AARP Questions New Meters, Auto Rate Hike Mechanism for Xcel

Public Service Co. of Colorado, owned by Xcel Energy, is proposing a new energy initiative designed to impose significant costs on ratepayers and implement policies that are not in the best interest of consumers.

Xcel also is seeking to have customers pay for a $500 million plan to install new meters on every home and small business in its Colorado service area.

The utility – the state’s largest electricity provider – also wants approval from the Colorado Public Utilities Commission for a new mechanism – decoupling – that could enable it to issue automatic rate increases without regulatory review. Energy efficiency programs and rooftop solar have cut into Xcel’s basic business of selling electricity, lowering the companies’ returns. Under decoupling, which “decouples” sales from revenues, the utility would essentially be held harmless from falling sales and could raise its rates to meet revenue targets.

“These moves by Xcel threaten to increase the bills of Colorado customers without clearly identified benefits,” said Bill Levis, a senior advocate for AARP Colorado. “The estimated value of the so-called smart meter program is vastly inflated, while it will give the utility the power to remotely disconnect any customer. Further, the decoupling proposal could leave customers vulnerable to rate hikes during an economic downturn when they could least afford them.”

Xcel already tried a smart meter project – Smart Grid City in Boulder – which never became operational and left its Colorado customers with a $27.6 million bill.

By Xcel’s own estimates, the cost of the new smart meter program to install 1.6 million meters would exceed its benefits over the next 20 years by $51 million.

And even those numbers are suspect since some of the benefits are questionable.

In addition, residential customers would not be contacted personally before service is disconnected for non-payment, which means a company representative couldn’t stop a shut-off based on reasonable circumstances. Also, Xcel has not clearly identified the cumulative bill impacts, or asked customers if they are willing to pay for these benefits.

Xcel says that most of the variation in use comes from weather-related events, but economic events can also have an impact. During the 2008 recession for example, electricity usage decreased as Colorado families tightened their belts. But under decoupling, it wouldn’t matter how much a family cuts down on usage, their Xcel bill would not likely decline.