Xcel Energy still facing pushback after cutting electric rate hike request

DENVER — A proposed settlement that would cut 37% off of the electric rate increase sought by Xcel Energy would still be the highest-ever jump in yearly revenue for a utility in Colorado history, according to the state Office of the Utility Consumer Advocate.

The agency represents the public, particularly residential and small-businesses customers, in utility proceedings and opposes the proposal.

The three-member Colorado Public Utilities Commission, which will consider the agreement, has scheduled a hearing by Zoom and will take comments from the public on the rate increase 4:30-6:30 p.m. June 16.

Xcel, Colorado’s largest electric provider, originally asked the PUC to approve an annual increase in revenue of $355 million, which would have boosted the average residential bill by nearly 10% a month.

The proposed settlement negotiated with the PUC staff and others would raise Xcel’s base rate by $225 million a year. The base rate is the investments on which a utility is allowed to earn a regulated rate of return.

“The agreed-upon amount of about $225 million is an amount that is $43 million greater than the next highest net base rate increase of $182 million from the 2021 electric rate case,” Cory Skluzak, a rate/financial analyst with the UCA said in testimony submitted to the PUC.

The “historic high rate increase” comes amid serious affordability and other concerns with Xcel, Skluzak said.

Under the agreement, residential bills would rise by 5.86%, or $6.13, to $110.81 a month, Xcel said. The average small business would see its bill rise by 5.59%, or $8.90, to $168.03 a month.

The UCA can’t sign onto an agreement that would enact the largest utility rate increase in state history, said Joseph Pereira, director of the agency.

“You have seen all over within the proceeding, customers complain about the (company’s) profits and the lowering customer service standard from the company,” Pereira said.

The PUC staff released an analysis in 2025 of the rising number of complaints from the public about Xcel’s customer service. The report said complaints per 1,000 people shot up 227% between 2002 and 2024.

“Focusing on the size of the proposed increase alone does not provide a complete or accurate picture for customers,” Xcel spokeswoman Sydney Isenberg said.

Xcel has spent more than $4 billion since 2022, the company’s last electric rate case, and completed a significant amount of work to meet customers’ growing needs, Isenberg said. The investments include replacing 17,771 wood poles; 406 new transmission circuit miles; 775 megawatts of new generation interconnected to transmission; and 50 new distribution feeders.

Xcel Energy’s bills in Colorado continue to fall below the national average for electric rates, Isenberg added.

While acknowledging that Xcel’s rates are lower than the national average, the PUC staff has noted that the utility plans to spend about $22 billion in Colorado through 2029. Rising costs are top of mind, the staff has said.

The UCA has criticized Xcel Energy for what it says is a piling on of rate increases over the past few years. In addition to the electric rate increase, the PUC is weighing the company’s proposed $190 million increase in annual revenue for its natural gas service.

Xcel has about 1.6 million electricity customers and 1.5 million natural gas customers in Colorado, with significant overlap between the two groups.

“Ultimately, customers are getting hit from all directions, and electric and gas are the first bill they pay. That puts pressure on everything else,” Pereira said.

AARP Colorado, which advocates for people 50 and older, Energy Outreach Colorado, which provides help to low-income utility customers, and the city of Boulder have joined UCA in opposing the proposed settlement.

AARP Director Sara Schueneman said the cost of housing and utilities top her members’ concerns. Even if Xcel’s electric rates are below the national average, increases are significant, she said.

“The other challenge I think we face is that the rate increases come year after year,” Schueneman said.

The proposed settlement includes components that Schueneman likes, such as the plan to direct $10 million of Xcel’s earnings to programs helping customers with electricity costs.

Besides the PUC staff, Colorado Energy Consumers, a group of large companies and industrial customers, and the International Brotherhood of Electrical Workers, Local Union 111, are among those supporting the agreement.

The agreement strikes a reasonable balance between Xcel’s need to recover costs and concerns voiced by the other parties during the negotiations, Erin O’Neill, the PUC’s deputy director of fixed utilities, said in testimony filed with the commission.

Opponents’ arguments, however, go beyond the $225 million increase to the details of financing. They’re arguing for the reduction of Xcel’s return on equity, or the rate of profit an investor-owned utility is authorized to earn on the equity portion of its capital investments.

Xcel wanted a return of 9.8%, while the settlement proposes 9.3%, the current level. The UCA and the city of Boulder think the return should be even lower.

The UCA also supports requiring Xcel to use more debt and less of its equity to pay for its assets and capital infrastructure.

“Debt is always cheaper than equity and given the company’s future investment, it makes sense to have larger proportions of debt to fund the transition,” Pereira said.

Tapping more of the equity “delivers for shareholders,” Pereira said.

The UCA and others opposing the settlement are urging the PUC to reject allowing Xcel to recoup $83.3 million over 15 years for the outstanding cost of old electric meters replaced by new, “smart” meters.

“Now the customers are paying for their new smart meters and they’re paying for old meters as well. We don’t think that’s fair,” Pereira said.