Xcel Energy has notified the Public Utility Commission of Texas that it is withdrawing an application to start a temporary fuel cost surcharge on Texas customer bills, originally planned to begin Oct. 1 and run through Sept. 30, 2018.

The charge would have added an extra $1.48 per month to a residential bill of 1,000 kilowatt-hours.

“Our fuel accounts remain undercollected, but that deficit has narrowed enough since we announced the surcharge in June that we have decided it won’t be necessary to start the surcharge,” said David Hudson, president, Xcel Energy – Texas. “We will continue to watch the fuel account and make necessary adjustments if the deficit widens.”

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. 

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.

The wind projects are being reviewed by utility regulators in both Texas and New Mexico, with anticipated approvals coming in 2018. Once the necessary approvals are obtained, construction on the 478-megawatt Hale Wind Project in Hale County, Texas, would start immediately with a planned completion in 2019. The other facility – the 522-megawatt Sagamore Wind Project in Roosevelt County, N.M., would be in service by 2020. An additional 230 megawatts of wind energy would be purchased from two facilities being developed in Texas by NextEra Energy Resources – one in Cochran County and the other in Crosby County.

More information about Xcel Energy’s wind proposal can be found at xcelenergy.com/ourenergyfuturesw.

“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 affordable energy prices for decades to come.”

(Press release from Xcel Energy)