Tiered Rates Now in Effect for Xcel's Colorado Residential Electric Customers

A two-tiered seasonal rate went into effect June 1 for Xcel Energy’s Colorado residential electricity customers. Designed to be revenue neutral, company leaders and regulators hope it may inspire consumers to reduce their energy usage during summer months.

From June through September, customers will be charged a lower Tier 1 base energy rate of $0.04604 per kilowatt-hour for the first 500 kilowatt-hours of use in a month. The total per kilowatt-hour charge in June, consisting of other related energy charges, will be $0.09847 per kilowatt-hour.

A higher Tier 2 base energy rate of $0.09 per kilowatt-hour will be charged for use above 500 kilowatt hours and that total per kilowatt-hour charge in June, consisting of other related energy charges will be $0.14307. During non-summer months, customers will pay the lower Tier 1 base energy rate for all of their electricity use. This change in the electricity price structure is due to the higher cost of providing electricity during the summer.

This is based on a request from the Colorado Public Utilities Commission, which ordered the company to provide tiered-rates options as part of Phase II of its May 2009 Electric Rate Case. The new summer rates also reflect other changes that the Commission ordered.

While some customers may pay more for their summer electricity use, on an annual basis customers are likely to pay nearly the same amount as if tiered rates were not in effect. For an average residential customer using about 632 kilowatt-hours per month, their monthly summer cost under the new rate structure is about $74.97. This is about a 2.5 percent increase and includes impacts other than tiered rates.

"By letting customers know they will pay more for energy use above 500 kilowatt hours we hope they will be more informed about the cost of electricity and consider reducing their use during the summer when it costs the most to buy and produce energy," said Karen Hyde, vice president of regulatory affairs. "To offset the increase during the summer, the lower Tier 1 rate will be in effect during the remaining eight months of the year. The program is designed to be revenue neutral for us and give customers incentive to conserve energy when our costs are highest."

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