If Xcel Energy customers feel like their electric bills just keep climbing, there’s a reason, according to state regulators. And if the company gets the full $355 million boost in yearly revenue it’s seeking, the total rise in electricity bills since 2023 will reach 33%.
The Colorado Public Utilities Commission staff and the Colorado Office of the Utility Consumer Advocate have recommended approving only half or less of the increase requested by Xcel. The PUC has scheduled meetings and to hear from the public.
Xcel Energy, the state’s largest electricity utility, has said the rate increase is aimed at recovering the costs of investments the company has made since its last rate increase in 2023. The company said the average residential bill would go up by nearly 10% a month.
But the PUC staff said if the full increase is allowed, customers’ bills will have risen by 33.1% in three years. Bills are approximately 23% higher since 2023 and 10% would be added if Xcel’s rate request is approved, O’Neill said.
The staff attributes the sharp jump largely to riders, or costs added to bills after the general rate is authorized.
Some riders are the result of settlements with the utility and some are approved by the legislature so Xcel can pay for improvements or projects. The charges sometimes expire after costs are recovered. Many times the riders have a long life.
“Just because the rider is created doesn’t mean it will live forever. But most riders do,” said Erin O’Neill, the PUC’s deputy director of fixed utilities.
There are currently 11 riders on electric bills. Three are assessed using a percentage of the total revenue, which would boost Xcel’s requested rate by about $11 million to $367 million, O’Neill said.
The uses for the add-on charges cover a broad range: new transmission and distribution infrastructure; wildfire mitigation; the costs of moving to cleaner energy sources; modernizing the grid; electrifying transportation; and fuel costs.
The number of riders over the past few years has gone up, O’Neill said. The riders allow utilities to be paid as they incur the costs. The PUC staff prefers to see the receipts first, do the math and then reimburse the company, O’Neill said.
“This is needed infrastructure that we need to make our system more resilient and work better,” O’Neill said.
But the PUC staff and the consumer advocate’s office are recommending that regulators authorize lower rates of return that Xcel can collect on its investments and different financing mechanisms that will mean lower rates for customers.
The PUC staff’s analysis of the rate increase is correct if the full request is approved, Xcel spokeswoman Sydney Isenberg said in an email.
“If enacted fully, the 33% increase would be based on 2023 rates and is reflective of the significant investments we’ve made to the electric system over the past three years,” she added.
Colorado residential electric bills are 39% below the national average, according to Xcel. Even after the proposed increase, the average Colorado household would spend about 1.27% of its income on electric service, almost half the national average, Isenberg said.
The Office of the Utility Consumer Advocate has been vocal about what it criticizes as a “pancaking,” or piling on, of rate increases. In January, Xcel filed a request for a yearly increase of $190 million in revenue for its natural gas services.
Cory Skluzak, a rate and financial analyst with the consumer advocate’s office, said in a filing with the PUC that nearly 73% of Xcel’s residential electric customers and 41% of small business electric customers also get natural gas from the company.
“The company has taken a very aggressive approach to maximizing the benefit for shareholders. So, you see the company on a spending spree,” said Joseph Pereira, director of the consumer advocate’s office.
The consumer advocate has recommended that the PUC approve a rate increase of $138 million. In 2023, Xcel Energy sought a $312 million yearly increase in revenue. The PUC cut the request to about $97 million.
Pereira was critical of the increase in riders on Xcel bills.
“When we collect costs through rates, the company is fixed on the revenues that they can collect in that year. It forces them to make fiscally responsible decisions,” Pereira said.
Rate cases generally take months. The PUC makes a decision after testimony from the staff, the company, interest groups and after getting feedback from local governments and the public.
O’Neill of the PUC said while other parts of the country are experiencing higher electric bills because of the expansion of energy-intensive data centers, those aren’t a factor in Colorado at this point. Xcel has proposed rates intended to prevent residential and small-business customers from bearing the brunt of supplying the large computing facilities if more are built in the state.
The PUC understands that investments are needed for new transmission infrastructure, tools to reduce the risk of wildfires caused by the electric system and improved distribution, O’Neill said.
“And we need a healthy, financially stable utility. We also need affordability and reliability and we try to make sure that we’re always balancing those things.”
