Xcel Energy’s proposed deal to raise average residential energy bills by nearly 6% is running into a wall of opposition from Colorado consumer and environmental groups.
The proposed residential rate increase would be among the largest ever in the state, according to the Colorado Office of the Utility Consumer Advocate (UCA), which advocates for customers and is opposed to the deal.
In November, the state’s largest utility petitioned state regulators at the Public Utilities Commission to let it increase how much it charges for electricity. Xcel hadn’t requested a major price hike to its customer base rates since 2022.
Last year, the company said it needed to recoup around $356 million it spent to build new renewable energy projects, transmission lines, and more. That amount would have raised average residential bills by roughly 10%, according to the company’s analysis.
Xcel, state experts and a flock of outside groups have spent months sparring over the proposal, trading hours of testimony and thousands of pages of legal filings. One main issue was how much of Xcel’s expenses should be paid for by Coloradans, versus how much should be paid for from the company’s own pockets.
Last week, several groups reached a sprawling settlement. Utility commission staff, electrical labor unions, Xcel, and its largest customers, like Walmart, agreed to let the utility increase its rates by $225 million.
That translates to a roughly 5.86% increase for average residential bills, and would still keep Colorado electricity bills below the national average, according to the company. It also lays out conditions for recovering expenses from the consistently unreliable coal plant Comanche 3 in Pueblo, and funds a program to help people pay for bills.
The settlement is an “example of us collaborating across a variety of stakeholders to find a reasonable approach to deliver highly reliable, modern electric service while keeping bills as low as possible,” Xcel said in a statement.
But several groups are unhappy with the deal. UCA said the deal is sub-par and should be modified to cut the company’s earnings.
Joseph Pereira, UCA’s director, said the proposal means consumers are paying at least twice for increased rates: once in their residential bill, and once when they go to retailers who get their power from Xcel.
“So it hits you from both sides,” Pereira said. “When you add up all the pieces, it looks like a bad deal for customers.”
Energy Outreach Colorado, which advocates for low-income customers; Boulder, which has thousands of Xcel customers; and AARP, which advocates for seniors, also oppose the deal.
Utility commissioners will begin debating the bill on Thursday, and may vote to approve, modify or deny the settlement by later this summer.
Xcel deal still too expensive, consumer advocate says
The sprawling settlement has several major parts, according to a document filed by PUC technical experts. Those include incentivizing the company to efficiently operate Comanche 3, guidelines to stop disconnecting customers who fall behind on their bills, and regular reviews if the company wants to keep operating its coal plants.
A thornier issue is how much money Xcel is allowed to make for its shareholders. That amount, known as “return on equity” in utility jargon, is how investor-owned utilities earn a profit and attract money to build expensive infrastructure, like power plants.
In recent years, the “ROE” for utilities has generated intense debate, as some economists and former utility executives say an excessive return may be jacking up consumer bills.
The settlement keeps the company’s current return on equity steady. That amount has helped the company be immensely profitable: last year, Xcel earned around $680 million in Colorado, even after paying millions of dollars to cover claims from the Marshall Fire.
The company is poised to spend billions of dollars in Colorado from now until 2030 — to harden the grid from wildfires, upgrade aging poles and wires and more. Funding those costs through customers, with a healthy amount of profit tacked on for shareholders, means rates could continue to skyrocket, according to Pereira.
He urged utility commissioners to take a firmer hand and lower the proposal’s impact on bills, instead of accepting the settlement offer without changes.
“We think the commission should have the final say,” he added.
Editor's Note: Xcel Energy is a financial supporter of CPR News. Financial supporters have no editorial influence.
