Texas electricity customers of Xcel Energy could see a 5% bill reduction this summer because of low natural gas prices and a greater reliance on wind energy, the utility said on Monday.
Xcel has filed with the Public Utility Commission of Texas to revise the formula that configures fuel charges and to lower the monthly fuel charge, aka the fuel cost factor that recovers the cost of purchasing gas.
Pending approval, Texas customers could see smaller bills by July. According to the utility, it is also planning to file a proposal for “a one month refund later this summer that will return at least $16 million to Texas customers,” all because of the reduction in the price of gas this spring.
“Historically low natural gas prices and more energy from wind farms are making electricity cheaper for our customers,” said Xcel’s David Hudson, president of the Texas unit. “And though we’ll soon need to account for the higher costs of improvements in our power generating and delivery systems, lower fuel costs and efficiencies generated by wind farms and grid improvements will help hold bills steady because fuel costs make up between 20% to 30% of an average residential bill.”
Natural gas produces roughly 50% of Xcel’s regional electricity at power plants, while wind energy accounts for about 20%. A small portion of the region’s energy is derived from solar energy, and the remainder is derived from coal.
Additionally, Xcel is in the process of completing the 478 MW Hale Wind Project near Plainview in West Texas. The $700 million investment in the region’s clean energy future has no associated fuel costs, the utility said. Xcel also procured high-voltage transmission lines that connect the region with the Southwest Power Pool electricity market, which has driven down wholesale power costs by enabling the utility to tap cheaper sources of power outside the region.