Full interview: Colorado Xcel president talks rate hikes

Well, let me thank you. First of all, thank you for taking the opportunity to talk to me and to have a better understanding of what we're doing in our business. Two things I think are important to note: the dollars that we receive from our customers, and you're referring to base rates, particularly with respect to our natural gas system, are going to be primarily used to fund the safety and the reliability of the system. I think that's something that we all share in common, a desire for a safe and reliable system. In the most recent case that we just filed, something like 60-some-odd percent of the investment in that case is going to safety, reliability, and mandatory relocations. We sometimes have to relocate infrastructure based upon counties or cities doing infrastructure replacements themselves. So that's kind of first and foremost, that is why we invest in the system, safety and reliability. You also referenced the legislation from last legislative session that was largely driven in response to what we saw with the gas commodity costs. Coming out of that piece of legislation, we are implementing mechanisms that will smooth out the implementation of the gas cost adjustment. You may know, and your viewers may know, my customers may or may not know, that the gas cost adjustment sets the cost of the commodity. That's the molecule, the gas that gets burned to heat homes and to cook food. We buy that wholesale and we don't charge any markup on that. So when that fluctuates up or down, customers realize that immediately. We file quarterly updates and adjustments to the gas commodity. Coming out of that winter heating season of late 2022, early 2023, we adjusted those rates even more frequently on a monthly basis because the commodity cost was coming down. What we're also seeing is that this winter heating season, the gas commodity costs about 28% less than it was last winter heating season, and customers are seeing that as well.

I wouldn't view them as magic words. I would view them as a true reflection of the obligation that we have. We know that with respect to both gas and electric, our customers deserve and expect their homes to be heated on cold nights, they expect the lights to be there to light the darkness, and we enjoy a high level of reliability. We also know that in order to maintain the safety of the system, we've got to do preventative maintenance, we have to do inspections. So I don't view them as magic words only to the extent that it's a solemn obligation that we have to our customers and our plan.

Because I think that it's important, as you've heard me say this before, as good stewards of our customers' dollars, they should understand where those dollars are going. I think one of the things that you said is that we have a lot of transparency with respect to the increases in our base rates. We also have a very transparent process at the commission, and we don't just get to arbitrarily change the price of our commodity like Netflix. We seek a rate increase, and we have a proposal that we submit to the Public Utilities Commission, and through that public and transparent process, that's the process by which we are allowed to increase our rates. But in order to do that, we have to justify to the commission and other stakeholders what we intend to do with those dollars. I think it's important that people understand we're not just arbitrarily raising rates, and it's important for people to understand what we're doing with their dollars.

I am, gas and electric.

I am happy with my bill to the extent that I understand probably more than the average customer. I understand what's required to provide the product that we provide and the service that we provide. I also know, and I will say this to you, Marshall, that I appreciate that there are certain of our customers that do have a harder time paying their gas and electric bill than do I. I'm very fortunate and very blessed, and I have a greater insight into where those dollars are going and what's required to run the system. So yes, I'm happy with the value that I receive for my dollar. Also, I understand simultaneously that there are some of our customers that may have a hard time, and that's why you'll recall last heating season and last winter, we worked with stakeholders and with the commission to increase the amount of energy assistance that's available to our customers that need help the most. And we're also in this most recent proceeding bringing forward a proposal to implement the proposed rate increase over a longer period of time and to mitigate the impact of that rate increase.

Actually, no, I wasn't talking about that. I was talking more about the increased $47 million increase in energy assistance. But thank you for reminding me. Yes, there was the half a million dollars that we contributed to Energy Outreach Colorado. But we also already have energy assistance programs for both gas and electric, and we worked with the commission to increase that by an additional $47 million.

So the additional $47 million is paid by customers, and that's not an uncommon construct throughout the country. That allows us to be able to collect those dollars and then distribute them as energy assistance.

Well, we did contribute the $500,000 that we contributed to Energy Outreach Colorado. We also do quite a bit of foundation giving, not just to energy assistance but to a whole host of nonprofits, to the tune of something like $1.3 million that we've contributed to a host of different nonprofits. And the other thing I will add is one of the efforts that we've recently instituted as well to get more assistance to our customers and to help our customers fill out the applications is our Red Truck initiative. We've been going into the community physically, going out into our communities to bring more information and energy assistance applications to try to get more customers connected with the energy assistance that's available. One of the things that we did learn is that not all of the eligible customers are necessarily taking advantage of what's available. So we're working with other stakeholders to make sure that we are maximizing the number of customers that are taking advantage of the assistance that's available.

