Here’s why your Xcel Energy bill is so high right now — and what you can do about it

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

Many Xcel Energy customers in Colorado received an early surprise this holiday ⁠— and no, it wasn’t from Santa Claus.

Instead, they woke up to staggeringly high energy bills from the state’s largest public utility, as much as double what they were in November. Social media sites and online communities like Facebook and Nextdoor have flooded with hundreds of customers expressing outrage over surging monthly bills. 

Many of them have the same question: Why?

“I don’t even know that a lot of people know what causes things with their utility bills,” said Denise Stepto, a spokesperson for Energy Outreach Colorado, a state nonprofit that helps people with high energy costs. “As much as we all try to educate, it almost doesn’t matter because they don’t know what to do about it.”

Xcel Energy representatives say much of the increase stems from higher prices for natural gas, a commodity used to heat and power homes during colder months. Xcel has also relied more on more natural gas this year, and the Colorado Public Utilities Commission has approved company proposals to recoup costs from purchasing more of the fossil fuel.

As customers pore over their energy bills, let’s break down some of the costs.

Natural gas is expensive right now

The main reason bills are higher is the wholesale cost of natural gas, said Xcel Energy spokesperson Tyler Bryant. The price in August was nearly double what it was during the same month in 2021, according to data from the U.S. Energy Information Administration. The federal agency forecasts both record production and consumption of natural gas in the United States this year.

Xcel and other utilities buy natural gas on the open market, which is currently under investigation by the federal government for potential price manipulation during a nationwide cold front last year.

“The gas supply market is not regulated and has never been,” said Cindy Schonhaut, the director of the Colorado Office of the Utility Consumer Advocate. “We’re all waiting for the outcome of that [federal] investigation.”

Natural gas prices peaked in August and fell through November, according to the Energy Information Administration. Another price bump is expected in January.

Hike in natural gas rates

The Colorado Public Utilities Commission this fall approved an increase in natural gas rates charged to customers, which went into effect in November.

Xcel Energy is looking to raise more than $188 million through the rate increases in the coming years to upgrade its natural gas infrastructure, fund programs to better insulate buildings and detect pipeline leaks.

Natural gas rates are expected to keep increasing each year through 2025, according to Xcel.

Recovering money spent on natural gas during a 2021 winter storm

The Public Utilities Commission in June also approved a company proposal to recover more than $500 million it spent on high natural gas costs during a winter storm last year. Xcel will collect a new fee, listed as “EGCRR” through customers’ energy bills, for up to 30 months, according to the company proposal.

Regulators determined Xcel acted prudently when buying natural gas during the winter storm. The Office of the Utility Consumer Advocate argued otherwise.

“With Xcel, it’s always something,” Schonhaut said. “They’re always seeking to increase consumers’ bills.”

Bryant, the company spokesperson, said Xcel is reducing the monthly impact on customers by spreading the cost over more than two years.

Coal shortages ⁠= more natural gas 

Labor shortages within the nation’s rail industry have led to smaller supplies of coal being shipped to power plants across the country, industry experts said. In order to reserve its coal stockpiles for the winter, Xcel has used more natural gas. Energy generation from natural gas is expected to jump by 240 percent this winter, company President Robert Kenney told CPR News last week.

Xcel Energy is asking the Public Utilities Commission to recover $123 million by raising fees next year to make up for the coal-delivery shortfalls and higher natural gas prices. The Office of the Utility Consumer Advocate objects to the increase.

There are ways to reduce your energy costs

Bryant shared several options for Xcel customers to conserve energy this winter, such as lowering thermostats and opening drapes during the day to let in home-warming sunshine. The company also has payment plans and energy assistance options for people who can’t afford to pay the higher bills, he said.

Residents can also make their homes more energy efficient by upgrading gas furnaces and installing new insulation, Schonhaut said, recommending customers visit the UCA website.

Energy Outreach Colorado helps residents sign up for other assistance programs, such as the Low-income Energy Assistance Program, known as LEAP. 

The nonprofit received nearly 17,000 calls from customers last week, the highest amount since it began tracking call totals in 2020, Stepto said. Many of the calls came from older or disabled adults, students and others with fixed or limited incomes.

“We do talk a lot about, ‘Expect to see an increase,’” she said. “It’s a totally different thing when it actually happens, and it’s shocking when it’s double.”