October 1 marks the start of a multi-year electric rate increase for Xcel Energy electric customers. While it is pretty straight-forward to understand that your bills are about to increase, the details behind utility rate increases can be confusing. That’s one reason CUB exists – to help consumers understand their energy bills and provide ideas to keep your energy costs in check, even when rate increases occur.
The amount of increase will vary among households and locations in Xcel’s service territory, but moving forward most residential customers will notice their bills go up a few dollars per month. In 2019, residential customers will see another increase of a smaller amount.
Read more for details about the rate increase, impacts to your future bills, and ways to keep your bill down.
At the end of 2015, Xcel submitted a formal rate increase request to the Public Utilities Commission (PUC). The PUC is the governmental body that must approve rate increases of investor owned utilities such as Xcel Energy. The original request included increasing the basic service charge (the fixed charge of $8 or $10 you pay each month) and the energy rate charged per kilowatt-hour of usage.
While Xcel was undergoing the rate increase review process, it was granted permission to begin collecting a portion of proposed increase through a line item called “Interim Rate Adjustment.” As a result, customers got used to paying more before a decision was made. (If you see the words “Interim Rate” on your electric or gas bill, it is a clue that your utility has proposed to raise rates.)
Decision and Impact
In May, the PUC approved raising the energy rates but denied raising the basic service charge. So, the financial impact of the rate increase will be directly related to the amount of energy a household consumes.
What’s important to note is the “ interim rate adjustment line” on your total bill (see graphic below) represents the majority of the increase customers will see on their bills. Beginning October 1, the interim rate adjustment line will disappear from bills and be replaced with the higher per kilowatt hour (kWh) “energy charge” rates.
The table below illustrates the new rates beginning October 1, 2017 and another step-up beginning January 1, 2019. Please notice that winter and summer rates differ. Summer rates are higher and end in September of each year. With the rate increase starting October 1, the price difference between September and October bills may not be so noticeable to customers.
The total impact on a customer’s bill will vary based on what types of fees and taxes exist where he or she lives. For example, some communities add franchise fees or a city tax to Xcel’s bills, and some do not. When rates go up, the subtotal of your bill obviously increases, and your taxes and fees also get higher, because they are calculated from the subtotal. The lower your bill, the less in real dollars you spend on taxes and fees.
The table below explains the impact of the rate increase on total bills for average customers in an average month. The chart illustrates how average bills have increased since the interim rate adjustment and will increase again with permanent rate hikes as of October 1, 2017 and then again in 2019. The chart shows how the majority of the total rate increase is already being paid by customers through the interim rate adjustment. We want to emphasize the specific impacts on a month-to-month basis will vary according to season, where the customer lives, and their amount of energy usage. While not precise, the table is a good approximation of what consumers can expect.
Additionally, customers will see a one-time small credit on their October bills, making the rate increase initially a little less noticeable. This credit is to reconcile the difference between the interim rate adjustment charged on customer bills since 2016 and the amount of increases actually approved by the Public Utilities Commission. There was a small overcharge in 2016 and slight undercharge in 2017, but overall a net overcharge that will provide a typical customer a refund of $3.33. Look for your credit on your next Xcel bill.
Are you concerned about paying more for electricity?
With rates rising on a permanent basis, its more worthwhile than ever to take advantage of money-saving programs and take steps to become more energy efficient. Here are some tips to bring your bill down, and you can always contact us or come to an upcoming utility bill clinic for a free one-to-one consultation.