Xcel fees in cross hairs
PUC concerned that utilities using surcharges to bypass rate hike rules
Gargi Chakrabarty
Monday, May 5, 2008
State regulators are investigating a growing number of fees and surcharges that Xcel Energy and other utilities are tacking onto customer bills.
The surcharges can account for as much as half of a customer's monthly electric bill.
This is the Colorado Public Utilities Commission's first major inquiry into Xcel and other utility profits and rate structures in recent years, even as the state undergoes a seismic shift in the way it conserves energy and generates more electricity using wind and solar sources.
The PUC commissioners, appointed by Gov. Bill Ritter, launched the formal inquiry last week as part of an overall investigation into regulatory incentives, including surcharges, and how those influence utility behavior.
They are concerned that utilities are bypassing regulatory rules for increasing rates, called rate cases, by simply tacking on surcharges. Rate cases require months of hearings and often end up whittling costs that utilities want to recover from customers.
"This wasn't always this way," said PUC Chairman Ron Binz, referring to the proliferation of surcharges. "Utilities used to have to live by their wits between rate cases."
In the past two years, Xcel has added two surcharges on its electric bills - the Renewable Energy Standard Adjustment (RESA) and the Transmission Cost Adjustment (TCA).
The TCA recovers costs incurred by Xcel to build new transmission lines, while the RESA recovers the cost of new wind or solar facilities. Those surcharges were approved by the legislature and former PUC commissioners.
"This is really an examination of how rates are set," said Xcel spokesman Tom Henley. "As a company, Xcel Energy can't set our own rates or add surcharges. Everything down to even the way the bill is designed and printed is overseen by the PUC."
Surcharges gained popularity a few years earlier as a way to bypass rate cases that often are litigious, prolonged and expensive. Surcharges have to be approved by the PUC, but are a more timely and efficient mechanism for a utility to recover costs.
But in recent years, utilities have begun using surcharges more frequently to recover a substantial portion of their costs, raising concerns among regulators and other state officials.
The concern regarding surcharges is that they rarely are decreased, unlike in rate cases where costs as well as savings are debated, resulting, at times, in lower hikes or even refunds for customers.
"One of our concerns is that surcharges seem to always go up," said Jim Greenwood, director of the Colorado Office of Consumer Counsel.
The PUC has offered a 30-day period for interested parties, such as the Office of Consumer Counsel, to submit their comments on the scope of the investigation.
The comments should be submitted by the end of this month. Binz said he would like to wrap up the effort before Xcel files its next rate case.
Depending on the outcome of the investigation, Binz said, the PUC could approach legislators or initiate rule-makings to change or eliminate the surcharges, among other incentives.
"I am glad that the Public Utilities Commission has undertaken this investigation to review the surcharges and incentives that relate to our state utilities," Greenwood said.
"We do have concerns about the numbers and amounts of surcharges (on utility bills)," he added, "and we are very interested in reviewing each and every one of them to see whether or not they are still appropriate or whether the dollars should be recovered in a rate case instead of surcharges."
chakrabartyg@RockyMountainNews.com or 303-954-2976
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May 5, 2008
2:34 p.m.
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MarineGrunt writes:
Used to be a Eng. at US West/Qwest and I am going to guess there will a lot of outrage over what is found!
Most do not know... if you call and tell them to take them off, they will! (But you didn't hear it from me!)
May 5, 2008
2:39 p.m.
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Diff writes:
WAY to GO PUC!
This is a welcome change from the almost rubber stamp rate increase for Xcel that we most often see - and of course my mantra - Follow the money!
Xcel keeps claiming they have had to raise rates to "keep up" and profits for the company were up some 15+% or more(I did not look it up but recently saw a RMN article about it)
More that the misc fees - I think they need to look at rate increases that have recently been approved, and those cost adjustment that are being passed on as well as be much more skeptical of new rate increase requests!!!
May 5, 2008
2:54 p.m.
