As customers see big jumps in their bills, Xcel reports massive profits

DENVER — Xcel Energy customers are seeing a big jump in their bills at the same time the utility company is seeing massive profits.

Higher rates for Xcel customers were reflected for the first time in bills starting Nov. 1.

The main reason for the raise is a big jump in natural gas prices. This time last year, customers were paying roughly 47 cents per therm. While this year they are paying roughly 95 cents per therm.

“The wholesale price of natural gas is what makes up the largest portion of most customers’ bills. And those have been high as we head into this coldest season of the year,” said Robert Kenny, president of Xcel Energy Colorado.

Xcel doesn’t make a profit from the natural gas prices, it just passes them through to ratepayers. Kenny says they have taken steps to try to mitigate the increases like storing gas to use during the winter heating season, contracting for natural gas in advance, and purchasing financial hedges which act as an insurance policy to minimize the volatility of the commodity costs.

However, because customers cannot simply pick up and switch utility companies Denver7 asked Kenny what incentive Xcel really has to negotiate for the best possible rate.

“Well, first and foremost, our incentive is inherent in our desire to keep costs low for our customers,” Kenny said. “It doesn’t do us any benefit to have our customers unable to pay our bills or to be dissatisfied with our service.

Over the course of 2022, Xcel has asked the state’s Public Utilities Commission for at least five rate increases on customers, which were all granted in some measure. It’s also currently in the process of asking the PUC for another rate increase on customers for the electric portion of their bills.

In a recent PUC hearing, commissioner John Gavan raised questions about all of the different increases that have been requested and asked his fellow commissioners to approach Xcel’s latest request with more scrutiny.

“I really think Xcel needs to step back and focus on customer satisfaction instead of nickel and diming us with all of these onerous rate increases that are just pancaking and adding up. We are in a very dangerous period now and I really call on the commission to really scrutinize this to a degree we’ve never done before,” Gavan said.

It’s a concern commissioner Eric Blank also shared publicly during that hearing. However, Cindy Schonhaut, the director of the Colorado Office of the Utility Consumer Advocate, says in her nine years working for customers she cannot remember a single instance of the PUC outright denying a request from Xcel.

As customers see big jumps in their bills, Xcel reports massive profits

They have, however, paired back some of the requests.

“We typically don’t get everything we asked for. And so we welcome that process by which the commission is able to scrutinize our proposal,” Kenny said.

The second biggest increase customers are seeing on their bills is an increase to their base rates, which have gone up about 7% from last year.

On customers’ Xcel bills, they will notice an increase in their usage charge, an increase to the interstate pipeline fee (which is the cost the utility recoups from customers for upstream gas delivery), an increase in the fee to recover costs for Xcel projects that reduce natural gas demand and more.

“We understand that any rate increase of any sort for some of our customers can be challenging and difficult. And the first thing I’d want them to know is that we are here for help,” Kenny said. “If they need help paying their bill, we can help put them on a balanced and levelized payment plans, and we can also direct them to energy assistance programs.”

However, those energy assistance programs are not paid for by the utility but by customers as an additional charge on their bills. It falls under the Energy Assistance Charge fee.

That money then goes to the Colorado Energy Outreach Office to customers who are struggling to pay their bills.

The Colorado Low-income Energy Assistance Program (LEAP) also offers help to income-qualified families using federal money to pay a portion of their heating and water costs.

“It’s not money out of Xcel’s pocket,” Schonhaut said.

On the other hand, Kenny says Xcel can help customers with levelized payment plans or programs to spread out the cost. He also insists that the company and its shareholders make charitable donations throughout the year and invested $10 million in the community.

At the same time that customers are struggling to pay their bills, in the first nine months of 2022, Xcel reported $555 million in profits for its shareholders. Kenny says the profits are an indicator of a healthy company and are in line with other utility and energy providers.

“If we’re financially healthy, the cost for us to issue debt and equity is lower and that is helpful for our customers,” Kenny said. “That also ultimately helps our customers because we’re able to issue and deploy capital more cheaply than we otherwise could.”

However, when pressed on how much of a savings individual customers are experiencing because of Xcel’s better bond rating, Kenny couldn’t cite any specific examples.

“A financially healthy utility is in consumers’ interests,” Schonhaut said. “That’s different from making outrageous profits.”

Schonahut wants to see Xcel’s shareholders on the hook for either helping pay for new infrastructure or helping customers who are struggling.

Xcel makes its profits from new infrastructure projects and has been working toward a clean energy transition. Schonhaut and other consumer advocates worry, though, that some of the current natural gas pipes that are being installed will be obsolete before reaching their lifespan, leaving customers on the hook to pay not only for the transition but unused pipes as well.

“So, what you’re looking at right now, is consumers have to tighten their belts, Xcel Energy is not doing that at all,” she said.

Kenny, however, disagrees, saying that the utility has an obligation to serve customers who need natural gas now while the clean energy transition happens. He also insists that the natural gas pipes going in now can be used to carry green fuels like hydrogen.

“We have to make those investments because the pipes are in the ground today, and our customers are still demanding the use of natural gas. And that infrastructure can be put to a different use in the long run for cleaner fuels,” he said.

For now, as customers continue to see their bills rise, Schonhaut is encouraging customers to reach out to the PUC with their stories before the commission decides to pass any more rate hikes on customers.