I understand that customers will view it that way. I think that one of the things that I mentioned earlier is the fact that we adjust rates to reflect the fluctuations in the gas commodity cost. That is a rate increase, but also sometimes that becomes a rate decrease. That's different than the rate case that we just filed earlier last couple weeks for our gas rate case to raise base rates. We file those when we need dollars to pay for the investments that we're making in the safety and reliability of the system. Recognizing that for some of our customers, there's never a good time for a rate increase, one of the reasons we've brought forth what we think is a creative proposal that we haven't brought before is to delay and defer the implementation of rates for this most recent proceeding, rather than doing it in November of 2024, delaying it to February of 2025.

There have been instances where utilities have done that. It's very difficult for me to sit here and predict today because we do have to again make those investments in both the natural gas and the electric system for safety and reliability. So it's very difficult to say and predict whether we would at some point in the future seek a rate decrease.

I think you're again referring to the legislation from last year's Senate Bill 291. We were obviously very active in helping policymakers shape the ultimate outcome of that bill. There were a couple of different aspects of it. There was the gas price risk mitigation plan, and that's already something that we have filed that sets a cap on the GCA, the gas commodity adjustment that I referred to earlier. It allows that any costs above that cap to be collected over a longer period of time so that the customer feels a smoother increase rather than a spiky increase. So that was one of the desired outcomes of Senate Bill 291, to eliminate the price spikes. The second mechanism that you're describing was a gas commodity adjustment incentive mechanism. The commission is required to adopt rules prior to January 1, 2025. I think the language in the Senate is to align financial incentives with fuel costs. One of the things that we are going to be doing is participating in that rulemaking. We believe that any proposed incentive mechanism should be symmetrical so that the company and customers can share in the risk and the reward. We also think it's got to be focused on metrics that we can control. As I mentioned, the price of gas is set on a global commodity market. Beyond that, what we do to make sure that we are being good stewards of our customers' dollars and making sure that we are protecting our customers from price fluctuations, we do have a gas price volatility management plan that we file, which covers our natural gas hedging program. I can't get into the specifics of the volume of the hedging, but we use both financial instruments and physical storage to buy gas when it's less expensive and store it in the ground so that we can withdraw it during the winter heating season. We're also working with the commission. We're going to be proposing that we are allowed to enter into longer-term fixed contracts so you can lock in the price of natural gas and thereby avoid exposure to the volatility as well.

Well, to the extent that I said that, I don't remember the exact words, and I'm relatively confident that you're not quoting me precisely. But what I did say, I think, was at the point at which the bill was first introduced, we spent a lot of time working very constructively and collaboratively with the sponsor's office. Where the bill landed is something that we're able to work with. We're not withdrawing or doing anything differently other than making sure that we continue to be good stewards of our customers' dollars and mitigate price volatility through the things that I just described.

Well, I'll say this. We have a net zero vision that includes decarbonizing electric and gas and contributing to the decarbonization of the transportation sector through transportation electrification. What we have said is that as we bring on more renewables onto the system, customers will ultimately see a stabilization or even a lowering in the fuel cost because we are not buying coal or natural gas. We do believe that electrification can be executed in a way that is cost-effective and efficient for customers. The other thing I will say is that we are deploying high levels of renewables, and that is getting us closer to our goal of 80% renewable by 2030 on our way to being 100% carbon-free by 2050. We're proposing to do it in a way that we think is measured and that will be most cost-effective for customers.

Thanks for the question. It is always, and you've heard me say this too, it is always my desire to provide outstanding and excellent customer service. We have to act like a competitive business and treat our customers as if they are ours to lose. I would say this: I don't want a customer to have to come to you, Marshall, or go to the news to be able to seek resolution. We know that we don't always fall short. My job as the leader of the operations here in Colorado is to make sure that I am communicating with my coworkers and colleagues that customer service is job one. I can tell you that we strive every day to provide outstanding customer service. We also know that we sometimes fall flat, and we try to make it right as quickly as we possibly can. But I know the 4,000 people that I work with get up and go to work every day with a servant's heart and with a desire to do right by our customers. So I hope they don't have to call you, but we will work as quickly as possible to make it right when we have those issues.

You know, actually it's not that hard to find me if they need to reach out to me directly.