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Lowtaxequalsfreedom writes:
Who is investigating all of the utilities that do not fall under the PUC? Utilities such as water, sewer and sanitation? Any utility that is considered an enterprise and that has no competition is most likely substantially over charging you.
May 5, 2008
3:17 p.m.
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holekeeper writes:
oh yea, I am willing to bet that we either never hear of this again because they will find nothing wrong with the fees, or we will hear about how t5rhey did nothing wrong and the fees were approved.
May 5, 2008
4:01 p.m.
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MGD writes:
LOL, thanks Sasquatch.
May 5, 2008
4:28 p.m.
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Diff writes:
Solar and wind energy are currently only slightly more expensive - than coal and other more traditional forms of electrical genaration.
(Except Hydro)
Soon they will be on par and maybe even slightly cheaper, as energy cost continue to rise (as they will, but that is another subject) and the cost of building solar and wind generation equipment drops. as it has over the years - recently tho, there has been a shortage of solar panels and cost increased for them quite a bit a couple of years ago.
In the long run it will be cheaper by far, and I think it is best to try and get ahead of the curve on this - but all that said - it is quite different than Xcel simply gouging us with rate increases and all those BS fees - It is time to really take a look at Xcel -
OH how I long for the days of Public Service of Colorado!
(and the steady dividend I got from owning stock in PSC)
May 5, 2008
4:33 p.m.
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JP1985 writes:
The fees were approved by the PUC, so why is the PUC investigating them now? Why weren't they investigated before they were approved?
Xcel is a publicly traded company. They're just trying to make money like everybody else. If the PUC approved the surcharges, don't blame Xcel when they're playing by the rules.
May 5, 2008
4:40 p.m.
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JP1985 writes:
Also, maybe we (the people of Colorado) should have thought twice before mandating a certain percentage of our power come from renewable resources. Green power doesn't just appear. We're all going to have to pay the price for renewable power in the coming years.
As soon as the federal government starts taxing carbon, look for your utility bills to increase substantially. Don't like it? Well sorry, we're the ones voting for it.
May 5, 2008
4:41 p.m.
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Seabreezes writes:
Correct me if I'm wrong, but isn't Xcel a monopoly here (metro Denver, if not CO as a state)? If so, why is there no competition. If not, who else is there?
May 5, 2008
6:24 p.m.
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bxwatso writes:
Seabreezes:
Xcel is not a natual gas monopoly. Larger users can find alternate suppliers.
Xcel is a regulated monopoly for electricity. It is effectivly illegal to compete with Xcel, per state laws and tarrifs.
May 5, 2008
7:48 p.m.
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happymike44 writes:
I'm so glad to see the energy producers have to answer some questions.Seems the rates go up whenever they feel like boosting their wallets.The average person this year has not see a pay increase.Yet big oil gas and electric seem to be chalking up record profits.Why is it since the war began we are paying double for our gas.So if these guys at any company have to answer quesions and explain themselves to the people I am all for it.How about forcing them to decrease the bill if they are found to have done something illegal.
May 6, 2008
6:49 a.m.
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PMSXpress writes:
Seabreezes
There is an alternative, but you'd have to live within the member boundaries of an REA service territory to take advantage of consumer-owned (rather than profit-taking investor-owned) electric power benefits. The decisions that REAs make directly benefit their users rather than the highest bottom line strategy of companies like Xcel.
May 6, 2008
7:02 a.m.
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natasha writes:
So Excel has taken a page out of our legislature's book and just charges random fees. Soon they will just freeze some prices. But that won't be an increase or a tax just a freeze so it's okay. Also I thought years ago they said monopolies were illegal.
May 6, 2008
7:34 a.m.
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SockRayBlue writes:
I once suggested that the money being sent by the treasury would be better if it were a solar energy starter kit. No one seems interested in being independent. Perhaps a pandemic is better.
May 6, 2008
7:35 a.m.
