Colorado utility customers get lump of coal for holiday: soaring bills

The utility bill Jocelyn Miller received in October for her business, a small nonprofit in Denver, was the largest she had ever received. The next month it was even bigger.

“I have been here over 20 years and I have never seen anything like this before,” Miller said.

Her bill for September was $103. The next one was $538 and the latest, due Dec. 27, is $621.78. “I would have had to have the heat turned all the way up and all the lights on for days, which is not the case.”

She is looking into available programs for assistance.

Miller isn’t the only Denver-area resident or business owner whose version of a lump of coal this holiday season is a utility bill that’s in some cases at least double what it was a year ago.

A driving factor behind the skyrocketing costs is a doubling of the natural gas prices that utilities are paying. Combine that with the cold temperatures and people are seeing shocking spikes.

Analysts say wholesale prices soared after Russia, a major gas producer, invaded Ukraine and drastically cut the flow of gas to Europe in retaliation for the West’s economic sanctions.

In addition, gas production had to be rebuilt after demand plunged during the pandemic. The American Petroleum Institute said U.S. production has since rebounded 20% above pre-pandemic levels.

In Colorado, the state consumer advocate’s office also points to recently approved increases in both gas and electric rates to explain why utility bills are so high.

Xcel Energy said in September that people’s gas bills could be nearly 54% more in December than a year ago.

Instead, Laurie Erb’s bill shot up 100%. Her latest bill from Xcel Energy, which includes gas and electric service, was nearly $600, compared to a little over $300 for the same period last year.

“A lot of times we have the heat turned down to 62 degrees and we’re still getting these crazy bills,” said Erb, who lives in Denver’s Washington Park neighborhood.

While Erb said she and her husband can pay the bill, she knows others can’t.

A recent analysis by LendingTree of a U.S. Census Bureau survey found that 26% of Colorado households say they skipped paying for food and medicine to pay the energy bill.

Robert Kenney, president of Xcel Energy-Colorado, said he realizes that rate increases of any size, particularly for some customers, can be a challenge. He said the company has programs to help customers having trouble making payments and can direct people to other resources.

“Having said that, the wholesale price of natural gas does make up the most significant portion of our customers’ bills and those costs are remaining high as we head into the coldest season of the year,” Kenney said.

Heating costs aren’t the only strain on people’s budgets. High inflation has driven up costs for all kinds of items. Between the utility bills and the city’s new fees for trash pickup and sidewalk repairs, Leon Buckley, who retired last year, is worried about being priced out of living in Denver. His Xcel Energy bill went from $186 to $339 in one month.

“That’s a chunk of money, $339,” Buckley said. “That’s two or three trips to the grocery store.”

“Height of hubris”

The Colorado Office of the Utility Consumer Advocate, which represents the public before the state Public Utilities Commission, expected natural gas prices to increase, said Cindy Schonhaut, the director.

“The company is saying that increases in consumers’ bills is due to gas prices being high in the supply market, but that’s not the whole story,” Schonhaut said.

The PUC recently approved a cost adjustment for natural gas utilities, including Xcel, because of higher wholesale prices. A recent dip in prices means customers will see slightly lower-than-expected costs in December, but prices are forecast to rise again in the first quarter of 2023.

Fuel-cost adjustments like those are passed through dollar-for-dollar without the company making a profit.

However, recently approved electric and natural gas rate increases will be added to customers’ existing base cost. The company, essentially a regulated monopoly, is allowed to make a certain level of profit on its capital investments.

Earlier this year, the PUC approved a $182 million increase in Xcel Energy’s revenue from electricity and in October passed a $64.2 million increase in natural gas revenue.

Xcel has 1.5 million electric customers and 1.4 million natural gas customers in Colorado, with substantial overlap between the two. Higher gas prices affect people who get just electricity because natural gas is used to generate 26% of Xcel’s power in the state.

