Best: Soaring utility bills provoke questions about our energy future
Natural gas responsible for most of winter surges along with cold weather uncommon of late. But not all the answers are obvious.
Colorado has had a chilly winter compared to recent decades, but the larger question triggered by the rising utility bills is how the state’s 5.9 million residents will stay warm in coming decades. I see this story as being mostly about the future of natural gas.
Utility bills from November and December — in many cases were double those of the previous year — have outraged many Coloradans.
Much of the heat was vented at Xcel Energy, the state’s largest utility with 1.4 million gas customers and 1.5 million electric customers. Black Hills Energy has 192,000 customers and Atmos 120,000 customers. Other residents are served by municipal utilities or, particularly in rural areas, burn propane.
Natural gas explained 80% of the increase on an average utility bill, according to research by the Colorado Public Utilities Commission staff. Gas prices surged, caused largely by supply disruptions caused by Russia’s war against Ukraine. Prices have now moderated but were responsible for 34% of bill increases.
Uncommon cold explained another 30%, according to the PUC staff research. For example, temperatures at Denver’s Central Park averaged 8 degrees colder than the year prior — which, by the way, was the second warmest since record-keeping began in the 1930s. The station was then called Stapleton Airport.
Russ Schumacher, the Colorado climatologist, says heating degree days, a measure of the energy needed to heat buildings, rose 30% at Central Park. Xcel said its customers in Colorado used 35.5% more gas in November and 31% more in December than the same months in 2021. It was the coldest winter in Denver in more than 20 years.
Some customers also started paying for Winter Storm Uri in February 2021, the week-long deep freeze, whose utilities had insufficiently hedged their contracts. They paid through the nose, and those costs are now being passed along to consumers.
This financial pain was evident this week at the statehouse when Gov. Jared Polis introduced several consumers. One woman said her family had commonly gone to the mountains on Saturdays but could not now because her husband was working Saturdays to pay for the higher utility bills. Other talked of lowering thermostats but still being shocked by their bills.
For Xcel, the high bills were being paid just as company officials informed shareholders that Colorado had delivered profits of 8.23% in 2022. That’s not exorbitant. Utilities commonly do as well or better. In the compact with states, they get monopolies, score high on reliability — and never take a loss. But this had produced calls for Xcel and other utilities to get more “skin in the game.”
Adding outrage was news that the PUC had allowed Xcel to pass along $2 million it had paid to lawyers and expert witnesses in supporting its argument for raised consumer rates. This equals the entire annual budget for the Office of Utility Consumer Advocate, a state agency of seven people charged with representing consumers in cases before the PUC. Passing along such costs has occurred for decades or longer. Despite precedent, it’s a valid question to ask whether an imbalance exists. Polis, in his remarks at the Capitol, seemed to agree.
In the short term, we can expect legislation that will require Xcel and other utilities to hedge in the natural-gas markets. Think of this as being like insurance, with an upfront cost that prevents big, big bills.
The broad question is whether we should, as Polis suggested, shift energy use to renewables that in theory would not be vulnerable to global-price swings. One bill got a preliminary nod by a House committee this week would require home warranty service contracts to allow homeowners to replace gas-fueled devices with those powered by electricity.
There has also been pushback to this drive to electrification, which one legislator from southeastern Colorado dismissed as “rainbows and unicorns.” That remark came during a discussion of a bill that proposed to prevent local jurisdictions from banning combustion of fossil fuels. Colorado has a sole precedent for such bans. Crested Butte last summer passed a law preventing use of natural gas in the remaining 100-some lots in that town to be developed.
Proponents of this right-to-choose law, however, could cite no other examples. It mostly sounded like a solution desperate to find a problem. A legislator from Colorado Springs, who opposed the bill, also observed that it would take away the rights of local utilities such as hers to decide their energy futures.
But a valid question was asked in the session. We’re hurrying to electrify both buildings and transportation. Contrary to some arguments, the payback on both is relatively rapid. Still unanswered, however, is whether we can build this electrical system with broad enough shoulders quickly enough to keep up with rising demand.
Allen Best writes about Colorado’s energy and water transitions at the reader-supported e-journal Big Pivots. See more at BigPIvots.com.
Mountain Mayhem: Spring flings
Casa Tua hosted a dinner last month in partnership with Wyld Blue, the chic boutique in the Elks Building downtown featuring a collection of housewares, childrens’ clothes and women’s fashion.