Co-ops Not at Fault for “Rising Utility Rates”

By Kent Singer, CREA Executive Director

In recent months, thousands of Coloradans have been hit with much higher home heating bills compared to past winters. I know, because the heating bill at our house in Denver (I’m an Xcel Energy customer) was significantly higher this winter. At a recent informational meeting of the Colorado Public Utilities Commission, the commission’s chief economist reported that “For a typical Xcel customer, the (2022) electric bills are up … 20-25%, as opposed to gas bills, which have increased … 75%.”

These increased costs to keep the lights on and our homes warm, particularly during this colder-than-average winter, have created a serious financial burden for thousands of Colorado residents. At a public hearing hosted by the CPUC, dozens of residents expressed their frustrations with the higher costs of home heating and how difficult it will be for them to pay their bills.

The utility companies that provide home heating services have largely blamed the high costs on the price of natural gas, the commodity that is used to heat most homes in Colorado. Natural gas prices are subject to significant volatility since the commodity is traded in national and international markets and is subject to many different variables that impact the cost.

The Colorado State Legislature and the Governor both have recognized the extraordinary costs of heating homes and businesses and they have initiated investigations into the cause of the recent rate increases. The legislature has established a “Joint Select Committee on Rising Utility Rates” that will meet in the coming months to investigate the causes and possible solutions for the current problem. Governor Polis has established an “Energy Bill Relief Working Group” that will engage in a similar analysis.

During these investigations, CREA intends to make it clear to the legislature and the Governor that Colorado’s electric co-ops are NOT part of the problem when it comes to high heating costs. For the most part, electric co-ops provide electricity and are not involved in the home heating business (one electric co-op provides propane heat to a few hundred residents).

So, while the legislature and Governor tend to lump together all utility services when they talk about “rising utility costs,” the focus should really be on the increased rates of those utilities that use natural gas for heating homes and businesses.

This is not to say that Colorado’s electric co-ops have not been impacted by increased natural gas costs. Two years ago, during Winter Storm Uri, the electric co-ops that purchase their wholesale electricity from Xcel Energy were hit with multimillion dollar “fuel adjustment clause” surcharges that those co-ops had to pass on to their retail consumer-members.

These surcharges were the result of increased wholesale power costs that, according to Xcel, were caused by a runup in the cost of natural gas used to fuel their power plants. Long after Winter Storm Uri, some of the electric co-ops that purchase wholesale power from Xcel have been subjected to continuing wholesale power cost increases that have resulted in rate increases to their retail, end-use consumers.

And while some electric co-ops have had modest rate increases over the last several years to pay for the costs of upgrading their facilities and the costs of inflation, the power supplier to 17 of the co-ops (Tri-State G&T) has not had a rate increase since 2017. The bottom line is that electric co-op consumer-members have not experienced anywhere near the magnitude of rate increases that have impacted so many Coloradans recently. Simply put, electric co-ops are not part of the problem that our legislature and Governor are investigating.

Under Colorado law, electric co-ops are not-for-profit companies that exist for the sole purpose of serving their members; they do not exist to make a profit for out-of-state hedge funds and insurance companies. Colorado’s electric co-ops have a straightforward mission: to provide electricity to families and businesses that reside in co-op service territory (70% of the state’s land mass) in the most reliable and affordable way possible.

Colorado’s electric co-ops continue to live up to that mission every day, and we look forward to helping policymakers find solutions to the home heating emergency that impacted so many Coloradans this winter.

Kent Singer is the executive director of CREA and offers a statewide perspective on issues affecting electric cooperatives. CREA is the trade association for 21 Colorado electric distribution co-ops and one power supply co-op.

Want to learn more about how these costs are affecting electric co-ops and their consumers? Read this article about reliability issues following Winter Storm Uri.