Critics have denounced Xcel Energy for continuing to seek higher rates while the company’s profits keep climbing. Federal records show that Xcel Energy made $660 million in profits in Colorado in 2021, up from $588 million in 2020 and $578 million in 2019.

Xcel Energy is headquartered in Minneapolis and operates in eight states.

Schonhaut acknowledged that Xcel is facing higher wholesale gas prices. She added that customers will face bigger bills as the weather gets colder.

“That’s a fact that no agency in our state can have an impact on. However, what the company can do is what consumers now do with 7% inflation: tighten their belts,” Schonhaut said.

But Xcel Energy has filed notice that it will seek an electric rate hike of  $312.2 million. The company plans to request another natural gas increase in 2023.

“It’s the very height of hubris for them to seek to continue to seek to raise rates at this time,” Schonhaut said.

With inflation and prices so high, she said the company or shareholders could absorb some of the expense. Instead, “They seek to get it all from consumers.”

Pumping up prices

Xcel Energy isn’t the only investor-owned, publicly regulated utility pumping up prices. Across the country, utilities sought a total of nearly $12 billion in rate increases through the end of August, according to S&P Global Market Intelligence. Inflation and the need to replace aging infrastructure and invest in new technology as part of the move toward more clean energy were among the reasons cited.

Kenney said Xcel Energy-Colorado will ask for another natural gas increase in 2023 after the PUC cut its request this year to $64.2 million from $138 million.

“We’re seeking these increases so we can maintain, repair and upgrade our infrastructure so that we can continue to provide safe and reliable service,” Kenney said.

If a new electric rate hike is approved, some of the money will be used to prevent wildfires sparked by falling power lines or equipment malfunctions and also bolster the electric grid, Kenney added.

Xcel Energy has a hedging program to buy gas when it’s cheaper rather than during the heating season when it’s more expensive, Kenney said. The company stores the gas to minimize the amount it needs to buy on the spot market.

The approach wasn’t enough to prevent a massive run-up of costs during a winter storm in February 2021 that brought frigid weather to a huge swath of the central part of the country.  The PUC investigated Xcel Energy’s preparations for the weather that experts had predicted. In the end, regulators approved temporary riders on customers’ bills to allow Xcel to recover about $500 million for the storm-related expenses.

As for the company or shareholders absorbing more of the costs, Kenney said Xcel must maintain the company’s financial health. “Investors have choices about where they’re going to deploy their capital.”

If Xcel Energy gets favorable terms for its capital investments, Kenney said that will ultimately benefit its customers because the company can borrow at cheaper rates.

Places to turn

The social media platform Nextdoor is awash in comments, questions and complaints about the steep utility bills hitting people’s mailboxes and inboxes in the Denver area. People say they are doing what they can — bundling up, turning down the heat, programming their thermostats.

And people are reporting questions about billing; dramatic hikes in the energy use recorded on their bills before the current cold snap; and trouble accessing data logged by their smart meters. Kenney said customers can call Xcel with their concerns and service representatives can check meters.

David Wilson of Denver planned to ask Xcel to check his meters after getting a bill this month for $364.79, up from $212.16 in November.

“It’s the biggest bill ever in this house,” Wilson said. “We’ve lived here since 1996.”

The bill showed the household used 96 therms of heat in October and 180 therms in November. A therm is a measure of heat content.

“I don’t get it. We’ve done nothing different,” Wilson said. “I’m thinking these meters are faulty. I’m going to call Xcel and have them come out and look.

“I can’t afford $364 every month this winter,” he added.

Leslie Kalechman worries about the Coloradans, especially those older and on fixed incomes, who can’t afford to pay their electric and heat bills. She is a volunteer advocate for Colorado AARP.

“No one should have to make choices between necessities, living essentials,” Kalechman said. “Our constituency, their health and their safety are vulnerable. They’re using oxygen and more electronics that require power. And they’re on medications and medications are not cheap either.”