Consumer advocate reviewing Xcel rate hike request
November 25, 2011
Denver — (AP) — The Colorado Office of Consumer Counsel is closely studying Xcel Energy Inc.’s request for a $141.9 million electricity rate hike, which would raise the typical residential customer’s monthly bill by about 6 percent.
The state office represents consumer interests before the Public Utilities Commission, which will review the request. Historically, Minneapolis-based Xcel has sought a larger rate increase than what the commission approves, Consumer Counsel Bill Levis said.
“Just because they’re asking for it doesn’t mean they’re entitled to it. They have to prove it’s prudent,” Levis said.
Xcel is Colorado’s largest utility. Levis said Wednesday it appears more of the company’s proposed rate hike will fall on residential customers than others, such as some commercial customers who would see smaller percentage increases in their bills.
David Eves, president and chief executive officer of Xcel subsidiary Public Service Co. of Colorado, has said the company has added more than $750 million of investment in Colorado to meet customers’ needs since the company’s last rate case.
Levis said his office will review Xcel’s request for a rate that allows for a 10.75 percent return on equity. By contrast, Black Hills Energy is seeking an 11 percent return in its own $40 million rate-hike proposal, Levis said. PUC staff and Levis’ office have recommended returns closer to 9 or 9.4 percent for Black Hills Energy, which is based in Rapid City, S.D.
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Xcel has said the proposed rate hike will help it cover costs for items including higher taxes, cutting down beetle-infested trees that could topple power lines and actions it’s taking under a state law on reducing air pollution.
The company also said it expects costs of serving customers to rise by $52 million because a deal to sell power to Black Hills Energy expires at the end of the year. Black Hills has said it also is incurring costs as the contract ends, because it is building new plants to generate power it has been buying from Xcel. Levis said his staff will examine whether extra costs to customers could have been avoided if the contract had continued.
Levis said his office also would have concerns over any efforts to recover costs of its Smart GridCity project in Boulder through rates charged to customers. SmartGridCity is a project Xcel took on to show how a modern energy grid would work.
Xcel recently proposed a $29.2 million reduction in a rider on customers’ bills. The rider reduction means customers’ bills would rise just 4 percent, if it and the proposed rate hike both take effect.
“Our goal is to provide our customers with reliable, safe and increasingly clean energy at reasonable cost,” Eves said in a written statement Tuesday. “No one wants to see their bills increase, especially during difficult economic times, but this rate change is needed to meet our commitments.”