Millions of Coloradans will face significant increases in their energy bills this winter. Some may have to pay up to 50% more than last winter.
The rate rises occur at a moment when residents are struggling to keep up with inflation, and the COVID-19 pandemic continues it to hammer the state as well as the rest of the country.
The rate hike is being driven mainly by the sharp rise of natural gas prices, but also by the actions of state regulators and policymakers who are driving up energy bills.
The spike in Xcel Energy, the state’s largest utility provider, is also due to a rate increase approved by the Colorado Public Utilities Commission. In a lesser degree, a law requiring utilities to charge customers more for energy assistance programs for low-income residents. Officials from the state stated that a small cost to consumers is a big help to the most economically vulnerable residents of the state.
According to Colorados regulatory body, an average energy consumer in an Xcel territory (the utility serves 1.4million Coloradans) will pay an additional $132.86 for a five-month period that began in November and ends in March next year.
The largest jump is in December when the same consumer will spend $39.57 more and pay $119.96. This is a 49.2% increase compared to last year.
The Polis administration called these price increases outrageous and acknowledged Coloradans vulnerability towards wild fluctuations in energy costs.
These price increases are shocking and reveal how vulnerable we are for huge swings in natural gas prices. It was evident during the Texas storm last year and it is again this winter, Victoria Graham, Colorado Politics’ spokesperson for Victoria Graham. We need to act quickly to get low-cost, stable wind and solar energy.
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The Public Utilities Commission is responsible for regulating the state’s investor-owned utilities. They anticipated rising energy bills following the rise in global gas prices this year. They questioned the utilities in November about their plans for passing on the costs to consumers.
Natural Gas prices reached record highs during the February 2021 freeze
In a statement, the commission stated that the PUC had voiced concerns about natural gas commodity pricing during recent weekly meetings. It also received enough information from utilities to better understand the potential impacts on consumers.
The commission stated that it will address the rising energy bills by increasing hedging efforts by utilities and spreading efforts to recover unplanned ratespayers costs over a longer period. It also plans to boost low-income support programs.
The fluctuations in energy prices are what the PUC cannot control, according to a spokesperson.
According to Colorado Politics spokesperson James Cullen from the PUC, utility bills are affected by fluctuations in gas commodity prices. Unfortunately, this is not something that the PUC or any other utility have much control.
Colorado is not the only one facing higher gas and electricity prices.
Both Serbia and Kosovo have implemented rolling blackouts in eastern Europe because power and natural gas prices are rising rapidly, according to Albin Kurti, Kosovo’s Prime Minister. He said prices are up seven times higher than last years.
The price of natural gas in Great Britain has risen to $25 per million British Thermal Units (BTUs), which is five times the previous year’s price. Rajiv Gogna, of Lane Clark & Peacock Energy Analytics, in the UK, stated that the government has been purchasing power at a significant premium from the private producers who still have operating coal plants after shutting down many of its coal-burning power stations.
The problem is partly due to the fact that the UK experienced an unexpected period with low winds which prevented windmills from contributing significantly to the demand.
The same thing happened in Texas during February’s freeze. The windmills stopped turning, solar panels stopped producing, and natural gas lines frozen up for four days. This cut off gas supplies to power plants and homes. It also forced Texas to use its coal-fired power plants to their maximum capacity. Despite this, rolling blackouts were necessary during the cold snap.
Gogna stated that the UK’s energy crisis has torn up the (power) sector, driving multiple supplier into non-existence, and forcing millions to change suppliers… We have witnessed the perfect storm of low renewable generation, an increase in global demand and a decrease in UK capacity, which has forced prices to repeatedly break new records.
France is also experiencing natural gas price rises, just like most of Europe. Between July 2020 – October 2021, France’s average annual gas bill rose from $1007 to $1 586.
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Black Hills Corporation, which services approximately 300,000. Coloradans, like Excel Energy, attributes the increase in energy bills soaring natural-gas prices.
The utility claimed that the second reason stems from expenses incurred as part of its proposed plan to recover expenses incurred during four days of extremely cold weather that ravaged states in the Midwest, including Colorado in February.
Natural gas providers were facing increasing and unplanned demand at the time and pushed prices up nearly 10 times.
According to the U.S. Energy Information Administration, gas was selling at $2.88 per million BTUs February 1. The price soared to $23.86 on February 17. Then, it dropped to $2.80 a Week later. This cost Xcel Energy more that $1 billion across its national system.
Colorado utilities asked their regulators for permission to recover expenses during this extreme weather period.
The commission approved the Atmos Energy Corporation’s request to recover $23.5 million from its customers. Colorado Natural Gas sought $7 million and Public Service Steam requested almost $2 million.
Black Hills Gas and Black Hills Electric are still awaiting requests. However, the major parties to this proceeding, including the PUC staff have already agreed in principle that the company’s electric arms will be able to recover approximately $22 million in expenses. The PUC staff asked commissioners to approve Black Hills’ request, arguing that it was reasonable. The company’s oil arm is meanwhile trying to recover $72.7 millions.
