The More Xcel Builds, the More we Pay; it Doesn’t Have to be This Way

Published in the Denver Post on November 30th, 2024

As someone who cares deeply about the future of our planet, I converted my 1963 home in Boulder from gas to all electric. The install went smoothly, the problem was the 7½-month ordeal Xcel Energy put me through to disconnect the gas.

First, Xcel had no simple form for canceling gas service in favor of electrification. Next, Xcel contacted me saying it would charge $5,333 for disconnecting. Xcel stopped attempting to charge me only when front-page articles featuring my story and that of others who were penalized in this way for discontinuing gas service appeared.

The next day, Xcel came to remove my gas meter, and I was not charged. However, the saga didn’t end here. Just as some patients who lose a limb continue to feel phantom pain, Xcel began charging me for phantom gas — estimated charges of up to $100 per month because it could no longer read the meter that Xcel had removed. I was threatened with collection action because I refused to pay for gas that I was not, and could not possibly be, using. Finally, when I called the customer service line to pay my bill, the automatic system put me on hold saying, “You must talk to an agent about reconnecting (to gas).”

Any private company in a competitive market would not survive such poor customer service. But Xcel is not a private company. Xcel is a “regulated monopoly.” 

That means we customers have no choices if we are in Xcel’s exclusive franchise territories. Our utility system allows Xcel to make profits by building infrastructure and then receiving a guaranteed rate of return on that infrastructure through customer rates. Consequently, it is no surprise to read that Xcel is planning to add about $22 billion of capital investments in Colorado and that customer rates will increase up to 2.5% per year.

Here is the frustrating part. The new cleaner resources that Xcel is planning to build, such as solar and wind, are actually less expensive to build and run than the old infrastructure they are replacing, such as coal plants. A private company probably would switch simply to save money. And if a private company had made poor previous investment decisions by building now-nonprofitable resources, that company would eat the losses, not its customers, who have the option of leaving and going to a competitor without penalty.

Instead, Xcel is forcing its customers to eat the costs of its poor decisions while its shareholders have seen steady increases in profits over the past few years — with more than a 10% increase in gross profits in 2021 and 2022.

Xcel should not be able to charge its captive customers for reduced consumption of its product. A private company would not have this option, and the high guaranteed rate of return set by the PUC protects Xcel from market risks. Private companies would salivate for a similar return-rate cushion.

In addition, our legislature should change the more-than-a-century-old exclusive monopoly franchise that Xcel enjoys. It might have been prudent when electricity was generated and distributed one-way — from a large power plant to customers. But we are in a new era where two-way, or bidirectional, power is the norm. Technological advances allow customers to generate their own electricity with solar panels and use home batteries or EVs for backup. 

Xcel and other large utilities have stood in the way of maximizing the CO2 and cost savings these technologies can provide.

Could our current cellphone service and all that our cellphones provide have been possible if AT&T were still limiting customers to the choice of a traditional or Princess phone? 

Instead of allowing Xcel to invest more and more in large infrastructure and to charge its captive customers more and more, our legislature can open up the system for new approaches such as neighbor-to-neighbor power sharing, microgrids and virtual power plants. 

We need to introduce more free-market structures allowing innovation that will accelerate carbon emission reductions and empower customers to have more.

K.K. DuVivier is the John A. Carver Jr. Chair in Natural Resources Law at the University of Denver Sturm College of Law.