DENVER (KDVR) — State lawmakers are trying to figure out why utility bills are so high and if any policy changes need to be proposed in order to avoid surprise spikes in rates.
The Joint Select Committee on Rising Utility Rates had its first meeting Tuesday. The bipartisan panel of lawmakers heard testimony from the Public Utilities Commission, Office of the Utility Consumer Advocate, Energy Outreach Colorado and the Colorado Energy Office.
“There are no predetermined outcomes here, I can assure everybody of that. This is to genuinely learn from people who are undoubtedly some of the leading experts in the field,” Senate President Steve Fenberg, D-Boulder, said.
Natural gas prices spiked, Xcel increased rates
Tuesday’s meeting was focused on understanding the factors that led to unusually large utility bills across Colorado.
According to PUC’s chief economist, Erin O’Neill, the commodity price for natural gas spiked in recent months due, in part, to the February 2021 winter storm and the disruption the war in Ukraine is having on the global natural gas market.
At the same time, demand for natural gas in Colorado increased because temperatures were about 10 degrees colder this winter than usual.
Additionally, Xcel increased its base rates, which pay for things like infrastructure and wages, in November 2022.
Still, the committee is questioning other aspects of operations.
“Why are profits for some utility companies reaching record levels while a record number of their ratepayers are filing applications for energy assistance?” Fenberg said.
He and the others say that by digging into the details of Colorado’s utility companies, they are hoping to find ways to save Coloradans money. For example, could Colorado stock up on natural gas when it is cheap in order to avoid paying higher prices when it spikes?
“So while gas prices are very low right now … there isn’t enough storage to sort of put it in the ground now and wait to use it until next winter,” O’Neill said.
Rate hike case costs passed on to consumer
The committee’s job is to figure out what is working and what could work better when it comes to public utilities.
“If we’re gonna continue to have for-profit companies provide public services, I think it does deserve the closest of scrutiny,” Fenberg said.
Joseph Pereira, the Office of the Utility Consumer Advocate’s deputy director, pointed out during his testimony that when utility companies are trying to secure rate hikes, they hire outside consultants that cost “many millions of dollars” to help argue the case. The cost is then bundled into the rate hike and passed on to the consumer.
“And so we often see this kind of overwhelming wave of resources from outside that could be
provided from in-house resources,” Pereira said.
The special committee will meet at least two more times. During its next meeting, public utilities will testify. By the final meeting, the goal is to have concrete ideas for potential policy changes.