Colorado utilities defend investor-owned model amid scrutiny of higher gas, electricity bills
State Sen. Steve Fenberg, seen here during a gun violence prevention hearing March 8, is chair of a joint select committee at the Colorado Capitol that's scrutinizing rising utility rates. (Kevin Mohatt for Colorado Newsline)
Executives from Colorado’s two privately owned utilities went before state lawmakers on Tuesday to defend their status as “regulated monopolies” amid scrutiny of soaring utility bills for their customers — and record-breaking profits for shareholders.
Robert Kenney, president of Xcel Energy’s Colorado division, which serves over 1.5 million customers in the state with electricity and natural gas, told the General Assembly’s Joint Select Committee on Rising Utility Rates that spikes in natural gas prices and colder-than-average winter temperatures are to blame for the sticker shock.
“Bills have clearly increased, and we do empathize with our customers, particularly our most vulnerable customers,” Kenney said. “While we have done much for our customers to mitigate volatility through our gas volatility mitigation plan, and our gas purchasing strategies … we do know that there are opportunities to do more.”
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Xcel and Black Hills Energy, which serves roughly 300,000 gas and electric customers in Pueblo and other parts of the state, are Colorado’s only investor-owned utilities, and together account for about 60% of the state’s electricity sales. Unlike municipally-owned utilities or rural cooperatives, Xcel and Black Hills are for-profit businesses that aim to deliver returns for their shareholders — and, in turn, are tightly regulated by the state’s Public Utilities Commission.
Xcel, which also operates in Minnesota and six other states, reported a record $1.7 billion in profits in 2022, including $727 million from its Colorado division, while customers dealt with utility bills that rose from an average of $115 in December 2021 to $177 a year later.
“That’s why we’re here today — that disconnect,” said Senate President Steve Fenberg, a Democrat from Boulder and the chair of the select committee. “Why are we simultaneously living at a time when people are struggling the most to pay their energy bill, and at the same time, the utilities are making the most profits they’ve ever made?”
As natural gas prices spiked over the last two years, Xcel successfully sought permission from the PUC to raise its rates, and has begun to lower them again after commodity prices peaked in October. Lawmakers have expressed concerns about the “asymmetry” of the PUC rate adjustment process, in which utilities like Xcel are able to pass on to ratepayers millions of dollars in costs for legal representation and expert witnesses as they lobby for rate hikes.
State Rep. Chris deGruy Kennedy, a Democrat from Lakewood, questioned whether lawmakers need to “revisit how the PUC goes about determining whether they should be approving these filings.”
Kenney and Nick Wagner, Black Hills Energy’s vice president of Colorado regulatory affairs, expressed openness to reforms like more assistance for customers struggling to pay their bills, and multi-year rate plans that provide a greater degree of certainty for ratepayers. But they defended the investor-owned utility model as an efficient way to attract the capital necessary to cover infrastructure costs and accelerate the transition to clean energy.
“If we weren’t an attractive place for capital to go … we wouldn’t be able to make the investments that we’ve made in renewable infrastructure,” Kenney said.
“There’s always room for modifications, reformations, evolutions,” he added. “There are things we could certainly look at. Structurally, I think the bones are very sound. I think public utility regulation is sound.”
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