Colorado Legislature Creates Panel
To Investigate
Rising Utility Rates
Skyrocketing utility bills hit consumers especially hard this winter, adding more stress to family budgets. In Colorado, people complained to regulators that bills had doubled or more and they were being forced to choose between food and heat.
In response, the Colorado legislature created a special committee to investigate the root causes of increases in utility rates and to consider possible policy changes. They are inviting your thoughts.
Rising gas prices blamed on the war in Ukraine, coupled with a cold winter, are the main culprit. Xcel Energy, like other utilities, simply passes along wholesale increases and decreases and the utility promises that as wholesale gas prices have fallen, so will heating bills this spring. Some observers, however, think the utility should have some “skin in the game’’ of making better choices about fuel purchases - or buying more fuel-free resources such as solar and wind power.
The legislature is concerned about other structural reasons why bills have gone up so fast, and the committee plans to look deeper. Xcel Energy is granted a monopoly to serve, and given a guaranteed rate of profit. The utility made $660 million in after-tax net income from Colorado in 2021 and was granted several recent rate increases. Most of the utility’s profit is tied to construction projects like new power plants, and some observers think a different model of incentive would make more sense- such as rewarding the utility for providing better service at a lower cost.
Another option would be to move away from the strict monopoly model by allowing communities to join together to buy some of their own power- a concept known as Community Choice Aggregation, which was pioneered in California and is now available in nine other states. Colorado authorized a study of the idea and regulators held a hearing last fall.
