Joe Smyth, Energy and Policy Institute, February 3, 2022
Link to the original article
Xcel Energy is supporting a new gas industry effort in Colorado that has published false claims about the costs of electrification. The new gas industry group launched the same week that Xcel Energy began seeking approval from the Colorado Public Utilities Commission to increase its gas rates. If approved, the gas rate increase would further raise the already elevated cost customers are paying for gas this winter. The rate increase would also come on top of the surcharges customers stand to pay over the next two years to cover the costs of the extraordinarily high gas prices that Xcel Energy and other utilities purchased during February Storm Uri one year ago.
The new gas industry group calls itself “Coloradans for Energy Access” and launched last week with a website and op-ed in the Colorado Sun. The website lists the new group’s members including Xcel Energy and Black Hills Energy, investor-owned utilities that sell electricity and gas in Colorado, along with Atmos Energy and Summit Utilities, which sell gas in Colorado and other states. Other members include unions, the Colorado Farm Bureau, and the American Public Gas Association, the trade association for publicly-owned gas utilities.
Xcel Energy is involved with the gas industry group despite also being a member of the Colorado Beneficial Electrification League, along with the Colorado Energy Office, cities of Denver and Boulder, and environmental groups. When asked for comment, Xcel Energy would not provide an explanation to EPI for its involvement with both the gas industry and electrification efforts in Colorado.
The “Coloradans for Energy Access” website includes a false claim that heat pumps cost more to operate than gas furnaces; in reality, higher gas prices mean that homes using efficient heat pumps are likely to be cheaper to keep warm this winter than homes that rely on gas furnaces.
The gas industry group’s website claims:
“The U.S. government’s Energy Information Administration forecasts that homes heated with natural gas will spend $746 this winter compared to homes heated with an electric heat pump will spend $1,268.”
But the claim that heat pumps are more expensive to operate than gas furnaces is not supported by the data in the cited source, which provides estimates of the electricity and gas bills for customers with gas heating and electric heating generally, not the costs of heating with heat pumps which are significantly more efficient than other types of electric heating.
The source for the gas industry group’s claim is the Energy Information Administration’s Winter Fuels Outlook, which states:
“We expect households that use natural gas as their primary space heating fuel will spend $746 this winter, 30% more than they spent last winter. This increase in natural gas expenditures comes from both higher expected prices and higher expected consumption.”
The Energy Information Administration goes on to add:
“We forecast that U.S. households that heat primarily with electricity will spend an average of $1,268 this winter on their electricity bills, which is 6% more than last winter. This increase is a result of our forecast of 1% more electricity consumption and 5% higher residential electricity prices.”
A spokesperson for the EIA confirmed in an email to EPI that its Winter Fuels Outlook cost estimate is for the average cost of the entire electricity bill this winter for households that use electric heating of all types, not households that use heat pumps. Most households that rely on electric heating in the U.S. still use less efficient electric resistance heaters such as baseboard heaters, which have remained a common feature in households in some regions of the country for decades. Electrification advocates promote heat pumps because they are more efficient and help to keep heating costs low. Recent technology advances mean that heat pumps now work well in regions with cold climates.
The gas industry group’s claim is also false because it does not reflect the fact that gas customers also pay additional electricity costs that are not accounted for in the EIA figure. Instead, the industry group compares the EIA figure for the average costs of an entire electricity bill for all uses of electricity – not just heating. The EIA Winter Fuels Outlook states this explicitly: “We forecast total winter expenditures for all uses for each primary heating fuel, not just the portion attributable to heating. For example, the expenditures included for households that heat primarily with electricity in this report would also include electricity used for appliances and lighting.” A spokesperson for the EIA also confirmed this to EPI.
A recent analysis from RMI found “that this winter, energy expenditures in homes with high-efficiency, cold-climate electric heat pumps are likely to be lower than in homes with gas furnaces.” That analysis looked specifically at winter heating costs in Denver, along with four other cities.
The RMI analysis also highlighted how gas prices are much more volatile than electricity prices. Gas prices have been particularly volatile over the last year, and will increase Colorado gas customers’ bills in multiple ways.
First, gas utilities pass on the costs of purchased gas directly to customers, and gas prices have risen this year globally and in Colorado. Increased gas exports mean that gas prices in the U.S. are increasingly tied to global markets where gas is more expensive. The Colorado Sun reported in November that Coloradans will see “double-digit hikes in their gas utility bills” this winter:
Rising gas charges will push the average Xcel consumer’s cost up more than 14% in the last three months of this year, while gas bills in some areas served by Black Hills Energy will go up 50%. Atmos Energy and Colorado Natural Gas have also filed gas cost increases ranging from 11% to 24% for the average residential consumer in peak winter months.
