NewsLocal News


Four Colorado electric cooperatives file federal complaint against Xcel Energy for its natural gas prices

Four Colorado electric cooperatives file federal complaint against Xcel Energy for its natural gas prices
Posted at 6:37 PM, Jan 06, 2023
and last updated 2023-01-07 11:28:42-05

SEDALIA, Colo. — Four Colorado electric cooperatives filed a federal complaint against Xcel Energy over the increased rates connected to a 2021 cold snap.

Like residential customers, the utilities saw their bill from Xcel increase significantly in the aftermath of Storm Uri. However, in a 482-page complaint, the cooperatives accuse Xcel of not using prudent business practices.

The complaint was filed with the Federal Energy Regulatory Commission by CORE Electric Cooperative, Grand Valley Rural Power Lines, Holy Cross Electric Association and the Yampa Valley Electric Association.

“After that event, we experienced this extreme high cost coming from Xcel, which we then had to pass majority of that on to our members,” said Virginia Harman, chief operating office of the Yampa Valley Electric Cooperative.

Yampa Valley serves roughly 25,000 meters in Routt and Moffat counties. After more than a year of back and forth with Xcel over the increased costs related to Storm Uri, Harman says the cooperatives felt they had no choice but to take this complaint to the federal government.

“What we're looking for here is more transparency for us as a customer of Xcel and then ultimately for our membership. And we're hoping that this results in the refund of some of what we believe to be unjustified costs coming to us and to our members,” Harman said.

Unlike bigger, investor-owned utilities, cooperatives distribute any profits they earn back to their customers. Because they also tend to be smaller utilities, they might own some energy generation plants, but the majority of their power comes from purchase agreements with bigger companies like Xcel.

“Under our wholesale agreements with Xcel, they buy the fuel for the power plants. We don't have the right to buy that fuel, and they pass the cost of those fuel purchases through to us,” said Jeff Baudier, CEO of the CORE Electric Cooperative.

Each year, utility companies plan out how much energy they will need throughout the year to serve their customers. They then provide that information to Xcel.

In addition to being able to serve the peak load, or the max amount of energy companies expect their customers to use at any given time, utilities also plan for a reserve of energy in case there is an emergency. Prudent companies then purchase enough fuel to ride out the year.

“Winter Storm Uri was one of those such emergencies. You couldn't really predict that the storm was going to be that intense,” Baudier said.

However, he says the utilities can predict with reasonable certainty how much your maximum power use will be.

The utilities say despite the advanced notice of customer energy needs, Xcel did not purchase enough natural gas to cover its peak demand for February 2021. As a result, Xcel had to purchase more natural gas at 60 times the rate of what it normally would have paid during the cold snap.

The cooperatives also accuse Xcel of moving some of the natural gas that it did have in storage to its reserves rather than distributing it to customers.

“What we believe was improper in this case is that instead of moving that stored gas into reserves, they should have used that to supply us,” Baudier said. “The difference is that the gas that was purchased for energy generation, Xcel was able to pass through to all of its customers. Whereas if they had just bought gas for reserves, Xcel would have had to pay for that themselves.”

Beyond that, the cooperatives allege that Xcel purchased more natural gas at those higher rates than it really needed at the time, and instead of selling it to a different company to try to cut the losses, Xcel sold it to another Xcel company in Texas — a move that did not help electric customers.

While Storm Uri was unexpected, Baudier says the storm was a red herring, and that whether it happened or not, Xcel took a risk by not having enough gas on hand.

“Those risks should have been either properly prepared for by Xcel or they should be borne by Xcel,” he said.

The Public Utilities Commission (PUC) did hold hearings on Xcel’s request to raise rates in order to recover what it paid for the higher energy rates. However, the cooperatives say they were left out of those discussions.

The complaint is now asking to see how the contracts for those gas purchases were made and also for reimbursement of nearly $7 million of the $17.5 million they were charged in added fuel charges. If approved, that reimbursement would then be passed down to the cooperatives’ customers.

Baudier doesn’t necessarily blame the PUC for agreeing to these continual rate increases by Xcel. He just thinks the commission is overwhelmed.

“The way the PUC operates in Colorado, I would say they're a little bit outmanned by an organization the size of Xcel. There's only three commissioners. They don't have an extensive staff, they don't have an extensive budget,” he said.

Like the area it serves, CORE has grown significantly since its start. It is now the third largest electric utility in the state behind Xcel and Colorado Springs, serving more than 300,000 people.

CORE has signed an agreement with a new power supplier that has yet to be announced. That partnership will begin in 2026 and primarily focus on renewable energy in accordance with Colorado’s energy transition goals.

In the meantime, Baudier says the cooperatives will continue to fight for the best rates for their customers, but admits more change might be needed to require companies like Xcel to truly advocate for the best rates for their customers.

“Until we make them responsible for the risk associated with buying that fuel and make them bear some of the responsibility to make sure that they procure gas and other fuels in a competitive way, they're not going to be incentivized to lower those costs for customers,” he said.

In a statement to Denver7, Xcel disputed the allegations, saying it is disappointed that it couldn’t come to an agreement with the wholesale customers, but that it’s hopeful it can find a resolution.

“Our gas purchasing practices before and during the storm were prudent, consistent with the law and our contractual obligations and ensured continued energy service for all customers – wholesale and retail – during the unprecedented storm,” the statement read. “Due to our sound planning and purchasing policies, we effectively and reliably managed the system as well as the health and safety of our customers.”

Xcel plans to respond to the cooperatives with a full description of the measures it took during Storm Uri.