Xcel Energy-Colorado raising electric rates starting Sept. 1

State regulators have approved an increase in Xcel Energy’s revenue and electric customers will see higher bills starting Sept. 1. Some of the rate increase, about $4 a month for an average residence, will include costs of closing the Comanche 3 coal power plant in Pueblo early.

Electric rates will go up for Xcel Energy customers starting Sept. 1 following state regulators’ approval of a roughly $97 million increase in revenue for the utility.

The Colorado Public Utilities Commission on Wednesday approved a settlement agreement among the various parties, including cities and consumers’ groups, that slashed Xcel’s original request for a $312 million increase.

The new rates will increase the average residential bill by about $4 a month and $5.58 a month for small businesses.

Speakers in hearings leading up to the decision contended that Xcel Energy didn’t need a rate hike because of previous increases and a jump in its net profits in Colorado to $727 million in 2022 from $660 million in 2021.

The PUC rejected a proposal by the Colorado Office of the Utility Consumer Advocate that the director, Cindy Schonhaut, said would have reduced monthly bills by about 4%. The office, which represents the public before the PUC, proposed deferring costs that Xcel wants to recover for closing coal plants early by pooling the expenses to be paid later through a refinancing mechanism known as securitization.

The objection was that deferring the costs for plants being used now would unfairly burden future customers, Schonhaut said. The consumer advocate’s office argued that its plan would have avoided adding the recovery costs to Xcel’s rate base now, the basic rate all customers pay, and would have ended up costing customers less in a few years when more renewable energy, which is less expensive, is on the system.

Under an agreement, Xcel Energy plans to close the Comanche 3 coal-fired power plant in Pueblo by 2031, ending the utility’s use of coal to generate electricity in Colorado. The chronically malfunctioning plant, which began operating in 2010, was originally scheduled to run until 2070.

“We take the question of affordability very seriously. It’s our priority issue,” Schonhaut said. “The only way you can address affordability is not just to not allow any increases, but also to have some decreases, even small ones, here and there.”

The consumer advocate’s office has been critical of a recent series of rate increases by Xcel, what staffers have called “pancaking.” A special legislative committee investigated why natural gas bills were so high in late 2022, resulting in a law aimed at protecting customers from big price swings.

In 2022, the PUC approved a $182 million increase in Xcel Energy’s electric revenue. Schonhaut said the utility has indicated it will seek a natural gas hike in 2024.

Officials with Xcel Energy, Colorado’s largest electric utility, said they requested the $312 million electric rate increase to cover investments in such projects as expanding transmission lines and other improvements while cutting greenhouse-gas emissions and expanding the use of renewable energy sources to meet state and company goals.