Higher prices for the natural gas Xcel Energy uses to produce electricity at area generating plants is leading the company to seek an adjustment to the monthly fuel charges Texas customers pay.
Fuel costs – which account for the cost of coal and natural gas as well as the cost of energy purchased from wind generators and other utilities – make up about a third of a typical residential customer’s bill. Customers have been paying lower fuel costs in 2015 and 2016 as a result of unusually low natural gas prices and lower costs for purchased power. While the cost of imported power has remained low because of recent investments that allow the company to tap cheaper sources of outside power, natural gas prices have been increasing over the past eight months.
If the adjustment to Xcel Energy’s fuel factors is approved by the Public Utility Commission of Texas, a typical residential customer using 1,000 kilowatt-hours per month will see an average monthly increase of $2.59 – or 2.6 percent. Xcel Energy has proposed this change take effect Oct. 1.
David Hudson, president – Xcel Energy Texas, said fuel costs are dollar-for-dollar pass-through charges that are separate from base rate charges, and the company is allowed to change its fuel cost factor up to three times per year to reflect fuel market changes. Since Feb. 1, just after the last adjustment, natural gas prices have increased 24.6 percent. An adjustment now will prevent the company from having to surcharge customers for under-collected amounts later, he said. In the meantime, the company will continue making improvements aimed at making the most of the customer’s fuel dollar.
“While we do not have control over the cost of natural gas, we do have the ability to make efficiency improvements to our system that help hold down these costs over time,” Hudson said. “We have a good track record of making timely improvements, such as the construction of new transmission tie lines that are helping us save $60 million a year or more on purchased power.”
Hudson also pointed out that additional purchases of renewable energy serve as a hedge against rising natural gas prices. The company has recently added an additional 700 megawatts of low-cost wind energy capacity through long-term contracts, and will soon add 140 megawatts of new solar energy capacity. Over the long-term, the company could save hundreds of millions of dollars in fuel costs since there are no fuel costs associated with renewable energy, he said.
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)
