Governor Jared Polis on Friday slammed an administrative ruling in favor of Xcel Energy’s request to recover $509 million from Colorado taxpayers for costs incurred during a wintery spell in February last year that wreaked havoc throughout the Midwest, killing more than 200 people nationwide.
In her ruling on Wednesday, Administrative Judge Melody Mirbaba described the cost recovery proposed in the negotiated settlement as “fair and reasonable” and “in the public interest.”
In a statement, Polis questioned Mirbaba’s decision, saying he recognized that Xcel “did not properly prepare or warn the Coloradans ahead of the storm, but consumers are now literally being forced to pay the price.” .
“I am disappointed that utility providers are able to balance their financial loss on the backs of consumers, when additional costs could have been avoided by better early warning systems allowing consumers to voluntarily reduce their consumption. energy,” the governor said.
The judge held that Xcel responded appropriately to the energy crisis.
“(The) record does not establish that the company recklessly incurred costs that could be disallowed due to its failure to issue conservation messages. At best, the dossier provides unreliable estimates of expected savings from conservation messaging,” Mirbaba said.
The Public Utilities Commission has yet to review Mirbaba’s decision. The commissioners, who hold the final decision-making power, can either accept, reject or modify the settlement agreement.
The judge’s decision, if ultimately adopted by the commissioners, means that, over 24 to 30 months, ratepayers would see their bills jump by 11.09% for residential gas customers; 12.6 to 22.8% for non-residential gas customers; 2% for residential electricity customers; and 3.9 to 7.1% for non-residential electricity customers.
Polis urged state energy regulators to take action to avoid the sharp rise in energy bills resulting from extraordinary events, such as the one customers would face if commissioners adopted Mirbaba’s decision.
Colorado escaped widespread blackouts, but Xcel and other utilities in the state had to buy natural gas at exorbitant rates to keep heating gas and electricity flowing to customers. during winter storm Uri, which lasted from February 13 to 17 and left about 10 million people in the United States and Mexico without power. The storm knocked out power in Texas, the biggest electricity crisis since the 2003 power outage in Northeast and Ontario, Canada, caused by a failure of the network’s computer alarm system at Akron, Ohio.
Xcel originally asked to recover $550 million from taxpayers, but through negotiations agreed to reduce its request to $509 million.
The effects of winter storm Uri pushed natural gas prices to unprecedented levels due to capacity and delivery issues, as well as extraordinary fuel demand. At the height of the storm, prices rose from $2 to $3 per thousand cubic feet (Mcf) to $600 per Mcf.
The Colorado Office of the Utility Consumer Advocate and others have criticized the utility for poor planning and poor operation.
The Consumer Advocacy Bureau has recommended that the Public Utilities Commission remove more than $156 million from Xcel’s recovery costs claim for the company’s alleged failure to purchase enough natural gas before the storm and for not operate its backup oil systems in a way that consumer advocacy The bureau said it would have saved customers millions by not having to buy natural gas during peak price times basic products. Critics also accused Xcel of failing to notify customers of the impending storm so they could reduce their power consumption to save money.
In his decision, Mirbaba deemed Xcel’s actions prudent.
“The ALJ cannot conclude that the company’s dual-fuel operations were reckless in light of the many factors at play. The company’s decisions regarding the transition to fuel oil are much more complex than suggested UCA’s arguments,” the judge said.
Mirbaba added that Xcel’s actions ultimately saved customers money, including avoiding power outages experienced by other states, and helped keep Coloradans safe during the crisis. Had Xcel not acted with caution, the parties “could argue over the company’s failure to provide reliable service and the resulting public harm”.
“The terms of the agreement above are innovative and creative methods that ultimately serve to reduce the amounts customers will pay. Although some of these approaches provide a more indirect benefit by ensuring that the company does not recover amounts in other proceedings, they still ultimately benefit customers by ensuring that they do not see these amounts on their invoices. at a later date,” she said.
She added: “Indeed, in ensuring that it had sufficient gas to meet projected demand, the company acted in accordance with statutory mandates requiring it to provide and maintain a service that promotes safety, the health, comfort and convenience of the public.”
Polis was unfazed.
“This is another example of why it is so important that we continue to move away from natural gas to avoid these types of unpredictable price spikes in the future, and I urge the PUC to establish specific measures to be taken regarding voluntary reductions in the use before the imposition of any extraordinary charges for future events,” he said.
As part of the settlement, Xcel agreed to forfeit more than $30 million, including approximately $14 million in replacement electricity costs for electricity it had to buy during generator outages at the plant. electrical from Comanche 3 near Pueblo in 2020. Xcel also agreed to absorb $10.8. million in deferred bad debts for 2020 and 2021. The company will also have to return approximately $41.5 million to residential electric customers under a new revenue decoupling adjustment pilot program.
Parties to the case have 20 days – or before May 31 – to file objections, which will stay the decision, then have 14 days to respond.
“The commission will then take up the matter and make a decision at a later date to be determined by it,” said Cindy Schonhaut, director of the Office of the Consumer Advocate for Utilities. “UCA will file exceptions by May 31.”