Xcel's Base Rates to Rise, Falling Fuel Prices Will Offset Increase
Xcel Energy and key customer groups in Texas have agreed to an interim base rate increase effective this month for Texas customers, but a planned reduction in fuel costs will largely offset the increase.
Under the new rates, the average residential customer using 1,000 kilowatt-hours of electricity per month will see February bills rise over January bills by 6.36 percent, or $6.04. Customers began paying a $2.22 charge in September 2008 to cover the costs of the new Hobbs Generating Station. These charges combined represent an increase of $8.26, or 8.7 percent, over rates in effect last summer.
This filing reflects a base rate increase of $57.4 million, or 18.5 percent, but because base rates account for only a portion of a bill, the overall impact is much lower.
Fuel costs account for the rest of the bill, and these costs are decreasing. A fuel surcharge that amounts to $4.97 on a 1,000 kilowatt-hour bill will expire at the end of March. Xcel Energy also expects to file a lower fuel-cost factor in the first quarter of this year to reflect lower natural gas prices. Additionally, the new Hobbs plant, which is 40 percent more efficient than older natural gas-fired plants, began delivering fuel-cost savings in September 2008 that continue to bring down overall costs.
The agreed-upon interim rates will be in effect until such time as the Public Utility Commission of Texas issues a final order.
Increasing the base rate will allow Xcel Energy to begin recovering cost increases weve experienced since 2005, said David Eves, president and CEO of Southwestern Public Service Company, an Xcel Energy company. Even with the increase, our costs have been and will remain among the lowest in Texas.