If Colorado’s energy regulators approve Excels requests for $263 million for natural gas and $287 millions for electric ratepayers, they will be responsible for $677 million.
The planned rate increases for this winter are not evenly distributed across communities.
Ratepayers in Black Hills’ central regions, which covers Castle Rock south to Fountain, Fountain and Woodland Park, east towards Kiowa, Limon, Burlington, and the surrounding communities, will see their bills increase in March from $54.24 up to $92.99. This is a 71.4% rise.
The price rise for its irrigation and seasonal customers is 86.7%
The average Black Hills resident would spend $37.93 more in March than last year. This is more than half the increase.
The utilities informed commissioners that they have launched messaging campaigns to inform ratepayers about the imminent rise in their energy bills in order to prepare them for it.
Black Hills stated that it launched a campaign to spread conservation messages and bill assistance resources during the winter season.
Atmos Energy is increasing its energy rates by 34% in march – $17.96 for the average residential customer – and said it is reaching out its approximately 114,000 ratepayers to remind them to conserve energy.
According to the company, information about its low income program programs is distributed throughout the year. The company said that in December it would include information about a nonprofit organization that assists low income residents on customers bills. In the following three months, it’ll also print information on how they can get energy assistance.
Colorado Natural Gas’ customers will end up paying between $21.96 – $40.23 less this March depending on their location. They also urge conservation. The company offers programs to help people struggling with their energy bills.
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Soaring natural gas prices are most likely to blame. However, Colorado’s policymakers have also contributed to the significant rise in energy bills.
A small portion of the rise in energy bills was caused by a new law that requires investor-owned utilities (IOUs) to collect a fee from customers. This charge starts at $0.50 this month, increases to $0.75 October 2022, and is then adjusted annually for inflation one year later. This new revenue stream will finance low-income energy assistance programs.
Excel: This means that Excel ratepayers bills will be increased by $2.50 from last November to March 2022.
Analysts at the General Assembly estimated that the new law would generate $6.6 million in fiscal year one, $12 million the following year, and $14.5 million the years after that.
Excel claimed it expects $8 million annually in revenue from the charge. The money will go to Energy Outreach Colorado as well as the Colorado Energy Office and Department of Human Services.
Excel stated that the amount would go to the most in need.
Excel customers face another major rate increase due to the Colorado energy regulators’ approval for the 2020 gas rate rise application.
This rate hike added $34.12 to the cost of heating this winter’s five-month period.
Excel observed that no one opposed the rate hike application.
The company claimed that the rate increase would have less impact on customers this winter but that it did not begin collecting money immediately. Due to the economic effects of COVID-19, the parties had agreed that the collection would be delayed until April 2021.
This artificially reduced bills from January to February. The company plans to collect some deferred revenue in March.
Excel customers will see an average 37.3 % increase in their energy bills between November 2021 – March 2022. This month is the most expensive, with a nearly 40 percent increase in monthly bills. This drops to $35.18 in Jan, then decreases to $18.10 February and settles at $22.49 March. Customers will be required to pay $86.50, compared to $64.01 in the same month last.
The company filed a statement stating that it had excluded Storm Uri-related expenses from its latest analysis. These expenses would have been passed on to the consumers. According to the company, those expenses would have a 9.7 per cent increase in average residential bills.
The company requested that the commission allow it to recover the expenses. However, the commission declined.
This delay, combined with the assumption that natural gas prices will fall in the coming months, means that average customers won’t have to pay 71.56% more than the original estimate for energy bills in March.
The company stated to commissioners that it shares their concerns about the effects of increasing natural gas prices on customers.
However, we have a strong record of keeping our customers bills low, our lawyer wrote. The lawyer cited an American Gas Associations survey, which showed that the utility had the third-lowest rates of all 50 major gas utilities for 2020, and more than 34% lower than the national average. “While rising natural-gas commodity costs are a concern, our customers will benefit greatly from a baseline which is among the lowest anywhere in the country.
The results of an American Gas Association survey were also noted and acknowledged by the Polis administration.
The planned rate increases by Colorado utilities are still higher than the average increase of utility bills for American households who use gas for heating. According to the federal agency, the average American gas-fueled home will see a 30% increase in energy bills between October 2021 & March 2022.
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This fall in natural gas prices was doubled by many, which many attribute to an increase in demand due to economies recovering from the pandemic and extreme weather.
According to Mark Green of American Petroleum Institutes, the problem is that global supply doesn’t meet global demand. He stated that gas supply has been largely flat.
He said that while demand rose, Europe and Asia had a colder winter than usual and a warmer Summer, increasing demand and leaving gas storage at its lowest level for many years.
Green also noted that American gas production has largely remained flat, whereas higher prices would have prompted more production and less demand in America’s power sector.