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JP1985 writes:
Xcel is a monopoly just like every single other utility is a monopoly. They're also a regulated utility, meaning they can't charge whatever they want, which stops them from taking advantage of you like an unregulated monopoly would. It's up to the PUC to make sure they don't charge you too much, so if Xcel is in fact charging too much, it's because the PUC isn't adequately protecting you. We need to be asking why these fees were approved without being investigated. If these fees weren't valid then they never should have been approved in the first place. Is it the PUC's policy to approve now and ask questions later?
Like I said before, we (Colorado voters) all voted for higher prices when we mandated that a certain percentage of our energy come from renewable sources. You're all just getting what you asked for. Except when the bills start to pile up, we get mad at Xcel for doing what we forced them to do.
May 6, 2008
8:12 a.m.
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777J writes:
On the subject of water, I do not believe the rates we pay for water actually represent the cost to deliver this resource to us (after all we - as residents of Colorado - own the water). 25 years ago there were less than half the number of homes in the metro area. Also the Rates for water were probably half what they are now. Therefore, the water board/Denver Water has seen it's revenue more than quadruple in the past 25 years. Obviously the "cost" of water has not changed (it comes from the sky), so where is all the money going??????????????
May 6, 2008
9:15 a.m.
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OpenYourEyes writes:
Denver Water is one of the biggest offenders in this whole system. Remember a couple years ago when the drought was so bad the tacked on surcharges and raised rates in order to curb excessive use? They even had those morons driving around in their little pickups to find water-use violators- very serious stuff. Then, the next year the reservoirs filled to near capacity- did rates come down? Of course not, the situation was still "very urgent". The following year there was TOO MUCH water in lake dillion (wasn't it?) and they had to release a bunch. Did rates come down? No, of course not. The Almighty Water Monopoly just "allowed" us to water our yards whenever we wanted (though they still suggested every third day to keep the facade up).
At the time, the running joke around the shop was Denver Water was now going to mandate that everyone MUST water every day in order to do away with the surplus!
What a joke here in the "freest" country in the world. The next thing I am going to hear is about what a privilege it is to pay taxes for a bunch of rich guys to play a child's game in a stadium we all paid for- oh wait! That is already a reality! What next?
May 6, 2008
9:25 a.m.
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CheapEnergyNow writes:
Xcel is allowed to make a guaranteed rate of return on investment. If the PUC approves $1,000,000 they are allowed to make, for example 15% of that $1,000,000. No wonder they want solar and wind. If you want 100 MW of capacity you can build a 100 MW coal plant or 300 MW of wind and solar because they are intermittent resource. The cost of the Coal plant is $300,000,000 so Xcel gets to earn a mere $45,000,000 per year. The wind farm would cost $600-$750 million earning Xcel $90-112.5 million. Plus wind is spread out across the plains, so they are allowed to spend millions more for transmission lines, adding to the profits earned. The solar plant would cost 1.2 to 1.5 billion earning Xcel $180 - 225 million. They have an incentive to spend more money for approved purchases. The green energy movement is the biggest money making opportunity in the history of the utility industry and nobody gets hurt, just the stupid ratepayers. You have the fox (PUC) that wants green power at all cost guarding the henhouse (Xcel) that stands to make huge profits by being forced to go green. But don’t worry, China will continue to burn our coal to make power and the cost of socks from Wal-Mart will keep going down.
May 6, 2008
10:15 a.m.
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Ztliano writes:
I find electricity rates cheap. Double them!!!
May 6, 2008
10:17 a.m.
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JP1985 writes:
Trythinking, it's not the PUC that is forcing Xcel to go green. Colorado voters (who happen to be the ratepayers) are forcing Xcel to go green. Green power sounds great until the bill comes, and then all the fingers start pointing at Xcel.
Colorado voters (and the PUC) are odering Ferraris and then crying foul when their car bill comes in and it's higher than when they were ordering Fords. I don't know how many more ways I can say this, but you're getting exactly what you wanted (or should I say, what you *thought* you wanted).
