Excel expected to respond to $80 million overstatement tomorrow


Xcel Energy will respond Thursday to accusations by Yampa Valley Electric Association that Xcel made an error of $80 million in its June proposal to increase wholesale electricity rates by 5 percent, said Xcel spokesman Mark Stutz this week.

Yampa Valley Electric Association received verbal confirmation from Xcel Energy representatives last week that Xcel had made the error, said YVEA General Manager Larry Covillo.

Xcel spokesperson Mark Stutz could not confirm the alleged mistake but said that Xcel is working on "response testimony" to the claims made by YVEA and other Colorado co-ops.

On June 18, Xcel announced its intent to charge more for wholesale electricity. YVEA and Holy Cross Energy, who share attorneys and consultants in the matter, filed a 112-page rebuttal to the rate increase on July 10, alleging inaccurate estimates in ten areas, including

  • rate of return on equities
  • credits for off-system sales
  • administrative and general expenses

But the fundamental argument arose when YVEA and Holy Cross Energy, which serves the Roaring Fork, Eagle and Grand valleys, discovered Xcel had "misstated what its income tax bill would be by $80 million," Covillo said.

It remains to be seen whether Xcel will file an amended rate increase, or if it will withdraw the June 18 proposal and issue a new one, Covillo said.

Either way, it appears that once the $80 million error is resolved, there will not be any grounds for a rate increase. A slight rate reduction is a possibility, Covillo said.

The discovery comes as good news to YVEA, which was contemplating a possible rate increase to its customers as a result of the Xcel filing.

The issue of whether YVEA would absorb the 5 percent increase or be forced to pass the costs on to consumers appears to have been averted, Covillo said.

The June 18 filing by Xcel was part of an attempt by the energy distributor to recover money it spent building its infrastructure.

Xcel recently spent $211 million on air-quality improvements to metro Denver power plants. Also, in an effort augment the power grid, Xcel is working to establish a 162-megawatt windfarm in Lamar. In both of these efforts, Xcel is bound to seek recovery by increasing rates to wholesale customers, Stutz said.

It will be up to the Federal Energy Regulatory Commission to grant the rate increases. YVEA has asked that the case be delayed five months to allow for discovery and further investigation into the matter.

In separate litigation between YVEA and Xcel, the co-op disputed the fuel adjustment costs Xcel reported, which caused

YVEA in 2002 to begin adding pass-through charges to its customers' monthly


Covillo said a cost of service study shows that YVEA is being overcharged for the electricity it purchases from Xcel.

The matter goes before FERC on Aug. 14.

Jeremy Browning can be reached at 824-7031 or jbrowning@craigdailypress.com.

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