By Greg Avery. Published in Denver Business Journal, March 31, 2022
An initiative proposed for Colorado’s fall election ballots could make investor-owned utilities return hundreds of millions of dollars in profits annually to customers, a measure that would have the biggest impact on Xcel Energy, the Denver metro-area’s power company.
Jon Caldara, media figure and president of the libertarian-minded Independence Institute, filed paperwork to get proposed Initiative 93 authorized over the next few weeks to appear on statewide ballots in November.
Caldara is a critic of Xcel Energy inc. (Nasdaq: XEL) and the state’s regulation of utilities under Gov. Jared Polis. The profit-reducing ballot initiative is necessary because the trade-off of allowing shareholder-owned utilities to have protected monopolies with guaranteed profits in exchange for low-priced power no longer applies in Colorado, Caldara said.
What’s replaced it, he says, are climate change-fighting policies pushed by the state legislature, the governor, regulators and utility companies alike — what Caldara calls “an evil alliance of Birkenstock-wearing-elitists and neck-tie-wearing fat cats,” — that are driving up prices and profits at the expense of the working poor.
“The system is broken. It’s no longer working for us. It’s why our rates are going through the roof,” Caldara told Denver Business Journal. “It seems like a very winnable issue.”
As proposed now, the initiative would target the two investor-owned utilities in Colorado — Xcel Energy Inc., which serves 1.5 million households, and Black Hills Energy, which serves about 300,000 customers in southern Colorado — and require state regulators to make the companies dip into their profits to give back to ratepayers at least 5% of the revenue generated from their electricity and natural gas sales in the state.
Xcel Energy sold $4.8 billion worth of gas and electricity to its Colorado customers in 2021, profiting $660 million. A 5% cut of that ratepayer revenue totals $238.4 million, which would be the minimum of what Xcel Energy would be required to give back if Caldara’s initiative wins voter approval.
The Colorado Public Utilities Commission would have to sort out the exact mechanism for the profit sharing, Caldara said, but it would likely be a bill rebate or similar measure.
When contacted about the proposed initiative, Xcel Energy declined to say anything before the measure goes through hearings and its language is finalized.
“It’s too early in the process to comment,” said Michelle Aguayo, a company spokesperson
The measure, filed with the state Legislative Council staff on March 17, is scheduled to go through its first hearing today and then is expected to face a state title board review in April that will determine whether the proposed initiative language meets legal requirements for the ballot.
The initiative’s backers would then have to gather signatures of thousands of registered voters to qualify the measure to be voted on in November.
Caldara predicts Xcel Energy lawyers will fight to keep the measure from even making it onto the ballot. But the Independence Institute is experienced in the initiative process and has succeeded in getting measures in front of voters before, he said.
The ballot initiative would take effect next year. By then, Xcel Energy’s rates will be higher.
The utility has increased its gas and electricity charges this year compared to 2021, matching rising fuel costs. Xcel also seeks a nearly 13% increase in its underlying electricity rates to reflect the growing cost of renewable energy as the utility moves away from coal.
The company, in response to state limits, plans to cut greenhouse gas emissions by at least 87% by 2030.
Xcel Energy proposes to accomplish that by shuttering all but one coal plant it uses and replacing them mainly with wind and solar power, leaving ratepayers to simultaneously fund paying off the decommissioned coal plants and construction of the new renewable energy systems.
Xcel Energy also recently won PUC approval to build a $1.7 billion transmission line project to handle all the electricity from new renewable energy systems expected in Colorado’s eastern rural plains.
The utility’s investors receive a guaranteed rate of return on infrastructure, meaning there’s no investor risk despite the profit growth from the switch to renewable energy, Caldara said.
“Xcel is not in the power business. They’re in the building infrastructure business and then double-charging us for it,” Caldara said. “This initiative would make sure shareholders have some more skin in the game.”
Energy is relatively affordable in Colorado compared to most of the country.
The U.S. Energy Information Administration ranks Colorado’s statewide average for residential electricity bills as third-lowest nationally, behind only Utah and New Mexico. That’s due to a combination of low rates, an arid climate and relatively mild temperatures.
Alice Jackson, Xcel Energy Colorado’s president, has said the utility’s rates are 35% below the national average and, even with proposed electrical rate increases, customer bill totals will remain 25% below the U.S. average and grow no faster than inflation while the utility achieves industry-leading emissions cutting.
None of that makes the proposed Initiative 93 ballot measure unnecessary, Caldara said.
“Just because the system is more broken somewhere else doesn’t mean we shouldn’t fix this,” he said.