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Xcel Energy Files for Fuel Cost Factor Increase Approval

Xcel Energy

Xcel Energy is seeking approval to charge customers more due to anticipated fuel cost increases for next year.

On Monday, Xcel Energy filed for approval from the Public Utility Commission to increase the Texas fuel cost factor on their customer’s bills, beginning in January.

The change would result in a 7 percent increase, or $6.30 for customers using 1,000 kilowatt-hours per month. Xcel is also requesting a revision of the formula which is used to calculate the Texas fuel cost factor.

The company says that the increases are anticipated in their natural gas purchases, as they cut back on coal-fueled power generation, to come into compliance with the Environmental Protection Agency’s Cross-State Air Pollution Rule.

Under the CSAPR, generators will be required to reduce nitrogen oxide and sulfur dioxide emissions up to 50 percent beginning on January 1st. To do this, Xcel decided that the best way to meet the new guidelines is to reduce the output of coal-fueled plants, which do emit more of the emissions than their natural gas-fueled counterparts.

Fuel costs are made to the customer through the fuel cost factor, which changes according to the fuel’s market price, and the company does not profit from the factor.

Xcel Energy President and CEO Riley Hill commented on the increase, saying “We have a long track record of implementing reasonable, cost-effective emission control strategies, but we can’t possibly retrofit our coal-fueled plants in time to meet the new requirements.”

“We’ll have to shift the burden of our generating requirements to the higher-cost natural gas plants until new emission control technologies can be installed at our coal plants,” Hill explained.

A lawsuit challenging the EPA regarding this rule has been filed, but will likely not have any effect until after the January 1st implementation deadline. Xcel Energy says that if the EPA rule changes and the higher fuel costs are not necessary, the increase will not be put into effect. The proposed increase only affects Xcel’s customers in Texas.

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