Xcel Energy could overcharge customers ‘tens of millions of dollars’ after last year’s cold snap, state watchdog says

Excel Energy Cherokee Generating Station
Hart Van Denburg/CPR News
The Xcel Energy Cherokee Generating Station in Denver, June 2, 2020.

A state office representing utility customers says Xcel Energy mishandled its operations during a 2021 winter storm, failing to take measures that could have saved ratepayers tens of millions of dollars.

The Colorado Office of the Utility Consumer Advocate filed its argument last week with the state Public Utilities Commission, which will decide how much Xcel — the state’s largest utility — can charge its customers to recoup what it spent during the cold snap. The extreme weather froze natural gas production and hiked fuel prices across the country, leading to major outages in Texas and other states but not in Colorado.

Xcel has proposed a new fee on gas and electric bills to recover $550 million over a period of 30 months, according to the Public Utilities Commission. The commission staff and Colorado Energy Office have signed on to the proposal. 

The Office of the Utility Consumer Advocate is disputing the total amount Xcel seeks to collect from customers, saying the company exercised poor judgment during the winter storm and should recover far less money.

“The company had little to no planning related to this event,” said Joseph Pereira, deputy director of the consumer advocacy office. “It had no plans in place on how to run fuel oil, it had no plans in place related to conservation messaging. In every instance, it was scrambling to adjust.”

In its filing, the consumer advocate argued Xcel received multiple warnings about the potential for extreme weather in the days leading up to the storm. It says the company failed to properly use its dual-fuel plants for backup generation; did not properly warn customers to reduce their energy consumption; and mismanaged customers who volunteered to shut off their service, which it said, “nearly resulted in disaster.”

Xcel Energy denied the claims in its own document filed with regulators last week, saying the office was judging its decisions with the benefit of hindsight. Instead, the company said it was reacting to an unprecedented situation and that it was still able to limit additional costs for customers.

“This industry is incredibly complicated. When you have extreme weather events, those add to the complications of the system,” Xcel Energy President Alice Jackson said Wednesday. “The entire record, in this case, is what we stand on.”

According to the company, Xcel’s proposed settlement waives nearly $140 million, including $74 million in carrying costs associated with recovering the financing over a longer period of time. 

“We are finding ways that we can bring to the table that are impacting us adversely from a financial perspective, but at the same time are helping our customers,” Jackson said.

The Office of the Utility Consumer Advocate disputed the waived charges in its filing and accused Xcel of inflating carrying costs. It also alleged Xcel made $11 million in “proprietary trading” during the cold snap, arguing the company should not recover that money.

The filing did not include a lower estimate for recovery costs, saying only that Xcel “could have taken reasonable measures within its capabilities before and during the storm that would have saved customers tens of millions of dollars.”

If adopted, Xcel’s proposed settlement would raise average residential electric bills by $1.49 a month over two years and average residential gas bills by $5.59 a month over 30 months.

Public Utilities Commission spokesperson Becky Quintana said she did not know when the commission would issue its decision. 

Other public utilities, including Atmos Energy and Colorado Natural Gas, have already settled with the commission to recover natural gas costs from the cold snap.

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