Consumer advocates, some of Colorado’s biggest companies, senior citizens and utility regulators are opposing Xcel Energy’s bid for a no-hearing, interim $100 million electricity-rate hike.
The challenges — in filings with the Colorado Public Utilities Commission — contend that Xcel has failed to prove the financial necessity of the increase and that the figure is too high.
Xcel, with 1.3 million customers the state’s largest utility, is seeking a $142 million rate increase, a process that will take months.
But citing a 2010 law, Xcel wants the utilities commission to rule in January on an interim hike without public hearings.
“The interim increase just isn’t justified,” said Steve Merrill, an advocate for Colorado AARP, a senior-citizens organization. “This shouldn’t be put on the backs of ratepayers without a full review.”
Xcel officials say the delay in awarding rate increases, known as regulatory lag, makes it difficult for the company to get the full return on its investments and impairs its financial standing.
The utility will respond to the critics in filings Jan. 5, Mark Stutz, an Xcel spokesman, said in a statement.
There is a broad consensus among those opposing the increase — from consumer advocates to big businesses — that Xcel has failed to show that it would be hurt financially by waiting for a full rate- case hearing.
There has to be “some demonstration of harm beyond the sheer fact of lagged recovery,” said the Colorado Energy Consumers, a coalition of businesses. “The company’s financial integrity is not remotely at risk.”
Xcel said in its rate request that under the 2010 law, a section of the Clean Air-Clean Jobs Act, a utility had only to show it would be “adversely affected” to get an interim increase and that since this was a new law, there was no precedent.
“These statements are incorrect and misleading,” said Francis Shafer, an analyst with the state Office of Consumer Counsel, in a filing. The counsel represents residential and small-business customers.
The PUC always has had the power to grant interim rates and has done so — but only in cases of extreme financial need, such as in 1980 when the credit rating for Public Service Co. of Colorado was downgraded, Shafer said.
If the commission feels it needs to give Xcel an interim increase, it should be the minimum amount necessary to give the company its allowed return, Shafer said.
The major component of the overall rate request is $52.5 million to cover the cost of absorbing 300 megawatts of generation Xcel had been selling to Black Hills Energy, which serves Pueblo and southeastern Colorado.
Xcel let the wholesale power contract lapse and planned to use the power for its customers. But it’s taking on the power generation at a time when it already has excess capacity.
Xcel’s two largest customers — Rocky Mountain Steel and Climax Molybdenum Co. — in a joint filing questioned “whether retail customers should bear the full burden of what apparently turned out to be a bad decision.”
“Because utilities are monopolies within their certificated service territories, the Commission’s duty is to protect customers from excessive rates,” the two companies stated.
While opposing the interim rate increase, the PUC staff also took issue with the $100 million price tag.
Among the items that should be addressed in the full rate case are $16 million for pensions and $23 million in increased property taxes. The staff said the local tax bills are not due until April 2013.
The staff said the commission should consider an interim rate increase of no more than $57.1 million.
On average, the PUC has awarded about 46 percent of the amount requested in electricity-rate cases, and Xcel is seeking 70 percent of the total rate request in the latest case, the commission staff noted.
Karen Hyde, vice president for rates in Xcel’s Colorado subsidiary, said in testimony to the commission that if the final rate increase was less than $100 million, the company would issue credits to ratepayers.
A refund in the spring after struggling to pay bills through the winter “does not adequately protect consumers,” AARP argued in its filing.
Xcel has one supporter for the interim rate increase: Black Hills Energy.
Black Hills said that if the PUC approved the Xcel interim rate request, it too would file for interim rate hikes.

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

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