Xcel hopes added fuel will reduce winter cost adjustments; bill increases from February storm rolling off YVEA bills
After seven months of additional charges on bills for Yampa Valley Electric Association members, the February Xcel Power Cost Adjustment will roll off after November’s monthly statements.
The additional fees started with smaller charges on March YVEA bills and continued with fees based on member electricity usage from March kilowatt use that was charged across bills received May through November.
Local entities such as Routt County, Steamboat Springs School District and city of Steamboat Springs reported paying an additional $20,456, $35,000 and $82,141, respectively, due to increased costs for energy following the fuel market price spikes after a February winter storm.
Xcel Energy Media Relations Representative Michelle Aguayo in Denver said Xcel is “doing a number of things to minimize impacts while helping keep bills low for our customers.”
“We have filled our storage accounts in advance of winter, contracted for some gas in advance, put extra inventory in our fuel oil tanks to back up power generation, and purchased financial hedges, as approved in advance by the Colorado Public Utilities Commission,” Aguayo said.
Hollie Velasquez Horvath, Xcel regional vice president, state affairs and community relations, said financial hedges mean having the ability to purchase natural gas earlier in the month at flat rates. However, Xcel does not have long-term fuel price contracts and can’s buy enough fuel in advance to last the winter season due to limited system storage capacity, Horvath explained.
“Xcel normally buys fuel monthly at market value,” Horvath said. “We don’t have the ability to store all of our fuel. It does not cover all of the demand for our customers throughout the month.”
Steamboat Springs City Manager Gary Suiter suggested to City Council in May that YVEA needs to be more aggressive in their dealings with Xcel and the Colorado Public Utilities Commission.
“It appears YVEA is advocating for policies and regulations through the PUC in an attempt to keep this from happening again,” Suiter told council. “Bottom line, there appears to be very little recourse, and it looks as if we will be stuck paying for this.”
Suiter noted this week the city paid the $82,141 through a supplemental budget appropriation, and the costs represented a 19.5% increase when looking at one month of energy used at the Combined Law Enforcement Facility, for example.
Steamboat Superintendent Brad Meeks said the addition $35,000 to the school district’s bill for service was covered from the district’s fund balance, which is maintained at a healthy level to deal with unexpected expenses. Meeks said he assumes the YVEA leadership team “has been assessing what happened and will make changes to ensure that, should something similar occur again, the cost to all customers is minimal.”
YVEA General Manager Steve Johnson said Wednesday the Xcel February power cost adjustment is a complicated issue well beyond YVEA since the local electric co-op functions as a pass-through entity for power supplier Xcel. He said the February PCA is under investigation with “a lot of layers to it.”
“We weren’t the only ones that were hit. It hit a huge demographic area,” Johnson said.
Yampa Valley Electric Association members can submit input to the YVEA leadership through the 2021 annual member survey through Dec. 31. Members with email addresses on file with YVEA were sent a link to the survey via email in mid-November, or individuals can contact YVEA member services to receive a customized survey link.
On March 15, YVEA received a bill from Xcel Energy for $9.78 million, which was roughly $6.4 million more than what YVEA budgets for February and represents 30% of what YVEA budgets annually for purchased power, according to the YVEA website.
It’s uncertain if a winter energy power cost adjustment will happen this winter.
Horvath said the cold temperatures across much of the U.S. during President’s Day weekend increased fuel use for heating, limited fuel supply and raised market prices for fuel some 100 times more than normal costs.
“The remaining fuel was at one of the highest rates in fuel in more than a decade,” Horvath said.
“Energy is a commodity. As the markets increase or decrease, the prices increase and decrease, and that’s what we passed through,” Johnson said. “We hope it’s as stable as it can be, but markets are volatile right now. We are working with Xcel to make sure we have some strategies in place that would minimize the best we could.”
Johnson said YVEA members have received the benefits of some positive power cost adjustments in the past when energy prices dropped.
“We’ve been pretty fortunate in the past years to return a lot of money. This is first time we’ve had to pass though some large power cost adjustments,” Johnson said. “Anytime there is fuel cost adjustment, or PCA, that can go up or down. That’s a component of the power bill.”
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