Xcel customers’ bills to increase as regulators back recovery of $500M in storm costs

State regulators voted Wednesday to allow Xcel Energy-Colorado to recover hundreds of millions of dollars from customers for costs from a 2021 winter storm, but knocked $8 million from the $508 million sought after criticizing the utility’s actions before and during the frigid weather.

Xcel Energy customers will eventually see a temporary rider on their monthly electric and natural gas bills to pay for the costs.

The costs stem from a February 2021 storm that brought record cold temperatures and soaring natural gas prices from Texas through the Rocky Mountains to the Midwest. Colorado didn’t experience the widespread power outages other regions did, but Xcel Energy and other utilities saw natural gas prices skyrocket in the scramble to keep the heat and lights on.

The Colorado Public Utilities Commission opened an investigation into utilities’ response to the storm. A May 11 decision by a state administrative law judge noted problems with Xcel Energy’s handling of the storm but recommended approving a settlement allowing the company to charge customers $508 million to recoup expenses.

“It goes without saying that nobody’s happy to be here today and talking about a $550 million expenditure on gas for only a handful of days,” said Megan Gilman, one of the three commissioners.

Xcel Energy agreed to not pass on some costs, including interest on loans it took out to cover the storm expenses.

During the Feb. 13-17, 2021 storm, natural gas prices were $150 to $190 per million British Thermal Units, many times more than the $2 to $3 per million BTUs just before the onslaught of freezing temperatures and ice.

Regulated utilities like Xcel Energy have the right to recover the costs of providing service. The PUC considers is the so-called “prudency standard,” which examines whether a company’s actions were reasonable given the things it knew or should have known at the time.

For the most part, the administrative law judge decided Xcel Energy’s actions were prudent. But the decision criticized the company for not communicating with customers about conditions so they could have reduced their use to blunt the expense.

The decision also said Xcel Energy’s handling of customers who agreed beforehand to cut back use of electricity and gas in extreme circumstances was ineffective. Some of the customers who get lower rates for agreeing to service interruptions to help the company conserve power weren’t in positions to do it.

The commissioners expressed concerns about the same issues and what they said was the failure to effectively use plants that can run on both oil and natural gas. The Colorado Office of the Utility Consumer Advocate argued the utility didn’t adequately plan for using oil to avoid buying as much natural gas.