PUC to weigh Xcel Comanche 3 delays, gas rate overcharge later this month

December 18, 2009

In a pre-holiday rush, Xcel Energy rate increase cases are flying fast and furiously before the Colorado Public Utilities Commission these days.

The PUC Wednesday essentially re-opened Xcel’s electricity rate case that appeared settled earlier this month, putting it back on the agenda for Tuesday of next week because of unexpected delays in getting the Comanche 3 coal-fired power plant near Pueblo online.

As first reported on the Colorado Independent Tuesday, Xcel discovered cracks in boiler tubing that will push the plant’s opening into January and possibly beyond. Comanche 3 was supposed to open this fall, and part of Xcel’s $128.3 million rate increase granted earlier this month was earmarked for the troubled facility.

The PUC will meet at 9 a.m. Tuesday to decide how to handle the rate case, whether to adjust it before it goes into effect Jan. 1, or leave it as is and provide a refund to ratepayers after Comanche 3 goes online. Xcel has proposed cutting its rate increase by 39 percent until Comanche 3 is up and running.

Also on Wednesday, Gene Camp, head of the PUC’s Energy Section, brought up a possible staff complaint alleging excess revenues on the gas side. According to Camp, Xcel’s return on equity (ROE) for 2008 was reported by the company to be 11.99 percent, which they later corrected due to various accounting errors to 11.37 percent.

PUC staff puts that number at 11.78 percent, but Xcel was only granted an ROE rate of 10.25 percent when its last gas rate increase of $32.3 million was approved by the commissioners after a settlement in 2006. Those rates, essentially a 2.5 percent increase, went into effect in July of 2007.

Camp said Xcel has proposed fixing the problem in a rate case “because they plan to file for a rate increase next year because they estimate they will under-earn.” But he added the staff does not favor that resolution.

The PUC commissioners will meet on the gas over-earning issue on Dec. 28. Expect some degree of resistance from environmental and community groups troubled by three Xcel rate increases granted over the last four years and issues such as lavish travel and entertainment expenses initially included in the latest rate increase but later expunged.