Colorado consumer office sues over $2M in expenses awarded to Xcel Energy in rate hike

The agency that represents the public in utility rate proceedings is challenging a decision by state regulators to award Xcel Energy-Colorado $2 million for its expenses in a recent case.

The Colorado Office of the Utility Consumer Advocate has appealed the decision by regulators to Denver District Court. The consumer advocate contends the decision by the state Public Utilities Commission was unlawful and wants the court to review it.

Both the PUC and the consumer advocate’s office declined to comment on the lawsuit.

In the filing submitted to the court in January, the consumer advocate, which has criticized Xcel Energy for what it calls a “pancaking” of frequent rate increase requests, argues the PUC didn’t follow the law in deciding the utility was due payment for its expenses in the case.

Xcel initially sought to raise its natural gas rates by $214.6 million. The PUC approved a $64.2 million increase in revenues.

Courts can review a PUC decision under certain conditions, the consumer advocate said. In this case, the agency said regulators’ award of $2 million for expenses wasn’t supported by the evidence. As a result, the PUC’s decision wasn’t just and reasonable, as required by law, the complaint said.

Xcel Energy said its expenses, mostly for legal costs, would exceed $2.2 million, according to the lawsuit. The PUC capped it at $2 million.

However, the consumer advocate said Xcel’s request didn’t include information typically used to calculate a reasonable payment, including the amount of time spent by each attorney and paralegal; each person’s hourly rates; and reasonable billing rates for area attorneys and paralegals. The company didn’t include the information in the record, the advocate said.

“In fact, for the partial legal invoices it admitted into the record, it intentionally redacted the time each attorney or paralegal spent on each task and the hourly rate for each timekeeper,” according to the lawsuit.

Xcel Energy declined to comment on the complaint.

The PUC’s failure to provide facts to support the decision to award the $2 million was “arbitrary, capricious, an abuse of discretion, and contrary to Colorado law and the Commission’s own rules,” the consumer advocate argued.

Expenses approved by the PUC are ultimately added to a utility’s base rate, which is paid by customers, said Bill Levis, who was the state consumer counsel in utility proceedings from 2009 to 2013.

“If they just get attorneys’ fees every time, it becomes part of the rate base. Even though it’s only a couple of million dollars, it adds up,” Levis said.