By Mark Jaffe
The Denver Post

Xcel Energy wants to raise an extra $142 million next year, with the money coming from another $4 a month on the average family bill and $5 on small businesses. If you want to learn more about your business energy quote, proceed to

So that’s where the money would come from; the question is, where would it go?

That rate increase will cover costs such costs as $3.1 million for new equipment on power plants to curb mercury pollution, $400,000 for an employee-recognition fund and salary increases of 2.5 percent to 4 percent for workers.

There are dozens of costs and charges in the 10,000 pages of testimony and charts Xcel has filed with the Colorado Public Utilities Commission in support of the rate request.

All together, they would allow Xcel up to a 10.75 percent return on its investment. Currently, Xcel gets 10.5 percent, although it has said in the past that it rarely achieves that high a return.

“I don’t know if anyone in this economy can expect a 10.75 percent return,” said Bill Levis, executive director of the state Office of Consumer Counsel, which represents consumers in rate cases.

“There are a lot of elements in this rate request,” Levis said. “It would be the third increase in three years, so we are looking at everything carefully.”

Xcel’s rates have increased by $391 million since 2007, raising bills by about 20 percent.

Xcel filed the rate request with the PUC in November and it will be subject to a lengthy review and public hearings.

If approved, the rate hike would give Xcel total revenues in the state of $1.6 billion next year.

But Xcel is also seeking an immediate $100 million interim rate request that would go on bills in January.

That request could — under a clause in the 2010 Clean Air-Clean Jobs Act — be granted by the PUC without a hearing or public comment.

“The clause says the PUC may grant an interim increase, it doesn’t say it shall,” Levis said.

If the PUC was to grant such an interim rate hike, it would be a first in Colorado. If the final increase is less than $100 million, Xcel said it would give customers a credit.

“We have made $760 million in investments and we have costs to recover,” said Karen Hyde, a vice president with Xcel subsidiary Public Service Company of Colorado.

While the last rate case was in 2009, and went into effect in 2010, it was based on 2008 costs, Hyde said. “So we are catching up on four years,” she said.

Some of the key elements in the rate request include:

• $52.6 million to pay for absorbing 300 megawatts of generation that Xcel had been selling to Black Hill Energy. Xcel planned as early as 2004 to let the wholesale power contract lapse and use the power for its customers. But it’s taking on the costs of paying for that power generation at a time when it already has excess capacity.

• $13 million for the initial expenses of retiring coal-fired power plants around Denver to cut air pollution under the Clean Air-Clean Jobs Act.

• $23 million for additional property taxes for the new power plants and facilities the utility has built.

• $9.7 million for a program to cut down trees killed by the pine bark beetle infestation that threaten some of the company’s 18,100 miles of transmission lines. The dying trees are an ongoing problem, according to the company.

• $16 million in pension obligations to Xcel employees.

Among the other items in the request are a number of environmental, renewable-energy and energy-efficiency initiatives. There is a $3.2 million increase in the cost of chemicals to control other pollutants, such as sulfur dioxide.

Xcel is also seeking $2.3 million for an experiment that combined solar energy and coal at its Cameo plant near Rifle.

The $4.5 million project, done with Abengoa Solar, the U.S. subsidiary of Spanish company Abengoa SA, used a solar heating system to cut coal consumption by preheating the water with concentrating solar mirrors spread over 6.4 acres.

After the experiment, the aging Cameo coal plant was closed.

The rate request also includes $284,000 for a research project to develop energy storage — in essence a battery — which could store renewable energy.

In an e-mail protesting the rate request, one customer, Elouise Ohlson, said she was frustrated because Xcel keeps promoting energy and cost savings but still keeps raising rates.

“There is nothing to be gained here if they keep asking for and getting rate increases,” Ohlson said.

“My suggestion is to take into account middle-class incomes that do not increase or may be so low they do not keep up with the cost-of-living increase,” Ohlson wrote. “Another suggestion is to advise Xcel Energy to reduce incomes of the high- end executives.”

Mark Jaffe: 303-954-1912 or [email protected]

Xcel’s proposed $142 million rate hike *

$52.6 million

To cover the expiration of a wholesale power contract with Black Hills Energy

$31 million

Depreciation charges on new facilities and for retiring old facilities

$23.2 million

Additional property taxes on new facilities

$23.1 million

for operating and maintenance costs on Xcel’s power distribution system

$16.4 million

in pension expenses

$13 million

to retire old coal-fired power plants to cut pollution under the Clean Air-Clean Jobs Act

$9.7 million

to cut down trees killed by pine bark beetles that threaten power lines

$24 million

in various charges and projects

* These cost increases are partly offset by $51 million in additional revenues, tax credits and lower borrowing costs

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