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Xcel Energy challenged on $52.7 million rate hike; case sent to administrative law judge

DENVER–An attempt by Xcel Energy to end run public scrutiny usually required for electricity rate hikes for Colorado customers is being challenged by the state Office of Consumer Council over concerns about transparency and the appropriateness of bypassing usual rate case proceedings.

On July 17 Xcel filed an “Advanced Grid Rider” (AGR) with the Colorado Public Utilities Commission (PUC) to approve $52.7 million rate hike to pay for replacing all of its Colorado electrical meters with new “smart meters” it says are needed to improve grid reliability and provide customers with better information on the energy they use.

Normally, requests by the company to change electricity rates are set as part of an involved process through the PUC called a “base rate case” in which members of the public have the opportunity to carefully examine and comment on all of the claims made by Xcel as to why the new rates are justified before the PUC makes a ruling.

Riders, on the other hand, are intended as a way to quickly adjust electrical rates in situations that are unforeseen emergencies like storm damage to wide areas of the grid.

But Xcel is now claiming that it should be allowed to use the rider process, which shortcuts many of the procedures that give consumers the opportunity to participate, instead of the regular rate case process.

The rider asks the PUC to approve the rate hike effective August 17, 2020 automatically and without a public hearing, unless the PUC “chooses to suspend the tariffs and set a hearing on the proposed rider and tariff changes.”

Complete Colorado reported August 8 on Xcel’s request for a separate rate increase to pay for its Wildfire Mitigation Plan (WMP) that was also requested as a rider and was filed contemporaneously with the AGR.

The two rider requests came to the attention of the state Attorney General’s Office of Consumer Council (OCC), which is tasked with protecting “the constituencies that the OCC is statutorily mandated to represent…including the Company’s residential, small business, and agricultural electric customers in Colorado.”

The OCC filed an objection July 29, requesting an evidentiary hearing to determine if Xcel’s claims and request are in the public interest.

The OCC pointed out at least two other attempts by Xcel to use the rider process to bypass formal base rate cases: its Transportation Electrification Plan (TEP) and its Colorado Energy Plan Adjustment (CEPA) rider to “recover the regulatory asset established as a result of accelerated depreciation costs associated with the early retirement of the Comanche 1 and 2 generation units.”

Complete Colorado reported on the Comanche power plant shutdown last year.

During a PUC hearing on the Comanche plant shutdown, Commissioner Wendy Moser conceded that the proposal was rooted in misdirection, stating at the time: “The customers of Xcel Energy will pay for the retirement of these plants and it will show up in rates. So, don’t think that this is free and that it’s going to be borne by somebody else.”

In its objection the OCC said it believes that “the Company has developed a deliberate and concerted strategy to shift a significant amount of cost recovery from base rate recovery determined in a Phase I rate case to a multitude of new separate riders with separate revenue requirements and which will afford extraordinary and contemporaneous cost recovery on a riskless dollar-for-dollar basis.”

The OCC also questioned “whether the proposed AGR may allow PSCo [Xcel] to collect extra revenues that it might not be entitled to collect had the increased costs been examined in the context of PSCo’s overall operations, as would occur in a general rate case proceeding.”

Instead of scheduling a hearing the PUC submitted the proceedings to an Administrative Law Judge (ALJ) on August 14 and suspended the proposed rate change for 120 days, until December 15.

A prehearing conference is scheduled for September 22, 2020 at 9:00 a.m. in the hearing room of the PUC at 1560 Broadway, Suite 250, Denver, Colorado.

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