Colorado customers will see their monthly electric bills increase in the coming months after state regulators on Wednesday approved a rate hike that was significantly smaller than what the utility originally sought
Residential customers will see their charges rise by an average of $5 per month while commercial customers’ average monthly bills will increase by $7.29. That’s a 4.77% monthly increase for residential customers and a 4.64% monthly increase for commercial customers.
The approved the electricity rate increase after months of negotiations between Xcel, state regulators and consumer advocates, including the and . The commission must issue an order to formally approve the increase, and Xcel’s customers will see the rate hike in their bills as early as October.
The rate increase will allow Xcel to grow its annual revenue by $157 million, said Ellie Friedman, a rate analyst for the PUC.
Michelle Aguayo, an Xcel spokeswoman, said in an email to The Denver Post that the company was disappointed in the decision.
“The commission’s decision not to support the infrastructure needed to deliver on Colorado’s energy policies — supported by such a broad range of stakeholders — is surprising, and we will need to evaluate our investment approach in Colorado going forward,” Aguayo wrote.
Xcel, which is Colorado’s largest electricity provider, originally asked the PUC to approve an increase in annual revenue of $355 million, which would have boosted the average residential bill by nearly 10% per month. The company said it needed more money to pay for improvements to its power supply system in the state.
The utility requested the rate increase in November. But consumer advocacy groups and the , a state watchdog agency, pushed back after customers complained about the state’s rising cost of living.
The amount of the proposed rate increase was lowered in May after a round of negotiations and then again this month.
Xcel has also asked the PUC for permission to raise its natural gas rates, and those proceedings will begin later this year.
Some consumer advocates still complained that Wednesday’s rate increase was too much for people whose household budgets are strapped by high gasoline prices and more expensive grocery bills.
Sara Schueneman, state director of Colorado for the AARP, said the original proposal that would have boosted average monthly bills by 10% would be too hard on senior citizens living on a fixed income. Schueneman was grateful the original deal was lowered, but still criticized Xcel’s continual cost increases.
“Frankly, I think that Xcel has a strategy to continuously propose rate increases,” Schueneman said. “We’ve seen these proposals year after year. We’re pleased with the latest proposal. I don’t think the year-after-year rate increases are keeping the consumer in mind.”
The utility company’s latest rate increase will impact families that are already struggling to pay their bills, said Andrew Bennett, vice president of advocacy for Energy Outreach Colorado, a nonprofit that helps people afford their utilities.
The nonprofit ran out of its pool of money designated for Xcel customers on July 27. It won’t have more until its new budget year, which starts Oct. 1, he said.
“Even with a mild winter, we saw that much demand for energy assistance,” he said. “There are that many people who couldn’t afford their energy bill. We are helping more families with more money than ever, yet we are still running out.”
The latest agreement with Xcel includes more money for the utility’s energy affordability program, which caps bills for low-income households. The threshold for those caps will be lower once the new rate scheme goes into effect, Bennett said.
The commissioners expressed concern Wednesday that Xcel is spending too much money even as its total sales have dipped since 2021.
In 2021, the company’s capital expenditures were $1.6 billion and increased to $5.4 billion in 2025. The utility’s 2026 expenditures are expected to reach $6 billion, said PUC chairman Eric Blank.
“At the end of the day, I remain concerned that if capital spending and rates continue to grow at levels considerably faster than inflation, electricity may simply become unaffordable for many customers,” Blank said.
But Xcel’s leaders have argued that electric rate increases are necessary to support its work in Colorado.
“We also disagree with characterizations of our current capital investment levels,” Aguayo wrote. “Many of the investments included in the 2025 electric rate case were driven by Colorado energy policy and focused on strengthening the electric grid, improving reliability and resilience, preparing for growing demand, and enabling the continued transition to cleaner energy resources.”
Aguayo cited the multiple improvements the company has made to the grid, including replacing 17,771 wood poles, adding five new transmission and distribution substations, and replacing 306 miles of distribution cable.
“These investments address the needs of a growing and evolving energy system,” she said. “They help improve reliability, strengthen the grid against increasingly severe weather, reduce outage risk, and support the delivery of cleaner energy resources that customers and state policy demand.”
The state’s growing population is increasing energy demands at the same time that more severe weather and high wildfire risk are driving the company to fortify its system for delivering power to its customers.
Xcel is also investing in clean energy as it tries to phase out coal, which is line with Colorado’s climate goals.
But coal is the third-largest source of energy for Xcel in Colorado, and the company needs to spend an undisclosed amount on its broken Comanche 3 coal-fired power plant in Pueblo. Comanche 3 hasn’t worked since August 2025, and the state permitted Xcel to keep its Comanche 2 plant running longer than planned.
Xcel is trying to reduce its reliance on coal as part of Colorado’s overall plan to reduce greenhouse gas emissions, which fuel climate change and global warming.
