Customers of the largest power company in Colorado should expect higher energy bills to pay for an expanding energy grid that includes upgrades to its natural gas facilities, said Robert Kenney, the newest president of Xcel Energy Colorado.
Kenney took the helm of Xcel’s state operations in June after serving as an executive for Pacific Gas and Electric Company in California. In an interview with CPR News this week, he said the recent trend of rising energy bills likely wouldn’t end anytime soon.
“We will likely see some amount of increase as we continue to make investments in the system,” Kenney said. “We're making the investments that we think are necessary to drive the clean energy transition while doing it safely and reliably.”
Kenney, who has both worked with utilities and served as a utility regulator, said he wants Xcel to model how investor-owned monopolies can change from coal to cleaner sources of energy.
At the same time, he reiterated the company’s position on natural gas, insisting customers should pay for power plants to burn the fuel and pipelines to carry it to new homes. Kenney said those plans won’t lock in more emissions because natural gas systems could someday run on carbon-free fuels like green hydrogen, a point that’s faced fierce skepticism from researchers and environmental groups.
Climate scientists have also drawn a clear line on new fossil fuel infrastructure. Earlier this year, the United Nations Intergovernmental Panel on Climate Change released a new report saying any new investment in such systems wasn’t compatible with international climate goals.
State regulators this year allowed Xcel to increase prices to correlate with rising costs in wholesale natural gas. The Minnesota-based company expects the average household will see their bills jump 54 percent this December compared to a year earlier.
The company will soon need to seek further rate increases to pay for new investments. The Colorado Public Utilities Commission recently approved nearly $10 billion in Xcel’s plans for new transmission lines and power generation to replace coal-fired power plants. The utility will recoup the cost of those projects from customers over the coming decades — plus an additional profit for their shareholders.
To reduce the effect on monthly bills, the company has incentives for customers who use less energy or make their homes more energy efficient, Kenney said. Xcel will also buy and store enough natural gas before the winter heating season to help guard against high prices that would be passed onto customers, he said.
The utility used one of those programs, the AC Rewards Smart Thermostats program, when its newest coal-fired generator broke down again last month, this time during a heat wave. The company did not warn the 22,000 customers who signed up for the program that it would take control of their thermostats, nor were they able to override the change. The move frustrated many customers and generated public backlash online.
“It's a component and a feature of the program that customers were voluntarily aware of when they signed up for it,” Kenney said, acknowledging Xcel should remind customers more often about those terms.
Xcel Energy continues to burn natural gas for electricity. The recently approved plan for new investments includes money for “dispatchable resources,” which could include improvements to existing natural gas power plants and new facilities. Kenney said these upgrades are necessary to maintain a reliable electricity grid and maintain low costs for customers. He added the company plans to purchase fuel certified as “responsibly sourced” natural gas.
“There's no inconsistency in continuing to use natural gas for heating and for power generation,” Kenney said. “We just wanna make sure that we're doing it as cleanly as possible.”
Kenney said he was approached to lead the utility because of his experience on “both sides of the bench” as chair of the Missouri Public Service Commission and later as a vice president with PG&E.
The California utility has faced government scrutiny and penalties for its electric grid, which sparked wildfires that have killed more than 100 people since 2015, according to PBS’ FRONTLINE. It pleaded guilty to 84 counts of involuntary manslaughter in connection to 2018’s Camp Fire, one of the deadliest wildfires in U.S. history.
Utilities need to evolve their electrical systems to prepare for wildfires that are becoming more frequent and furious because of climate change, Kenney said. That could mean burying power lines underground or clearing more trees and vegetation near lines, he said.
“That work is underway now” for Xcel Energy, he said, though he did not go into specifics. The company filed its own wildfire preparedness plan with the Colorado Public Utilities Commission in 2020.
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