Colorado’s public utility model questioned in first committee meeting on rising rates

Colorado lawmakers held their first in a series of meetings looking into the forces behind increasing utility costs in the state and developing a plan to address the issue.

“We have all heard from our constituents that their utility bills have gotten out of control,” said Senate President Steve Fenberg during a Tuesday hearing for the Joint Select Committee on Rising Utility Rates.

“This select committee is about asking ‘Why?’” he said. “Why have some natural gas rates tripled in just three years? Why does it seem that even though we’re transitioning to electricity sources that get cheaper … the cost to deliver that energy seems to have gotten more expensive? Why are profits for utility companies reaching record levels while a record number of their ratepayers are filing applications for energy assistance?”

The joint committee was convened in February by Fenberg, a Boulder Democrat, and House Speaker Julie McCluskie, a Dillon Democrat. Fenberg serves as the committee’s chair.

Its other members are:

• House Minority Leader Mike Lynch, a Wellington Republican
• ​​Rep. Chris deGruy Kennedy, a Lakewood Democrat
• Rep. Matthew Martinez, a Monte Vista Democrat
• Sen. Lisa Cutter, a Littleton Democrat
• Sen. Barb Kirkmeyer, a Brighton Republican

“Establishing the baseline of what the issue is will be critical. That’s going to steer the whole conversation moving towards what we can do as a Legislature, if anything, to address the issue,” Martinez told reporters before the first hearing.

On Tuesday, lawmakers heard from representatives from the state’s Public Utilities Commission, Colorado Energy Office, Office of the Utility Consumer Advocate, and Energy Outreach Colorado. Subsequent hearings will involve representatives from utility companies and experts to start the conversation on solutions moving forward.

Public utilities in Colorado essentially act as monopolies under a concept called the regulatory compact. In return, and to collect profits, the utilities are expected to provide service at a reasonable cost.

Fenberg questioned if that is still a worthwhile model.

“Have we lost track of truly what is a reasonable and necessary expense to provide reliable, safe and clean energy? I would say if a ratepayer is deciding between paying their heating bill or paying their prescriptions this month, then, yes, something is wrong,” he said.

PUC chief economist Erin O’Neill outlined four main factors that drove utility costs up this winter: the rising cost of natural gas fuel, the increase in gas usage due to substantially colder weather, a gas cost recovery rider for Winter Storm Uri in 2021, and an increase in the Xcel Energy base rates. Xcel is Colorado’s largest utility.

She said that typical gas bills increased by about 75% this winter compared to 2021, and electric bills increased by about 25%.

O’Neill also highlighted items that are not factors in increasing rates, including investment into renewable energy, Xcel’s implementation of smart meters, time-of-use rates and the requirement for utilities to file and implement clean heat plans.

None of the joint committee hearings will have public testimony. The public is invited to submit comments on the matter to to [email protected]. Those comments will be made available to committee members.