lower, one-tier rate. I’d like to see an audit. I suspect Xcel is exaggerating the summer differential and doubt that winter savings for air conditioning users will match the summer surcharge. This also smacks of environmental correctness, taxing the comfortable while Boulder greenies revel in a pool of self-righteous sweat.
The “riders” that drive Xcel’s rate increases include the cost of emissions controls even when uneconomical. These will accelerate when the legislature’s latest brainchild, House Bill 1365, takes effect, mandating that Xcel make costly capital investments to convert economical, clean Colorado coal plants to more expensive and price-volatile natural gas.
Welcome to your New Energy Economy.
Mike Rosen’s radio show airs weekdays from 9 a.m. to noon on 850-KOA.
