Colorado AG files complaint seeking $100M cut in Xcel rate hike

The Colorado attorney general’s office filed papers today asking Xcel Energy to cut more than $100 million from a proposed rate increase of $136 million, according to documents filed with the Colorado Public Utilities Commission last week.

Xcel CEO Dick Kelly (Xcel)
Xcel CEO Dick Kelly (Xcel)

Arguing on behalf of the Colorado Office of Consumer Counsel (OCC), the attorney general’s filing takes issue with a proposed settlement in the ongoing Xcel [Public Service Company of Colorado] rate case that enters into final deliberations before the PUC on Thursday in Denver (pdf).

“A settlement joined by only three of more than 30 interveners is aptly described as ‘four parties with a joint position,’” First Assistant Attorney General Stephen Southwick wrote in a filing last week. “It hardly constitutes settlement of a litigated rate case. In an agreement among such a small number of parties, the [PUC] must consider carefully whether the proposed settlement issues are in fact in the public interest.”

Earlier in November, Xcel offered to lop $44 million off its nearly $180 million initial request for a rate increase to cover the costs of the new Comanche 3 coal-fired power plant near Pueblo, smart-grid technology in Boulder, two gas-fired power plants at Fort St. Vrain and other power line and distribution upgrades.

That settlement was reached with two consumer groups, Energy Outreach Colorado and Colorado Energy Consumers, but still would result in a rate increase for the average residential consumer of $4.66 a month. And that increase comes hard on the heels of a $112 million rate increase granted Xcel by the PUC last summer.

“The OCC finds this settlement agreement to be contrary to the public interest and recommends that the [PUC] reject the settlement agreement,” Southwick wrote, agreeing with the PUC’s proposal to base a rate increase on a historic test year with adjustments for all the power plant additions. “However, the OCC continues to recommend that just and reasonable rates would ensue from the [PUC] granting a rate increase amounting to about $33 million.”

Other interveners mentioned the disproportionate percentage of revenue Xcel, a Minnesota-based investor-owned utility, continues to derive from Colorado, where the company is seeking its third rate increase in the past four years.

Leslie Glustrom of Boulder-based Clean Energy Action points out in her filing on the settlement agreement that Colorado’s share of Xcel’s overall earnings has increased from 42.5 percent in 2006 to 52.7 percent in 2008, before either last summer’s or the current rate increase have even been factored in. Meanwhile, Minnesota rate payers contributed 44.3 percent of Xcel’s overall earnings in 2008, down from 47.4 percent in 2006.

“Xcel’s financial metrics look very healthy,” Glustrom wrote in her filing, noting the 10.5 percent return on equity for Xcel that’s built into the settlement. “In contrast, the financial status of [Colorado] rate payers appears seriously stressed.”

Dennis Kelly, attorney for the Arapahoe County-based activist group ArapaHope Community Team, addressed what he considers excessive travel and entertainment expenses and employee bonuses being passed onto rate payers.

Xcel already trimmed some of those costs from the current rate case, responding to concerns from activists and inquiries from the PUC, but Kelly and Glustrom would like to the see the PUC establish a permanent policy on such expenses. A spokesman for the PUC indicated to The Colorado Independent that that was probably not going to happen at Thursday’s deliberation and would likely require a separate hearing if the PUC decided to go that route.

“I continue to think the PUC could set a rate case policy related to these wining-and-dining expenses as part of the rate case, but either way, it is long past time for the Colorado PUC to hold a lot firmer hand on our monopoly utility that exists to serve its shareholders first, its ratepayers not so much,” Glustrom said in an e-mail.

Kelly said he’s concerned that both the PUC and the Office of Consumer Counsel are both understaffed and therefore unable to fully delve into all the expenses Xcel tries to pass on to ratepayers. He said it may be something the State Legislature will need to take up.

“We have already been in touch with some state senators and representatives regarding the understaffing of the [PUC] — I was told that they have about 15 unfilled positions — and the OCC, they have about three or so unfilled positions,” Kelly said in an e-mail.

“This is ironic since both are funded by fees assessed against utilities rather than by tax money. In any event, yes, we are going to try to get the ear of some key legislators to see if they can provide some response — although it may be a bit late for legislation in the upcoming session [in January].”

Note: The original version of this story made it seem that the attorney general’s office was arguing for the rate cut on its own. In fact, the AG was required by law to make the request on behalf of the Colorado Office of Consumer Counsel (OCC). State statute requires the attorney general to represent government entities such as the OCC.

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