Lower fuel costs offset electric service increases overall bills to remain under 2017 levels with Xcel Energy Texas base rate increase
AMARILLO, Texas (May 20, 2020) – An Xcel Energy electricity bill in Texas is lower now than it was in 2017, and that trend is expected to continue even with a base rate increase to recover investments in the grid powering the region’s economy, a change that has gained approval from key customer groups.
“Customer bills are made up of two main costs - base electricity rates and fuel costs,” said David Hudson, president, Xcel Energy - Texas. “We invested hundreds of millions of dollars in new power lines, substations and renewable energy generation projects resulting in a cleaner, more efficient grid. These investments are driving a portion of the monthly bill up this year, but they also have created efficiencies that, combined with low natural gas prices, have lowered fuel costs and kept overall bills under 2017 levels.
Xcel Energy submitted a regulatory rate review in August 2019 with proposed new rates to support investments in the regional grid since 2017. The process has resulted in a settlement with key customer groups that has been presented to the Public Utility Commission of Texas, which ultimately approves changes in base rates.
Under terms of the settlement, total monthly costs for a residential customer using 1,000 kilowatt-hours would increase by $9.26 but would still be lower than monthly bills in 2017 because of fuel cost reductions that have reduced typical residential bills by $10.43 since that time.
If approved, new rates could be in effect this summer.
“We have been intentional about keeping overall billing increases at or near the rate of inflation through a focus on lowering fuel costs,” Hudson said. “Over the last three years, this focus has actually lowered billing costs for our customers. Xcel Energy’s electricity remains a responsible and cost-effective source for powering our lives.”
Xcel Energy expects further fuel cost reductions after the Sagamore Wind Project comes on line in New Mexico in December of this year. Sagamore is the second of two large projects Xcel Energy announced it would build and own in 2017, the first of which is the Hale Wind Project near Plainview, Texas.
Together these wind plants will have added 1,000 megawatts of wind energy capacity to the regional generating system, and 100 percent of the federal production tax credits generated by these facilities is flowing back to customers in both Texas and New Mexico through lower fuel costs.
The new renewable resources are paying for themselves through the fuel cost savings they generate, and will help Xcel Energy reach an 80 percent carbon reduction by 2030, with an aspiration of providing 100 percent carbon-free electricity by 2050.
• Fuel costs, which once accounted for close to half of a monthly residential bill, have fallen to about 11 percent of the total.
• The most recent fuel price decrease went into effect in April, lowering typical residential bills by $4.35, or 4 percent. A reduction in fuel costs in the summer of 2019 lowered residential bills by more than $5, or 5 percent.
• On top of the monthly fuel cost decreases, Xcel Energy has refunded a total of $78 million in fuel costs to Texas customers since 2019, reflecting continued low natural gas prices and more low- cost wind energy on the system. Customers are currently receiving bill credits reflecting the latest refund of $39.4 million.
• About half of the region’s electricity comes from natural gas-fueled power plants, and the price of natural gas has fallen to historic lows.
• Xcel Energy has added more low-cost wind energy to the mix, which has no associated fuel costs. This, coupled with the fact that 100 percent of the federal production tax credits on wind energy are applied against fuel costs, has significantly reduced monthly fuel charges on bills.
• New transmission line connections to the wider power market have enabled the company to import more affordable supplies of electricity, savings that reduce monthly fuel costs.
• Since 2017, Xcel Energy has invested close to $1.7 billion to increase the reliability and capacity of the regional power grid to support economic expansion for decades to come.
• The negotiated increase in base rates will generate $88 million in new revenue annually to recover the costs of new investments over time. This number accounts for $14.5 million already being recovered through a line item on the bill called the Transmission Cost Recovery Factor (TCRF) that will be rolled into base rates. Actual new revenue, net of the TCRF, is approximately $73.5 million annually.
About Xcel Energy Xcel Energy (NASDAQ: XEL) provides the energy that powers millions of homes and businesses across eight Western and Midwestern states. Headquartered in Minneapolis, the company is an industry leader in responsibly reducing carbon emissions and producing and delivering clean energy solutions from a variety of renewable sources at competitive prices. For more information, visit xcelenergy.com or follow us on Twitter and Facebook.