Plunging wholesale natural gas prices since mid-summer will allow Xcel Energy to lower its retail electric utility charges in Texas at the outset of winter, but other factors will offset those savings longer term, the Minneapolis-based utility holding company said. Unrecovered higher fuel costs from last winter and spring, along with a pending general rate increase request, may raise retail power rates later next year.

Xcel’s Southwestern Public Service Co. filed two offsetting fuel cost-related proposals last Tuesday with the Texas Public Utilities Commission (PUC) — a winter fuel cost factor that would lower retail power rates, and a fuel surcharge to collect underrecovered fuel costs from earlier in 2008 that will raise rates.

“The two fuel charges reflect two different time periods — the winter fuel cost factor will collect projected fuel costs from Nov. 1 to six months out, while the surcharge reflects actual fuel costs from a past period [October 2007 to August 2008],” an Xcel spokesperson said.

The winter fuel factor will lower retail power bills 8.86%, or $8.96/month, in November and December, but in January the surcharge would kick in to raise those same average power bills 6.17%, or $5.69/month.

Separately, the Texas PUC is currently reviewing Xcel’s proposed increase in its base rates to cover increased operation and maintenance expenses. A decision in that case is not expected before the end of this year, the utility spokesperson said.

Noting that setting the various rates for its utility operations is a complex process, Southwestern CEO David Eves said that “fuel charges can be especially complex when commodity prices are volatile, and we are hopeful we can refine our system to iron out some of those highs and lows.”

Eves stressed that the fuel cost charges are a straight pass-through, and the utility does not make any more profits from higher gas costs.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.