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Public Utilities Commission explains high energy costs

Christopher Kelley
Posted 2/5/23

The Colorado Public Utilities Commission (PUC) met on Wednesday, January 25, 2023, at 9 a.m. to discuss the causes for rising utility bills and to provide Colorado residents avenues of

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Public Utilities Commission explains high energy costs

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The Colorado Public Utilities Commission (PUC) met on Wednesday, January 25, 2023, at 9 a.m. to discuss the causes for rising utility bills and to provide Colorado residents avenues of relief.

Chief Economist Erin O’Neill and Chief of Media Relations, Outreach, and Engagement Gail Conners presented to the PUC an analysis of changes to utility customers’ bills and factors contributing to the fact that Colorado’s utilities costs have doubled since 2021.

The PUC regulates utilities and facilities to assure affordable, reliable, and safe services to the public. The PUC is a subsidiary of the Department of Regulatory Agencies (DORA), which manages business licensing and registration, regulates Colorado industries, and protects consumers by “preserving the integrity of the marketplace and promoting a fair and competitive business environment throughout Colorado.”

Customers feeling the effects of inflation across all consumer markets have complained to utilities companies and to the PUC in “unprecedented” numbers, according to O’Neill. Customer comments were provided, detailing “astronomical” increases of up to 62% to natural gas bills and bills reaching over $300 a month to heat an 800-square foot home.

O’Neill specified that the discussion will mainly focus on Xcel Energy, with the data varying based on individual consumers’ usage, billing cycle, and geographic location, among many other factors. In December 2022 a typical Xcel customer saw a 25% increase from the previous year to their electric bills, and a 75% increase to their gas bills.

Provided data showed that combined gas and electric bills rose from $166 in December 2021 to $253 in December 2022. Fuel charges on the combined bills jumped from $78 to $126; and usage charges jumped from $69 to $98. O’Neill noted that the higher usage in 2022, equating to an increase from 100 to 133 therms for gas usage and 550 to 600 kWh for electricity, was due to colder average temperatures and rate changes implemented between December 2021 and 2022.

The four main factors contributing to the significant billing increase were a 40% increase to the cost of natural gas fuel, a 30% increase in gas usage this year compared to last December, the recovering costs deferred from February 2021 for winter storm Uri, and the increases to Xcel’s base rate for both gas and electric service.

O’Neill also specified the factors that are not contributing to the rising cost of energy: Xcel’s rolling out of new Smart Meters for electric customers; investments into renewable energy like wind, solar, and electric vehicle initiatives; and the currently in-development Clean Heat Plans for gas utilities.

Fuel charges are most responsible for the high cost of utility bills and comprise more than half of the total bill. Though gas fuel charges for all of Colorado’s gas utilities have steadily increased over the years, utilities companies do not earn revenue from fuel charges. Also, the rise in fuel charges accurately reflects recent trends in the natural gas market, with the current Gas Cost Adjustment (GCA) showing $0.6 to $0.8 per Therm pricing, plus delivery charges.

The deregulation of natural gas markets in the U.S. and the international export of Liquefied Natural Gas are among several reasons for the high cost of natural gas. O’Neill noted that the PUC does not regulate the natural gas market. However they do approve the fuel rates charged by Colorado utilities. Natural gas prices began to skyrocket after February 2021 as a result of winter storm Uri.

O’Neill’s presentation explained that all Colorado utilities have implemented Extraordinary Gas Cost Recovery Riders in efforts to recover deferred gas costs because of winter storm Uri. Colorado Natural Gas began their 24-month recovery period in April 2022 with an impact of $16.50 per winter month to the bill. Xcel Energy Gas began their 30-month recovery period in August of 2022 with an impact of $7.20 per winter month to the bill.

O’Neill also mentioned that Xcel Energy had implemented approved base rate increases on April 1, 2022, for electricity and on November 1, 2022, for gas.

The presentation concluded with information concerning the PUC’s expectations for the future in regard to changes in the natural gas market and their own initiatives and actions. Wholesale natural gas prices are expected to decline and Colorado utilities are expected to announce lower GCA rates effective as soon as February 1, 2023. The PUC has approved requirements for utilities to file applications for performance incentives around gas purchasing, and has also begun examining utility disconnection policies.

Gail Conners led the PUC through the next portion of the presentation, which highlighted budget billing options and resources for customers in need of financial assistance.

All Colorado utilities are required to offer to their customers Budget Billing or Averaged Monthly Payment. Customers can opt to average the amount of their monthly bills in order to avoid bill spikes based on seasonal usage. Conners also mentioned several assistance programs including the Colorado Low-Income Energy Assistance Program (LEAP) and Energy Outreach Colorado.

Conners detailed the PUC’s objectives for public engagement, which include “promoting consumer interests” and “adhering to high standards of transparency and accountability.” The PUC will continue to be a resource for those who desire to be informed on issues pertaining to and affected by Colorado utilities.

For more information on the Colorado Public Utilities Commission go to: https://puc.colorado.gov

For more information on the Department of Regulatory Agencies go to: https://dora.colorado.gov