Xcel Energy files for 40% reduction in Colorado gas costs

Xcel Energy Inc. Monday said it filed a request with the Colorado Public Utilities Commission for a $571 million reduction in the natural gas cost component of the company's retail rates. The gas cost adjustment would reduce the price that customers pay for natural gas by more than 40% starting in October, the company said.

Sept. 17, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Sept. 17 -- Xcel Energy Inc. Monday said it filed a request with the Colorado Public Utilities Commission for a $571 million reduction in the natural gas cost component of the company's retail rates.

The gas cost adjustment would reduce the price that customers pay for natural gas by more than 40% starting in October, the company said.

With the commission's approval, Minneapolis, Minn.-based Xcel Energy will reduce the natural gas bill for a typical residential customer, based on average monthly use of 76 therms, by about 41%. This amounts to a savings of nearly $372/year. A typical business customer, using an average of 396 therms/month, will pay $1,932/year less, a cost reduction of 45%, compared to current charges, Xcel said.

Cynthia Evans, vice-president of Xcel Energy in Colorado and Wyoming, said the company was keeping its commitment to reduce prices as soon as possible after last season's sharp price increases for natural gas.

In 2000, increased demand from natural gas-fired electricity generators and consumers coping with unseasonably cold weather tightened supplies of natural gas nationwide. Tight supplies led to high prices across the country.

Market prices that hovered around $2/decatherm in mid-1999 soared past $10 by the end of 2000. Because of this price escalation, Xcel Energy requested and the commission granted three separate gas cost adjustments -- $117.1 million in July 2000, $126.3 million in October 2000, and $361.6 million in January of this year -- that more than doubled the cost for natural gas delivered to customers from the previous heating season.

Evans said greater production of natural gas and customer conservation have driven down market prices.

"Additionally, we closely monitored the market and, when it benefited our customers, we purchased more natural gas at fixed rates," Evans said. "As a result we are able to not only pass along reduced prices to our customers but also decrease the cost volatility of natural gas." Evans cautioned that while market prices have fallen they could rise again.

Absent the company's fixed delivery rates, which include metering, billing and distribution costs, residential and commercial customers will pay 28¢/therm for the natural gas commodity. This price is lower than the 69¢/therm cost customers paid with last year's series of dramatic price increases.