Colorado’s top utility regulators on Wednesday renewed their calls for a speedy completion of an investigation into Xcel Energy and other major power companies’ purchases of natural gas during February’s statewide deep freeze—purchases that may leave customers with significant bill markups in the coming months.
During their weekly meeting, the three members of the state’s Public Utilities Commission all stressed the need for a detailed accounting of the transactions, which totaled over $1 billion over three days. The amount far exceeds gas costs during a typical winter cold snap.
“We really rely on our utilities to make prudent decisions and to do the best that they can,” said Commissioner Megan Gilman. “I think that’s really the goal of this investigation, is to see what that looks like, especially in this instance.”
Pressure has been building on Colorado power companies in the weeks following the freeze to reconsider passing the natural gas price spike on to customers. The PUC officially launched its investigation into the utilities’ buying decisions last month.
On Tuesday, Gov. Jared Polis said during a press conference that he felt most utilities did not take enough action to warn customers to curtail energy ahead of purchasing the marked-up gas.
“There were some utilities in Colorado that did that,” Polis said. “And their customers did cut back.”
Polis said he wants to avoid large utility bill hikes like those seen in Texas following that state’s fallout from the same storm system. Unlike Texas, Colorado’s utility companies are heavily regulated.
“We are not Texas,” Polis said during his Tuesday conference. “Consumers shouldn’t be expected to shoulder unexpected exceptional costs without first being advised to reduce usage.”
Xcel Energy said in a letter to Polis earlier this week that it did not alert customers to reduce power usage between Feb. 13-15 due to internal policy reasons.
“Although we take seriously the impact of high prices on our customers, it is important to save tools like reverse 911 calls for the most significant system emergencies,” Xcel executives wrote. “These system emergencies relate to outages and safety, not market price volatility and economics.”
In its letter, Xcel said that while it observed natural gas prices skyrocket up to “100 times” their usual price during the freeze, the company took appropriate steps to mitigate costs for consumers.
“We drew on gas storage to reduce our exposure to the gas market,” executives wrote. “We also interrupted our gas customers that are signed up for interruptible service.”
Despite those steps, the company still accrued hundreds of millions of dollars in unexpected costs. It now intends to pursue a cost recovery plan that would raise Coloradans’ monthly gas and electric bills by $7.50 and $3.50, respectively. If approved, the increase would be spread out over two years.
Other utilities involved in the PUC’s investigation, including Atmos Energy and Black Hills Energy, have not yet outlined their cost recovery plans.
Consumer advocates say the utility companies should have done more to avoid cost increases.
Joseph Pereira, deputy director of the Colorado Office of Consumer Counsel, said it’s also unfair to expect residents, who may be out of work or already struggling to make utility payments due to the ongoing pandemic, to shoulder the added burden.
“It’s a double whammy,” Pereira said. “And it’s happening during winter when bills are already up.”
It’s not unusual for utilities to pass along natural gas price increases to customers. Colorado’s utility commissioners said on Wednesday they were looking closely at the February winter event because of how extreme it was.
Several other states, as well as the federal government, are also investigating whether natural gas companies engaged in price gouging during the winter storm.
The Colorado PUC’s investigation is expected to take weeks to complete.
On Wednesday, Commissioner John Gavan said he also saw the incident as an opportunity to examine the state’s policies around recouping costs for extreme weather—especially as the country’s climate continues to change.
“I think that would be valuable,” he said. “Let’s face it, we’re probably looking at more frequent extreme weather events across the country.”
