Xcel Energy is seeking a temporary fuel cost surcharge on Texas customer bills to reduce a negative balance in its fuel account that resulted from a time when fuel-related costs exceeded what the company recovered in fuel charges on monthly bills.

If approved by the Public Utility Commission of Texas, the surcharge would add $1.48 per month, or 1.3 percent, to a residential bill of 1,000 kilowatt-hours, starting Oct. 1 and running through Sept. 30, 2018.

Fuel charges make up about a third of a typical residential customer bill. They collect the cost of coal and natural gas used in Xcel Energy generating plants, and costs related to purchasing electric energy from other producers. These costs are collected each month through a fixed fuel cost factor that can be changed up to three times per year to reflect changes in fuel market prices, and Xcel Energy only collects enough to cover those costs dollar for dollar. Xcel Energy makes no profit on the costs it collects in its fuel factor.

“When we undercollect our fuel costs, we use temporary surcharges to bring the account back into balance,” said David Hudson, president, Xcel Energy – Texas. “A temporary surcharge keeps ongoing fuel charges more closely aligned with the actual fuel expenses Xcel Energy is incurring to generate electricity. During times when fuel costs decline due to a drop in fuel prices or other reasons, fuel cost refunds are made. In the past six years, we have surcharged and distributed refunds at various times.”

Xcel Energy lowered its monthly fuel cost factors in March 2015 and again in February 2016. In November 2015, the company issued $18.6 million in refunds to Texas customers to balance an overcollected fuel revenue balance. Natural gas prices began to rise shortly after the 2016 fuel factor reduction, which led to increases in the fixed fuel cost factors in October 2016 and again in February.

The volatility of natural gas is a driving factor behind the company’s recent announcement it plans to add 1,230 additional megawatts of wind energy to its regional power generation mix. Wind energy has no fuel costs associated with it, and by adding these new wind facilities, the company expects it can save customers $2.8 billion in power generation costs over 30 years by displacing a percentage of its natural gas and coal generation with more wind energy. More information about Xcel Energy’s wind proposal can be found at https://www.xcelenergy.com/company/rates_and_regulations/our_energy_future_southwest.

“We will use wind energy to build in more predictability in our future pricing,” Hudson said. “Because of substantial federal tax credits and the absence of fuel costs, we can lock in prices for wind energy that are comparable to our coal generation fuel costs.”

About Xcel Energy
Xcel Energy (NYSE: XEL) provides the energy that powers millions of homes and businesses across eight Western and Midwestern states. Headquartered in Minneapolis, the company is an industry leader in responsibly reducing carbon emissions and producing and delivering clean energy solutions from a variety of renewable sources at competitive prices. For more information, visit xcelenergy.com or follow us on Twitter and Facebook.

(News release from Xcel Energy)