Minnesota-based Xcel Energy’s Colorado utility plans to upgrade and expand its natural gas and steam infrastructure in response to regulatory mandates and safety needs calling for an overhaul of the utility’s pipelines system. Xcel is asking state regulators to approve annual gas utility retail rate increases averaging 3.6% and totaling $113.8 million through 2015.
Colorado’s Clean Air Clean Jobs law calling for conversion to gas or closing of some coal-fired generation, and more stringent federal pipeline safety rules, are prompting Xcel’s plan that calls for a $40.4 million annual gas rate hike (the steam system is separate), or 2.1%, for residential customers next year in its filing made Wednesday to the Colorado Public Utilities Commission (PUC).
Xcel said the PUC is expected to initially address the filing in the next 30 days, hold public hearings in late spring 2013 and decide the case by late summer. The utility has asked for the new rates to be effective in August 2013, and in return Xcel has committed to not filing another gas rate increase until 2015 for an effective date in 2016.
Xcel told the PUC it plans to accelerate replacement of its natural gas pipelines and steam plant in Denver. For the first time, the utility is proposing to spread the costs over three years, with a rate hike in each of the years for gas utility ratepayers.
“Now is the opportune time for such investments as we can take advantage of historically low financing costs and low wholesale natural gas prices,” said David Eves, CEO of Xcel’s Public Service Company of Colorado. “Taken together, this plan will greatly benefit the state while still keeping rates competitive for our customers.”
Xcel called for an aggressive effort to modernize its gas pipelines across Colorado, many of which it said are more than 50 years old. The plan also will accommodate Xcel’s need to convert its Cherokee coal-fired generation plant to natural gas.
A utility spokesperson added that continuing low gas prices are helping lessen the impact of the pipeline improvement costs on retail customers. “Natural gas prices have declined significantly since 2008, and prices are predicted to remain relatively low into the future, which will help keep customers’ total bills low,” the spokesperson said.
Xcel proposes to install new boilers in the downtown Denver steam system through investing $29 million in replacement facilities over the next three year to support its 133 commercial customers there. The utility’s steam system provides heat for nearly half of the downtown area.
For now the steam system is separate from natural gas and will be seeking $4.8 million in additional revenues during the next three years, and it is asking the PUC to combine rate-setting for gas and steam starting in 2016.
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