He said that producers have had to deal with the supply-chain and workforce limitations that have affected so many industries, and they have also paid down their debt.
Some have suggested policies that would shift the country’s dependence on coal to other forms of energy. But Green said that it is difficult to draw that connection immediately.
He stated that there are some areas in the country like the Northeast that have experienced higher natural gas prices as a result of state-level policy limitations on building necessary gas infrastructure. However, the overall picture is a reminder about the importance of remaining independent of imports. It wasn’t so long ago that the United States was the world’s largest gas importer. But, this has changed dramatically in the past decade with the shale revolution.
Green stated that America is today one of the largest gas exporters in world.
Colorado played a crucial role in this development.
Because of its vast natural resources, the state is America’s 7th largest producer of natural gasoline. This is a result of its 5% natural gas reserves.
The state is home to eleven of the 100 largest natural gas fields in the country.
Colorado’s fertile fields have enabled it to double its natural gas production since 2000.
Since then, the state has been moving away coal.
Local officials support SW Colorado’s solar plant plan
Colorado became the first state to require a standard for renewable energy portfolios for power producers in 2004.
The legislature increased the requirements several times more, culminating with standards requiring investor-owned utilities to get 30% of electricity from renewable energy sources by 2020.
Polis took a more aggressive approach to this, noting that he ran with a platform for transitioning to 100% renewable electricity by 2040.
Looking ahead, we know that clean energies will be crucial to helping us build a sustainable and just economy as our nation recovers from this pandemic. The governor stated in the Colorado Greenhouse Gas Reduction Roadmap his strategy to achieve General Assembly goals of reducing 2005-level greenhouse gases emissions by 26% by 2025 and 50% by 2030, respectively, and by 90% by 2050.
The administration stated that electric utilities already have committed to reducing greenhouse gas emissions by 80% by 2030.
His administration stated that a key component of this strategy is the rapid transition from coal to renewable electricity.
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Xcel Energy, 11 months after Polis revealed his strategy, reached a deal to accelerate closing the state’s largest coal fired power plant, the Comanche Three unit, Pueblo. This move could allow the utility to reduce its greenhouse gases emissions by approximately 90% by 2030.
Renewable energy supporters see this as a step forward.
Senator Chris Hansen, a Democrat representing District 31, stated that fluctuations in natural gas prices are a reminder of the need to shift away from fossil fuel generation and instead to renewable energy.
He explained that one of the major economic benefits of more wind and solar is the elimination of commodity price risk. Colorado Politics adopted this approach. It reduces the risk to power customers.
Hansen, a long-standing expert in the global energy industry, acknowledged that there are short-term tradeoffs. He said that Colorado will need to use more natural gasoline in the future as it shuts down its coal plants.
He said that Colorado’s long-term future is largely dependent on this wind and solar.
Hansen stated that wind and solar energy are now “highly forecastable”, which means reliability since power producers can plan their generation according to the forecast.
Rep. Matt Gray, a Democrat from District 33, stated that wind and solar energy are more predictable and therefore better for customers because it is produced locally.
He said that energy from solar and wind is inoculated from the events elsewhere in the world.
He stated, “You’re not dependent on what’s happening in another country.” The generation takes place in Colorado. Were not as susceptible to [fluctuations]Oil and natural gas
Gray, like Hansen, noted the difficulties of the transition from fossil-fired energy. He said that society must find ways to support coal plant workers and families who might be facing spikes in their monthly payments.
He said that there is a lot of politics involved and balancing acts to be done.
We recognize that climate change and emissions pose a threat to public safety. He stated that we recognize that those who have worked in fossil fuel industries for years deserve to receive respect and be taken care of by their families. It’s a difficult problem, because infrastructure development takes time. It needs to be paid for, which is expensive and people pay monthly.
Gray stated that policymakers should look at the entire family budget holistically and then find ways to offer relief.
He stated that oil and natural gases prices cannot be controlled by the state. However, there are some things we can do to reduce the cost of housing.
Martin Drake Power Plant (copy).
Senator Ray Scott, a Republican representing District 7, is not persuaded by the Democrats’ arguments.
He said that the problem is simply a matter of supply and demand. He argued that Colorado has a policy of effectively limiting the number of energy sources it uses.
He stated that they only want solar and wind, and that is the cliff we will drive off of. “If you can’t produce more natural gas, the cost of energy will rise as you squeeze the resources needed to run those facilities.”
He stated, “The bottom-line is it’sn’t helping the consumer.”
The Polis administration made a statement and suggested strategies to assist Coloradans in times of crisis.
Victoria Graham, the governor’s deputy press secretary, stated that saving money for Coloradans is the governor’s top priority, especially in light of rising prices for housing, food and other essential goods.
Colorado will need to do more to protect families from the rising cost of natural gas. Graham stated that the TABOR refund, which amounts to $72 per person and will be available once 2021 tax returns have been filed, is a good place to start.