May 6, 2008
10:38 a.m.
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CheapEnergyNow writes:
Forward69,
It is amazing, I've spent 25 years in the power industry and now everyone is an expert.
Nothing is stopping you from doing that, except for a return on investment. I believe you said earlier that you saved 3kWhrs so far. At $65.00 per MWhr you have saved a little over 20 cents. What was your investment?
Source: Northern tool Model number BPS-3600
3.6 kW solar panel for $250/Month. 3.6kW for 1 month (Daylight only) = 1,296 kWhrs or 1.296 MWhrs. $250/1.296MWhrs = $193/MWhrs or roughly 3 times what Xcel charges. Your payback period is "never". You lose $166 per month. I doubt we could put Xcel out of business anytime soon. Do it if it makes you feel good, but don't force me to contribute.
The same catalog has a 1.8kW wind turbine for $152/month. 1.8 kW times 740 hours/month divided by 3 (wind only blows 1/3 of the time) = 444 kWhrs per month. At $152/Month that is $342/MWhr.
But if you want to go off grid, the cost involved for purchasing energy when the sun isn't shining and the wind isn't blowing will be very high. Taxpayers already subsidize wind and solar by way of tax credits. We should not be required to also subsidize your backup power.
May 6, 2008
11:01 a.m.
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CheapEnergyNow writes:
JP1985,
Wow someone that actually get's it is rare in this forum. I agree to you to a point, but have you seen the newest member of the PUC. Matt Baker hates coal and has said so. Do you believe that if given the choice he would allow for cheap coal development or allow an expensive solar plant? There are no longer checks and balances.
May 6, 2008
11:29 a.m.
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Acemon writes:
What a shame that I will have to increase the fees I charge Xcel. Now I must implement an envelope opening fee of $1.00, a bill processing fee of $2.00, a check writing fee of $3.00, and a special surcharge access fee of $7.00 for allowing their employees onto my property in the unseen future. These fees will be assessed monthly and deducted from my monthly utility bill. Since Xcel has never inquired about these fees, nor does anything in their paperwork prevent user-imposed surcharges, my new fee structure will take place immediately. I urge other citizens to follow my progressive example of revenue enhancement.
May 6, 2008
12:52 p.m.
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Big_D writes:
I noticed that once I moved out of their service area my bill dropped dramatically and my new company uses all renewable energy too.
May 6, 2008
2:04 p.m.
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CheapEnergyNow writes:
Sure they are 100% renewable. Where do you live? Oz?
May 6, 2008
3:42 p.m.
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Lowtaxequalsfreedom writes:
The water and sewer is the real joke. No regulation no competition. Talk about monopoly.
May 6, 2008
4:01 p.m.
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tiero writes:
Gas & electric is a bargain in Colorado. sales tax and franchise fees is a bunch of crap imposed by the cities. Thank them not Xcel
May 7, 2008
12:54 p.m.
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JP1985 writes:
Trythinking, I don't need to go into the individual opinions of people on the PUC, but you're absolutely right. The fact is though, it is now LAW in colorado that utilities get a certain percentage of power from renewable sources thanks to Colorado voters. We basically told Xcel to go out and buy a bunch of new power. Everybody knows that utilities get to recover costs, what were we expecting?
Just remember, the war on carbon emissions is going to be a costly one. The current round of fees (I haven't even noticed them) will be pennies on the dollar compared to what we'll be paying when/if the federal government starts taxing carbon. Ratepayers are going to finance every single renewable power source that utilities buy.
Be careful how you vote.
May 7, 2008
12:58 p.m.
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JP1985 writes:
Anyway, Comanche 3 will be online in a couple years, so your utility bill should drop noticeably.
May 7, 2008
1:58 p.m.
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againstxsteal writes:
xcel should be taxed surcharges for being a bad utility company