Those higher gas prices are already showing up on Xcel Energy gas customers’ bills this winter. “Colorado’s Xcel customers could see their monthly natural gas bills rise by $27 over last winter’s charges, even if they use the same amount of energy,” Westword reported in December.
Xcel Energy spent more than $1 billion on gas in 2021, up 57% from the $689 million it spent in 2020, according to its latest filing with the Securities and Exchange Commission. The same filing shows that Xcel Energy generated more profit from its operations in Colorado than any of the other states in which it operates.
On top of those higher gas prices that are automatically passed through to customers, Xcel Energy is also seeking approval from the Colorado Public Utilities Commission to increase its gas rates 13% over the next three years. This new request comes less than a year after Xcel Energy’s earlier gas rate increase that took effect less than a year ago in April 2021.
The Office of Utility Consumer Advocate, which represents the public interest in proceedings before the Colorado Public Utility Commission, filed a protest objecting to Xcel Energy’s proposed gas rate increase. If approved by the Commission, Xcel Energy’s proposal would amount to an increase of $8.13/month for an average residential gas customer, beginning in November 2022.
Finally, gas utilities in Colorado are also seeking approval from the Public Utilities Commission to charge customers for the extremely expensive gas they purchased during Winter Storm Uri, which froze power plants and gas operations in Texas a year ago and led to gas price spikes across the country, including Colorado. Xcel Energy is seeking to charge gas customers $287 million for the extremely expensive gas the utility purchased during those few days, which could mean a monthly surcharge of $6.20 for the average gas customer for the next two years according to the Colorado Public Utilities Commission. Black Hills Energy, Atmos Energy, and Colorado Natural Gas are also seeking to add surcharges to their gas customers’ monthly bills for the next two years to pay for the millions of dollars they spent on gas during the February 2021 storm and gas price spike.
The “Coloradans for Energy Access” website also features a stock image of a woman and child cooking with a gas stove in a kitchen without a range hood for ventilation, which increases the risks of dangerous air pollution inside homes.
Cooking with gas stoves creates pollution inside homes such as nitrogen dioxide and methane. One analysis found that “children living in a home with gas cooking have a 42% increased risk of having current asthma, a 24% increased risk of lifetime asthma and an overall 32% increased risk of having current and lifetime asthma.”
Cooking with a gas stove in a kitchen without a range hood for proper ventilation can increase the risks of interior air pollution. A new study from scientists at Stanford University determined that gas stoves emit methane pollution even when they are off, and also “found that families who don’t use their range hoods or who have poor ventilation can surpass the one-hour outdoor standard within a few minutes of stove usage, particularly in more cramped kitchens, which are more common in poorer communities.”
The U.S. Consumer Product Safety Commission advises consumers to “Install and use exhaust fans over gas cooking stoves and ranges,” as does the American Public Gas Association.
“Coloradans for Energy Access” is not the only gas industry group that Xcel Energy supports. The utility is also a member of the American Gas Association, which has led a campaign against electrification efforts in several states.
NPR caught the CEO of the American Gas Association providing misleading statements about the trade association’s involvement with gas industry campaigns in several states:
While the AGA says it “will absolutely oppose any effort to ban natural gas,” President and CEO Karen Harbert says her group maintains an arm’s length relationship with efforts to pass preemption laws. “We are not coordinating these efforts and we are not state lobbyists,” she tells NPR. “We concentrate our activities, certainly, at the federal level.”
That distinction is important because much of the AGA’s budget comes from ratepayers through its member utilities. That means you, as a ratepayer, could be funding this work, even if you don’t agree with it.
But public documents reviewed by NPR and recordings of AGA executives reveal that the group is actively involved in passing state-level bills, along with utilities and local gas trade groups, that block critical local action to cut heat-trapping emissions.
One of those documents advises AGA member companies like Xcel Energy to “Build a local and/or state consumer coalition to serve as the spokesperson for the natural gas industry”
Similarly named groups that echo gas utility talking points have also appeared in other states. For example, Southern California Gas Company, a Sempra subsidiary and AGA member, funded an organization called Californians for Balanced Energy Solutions (C4BES) to promote the continued investment and use of the gas system to local communities and governments. Documents detailed how SoCalGas targeted “key Latino leaders” to support C4BES and push the idea of “renewable” gas as an alternative to electrification. Northwest gas utilities also launched a front group called Partnership for Energy Progress, which has raised over $2.8 million dollars for TV and social media advertising to fight electrification policy in Oregon and Washington.
The Federal Energy Regulatory Commission is considering new rules that would make it harder for utilities to charge ratepayers for the lobbying efforts and political activities of trade associations like the American Gas Association.