Xcel Energy explains rise in utility cost and how to save energy
Due to a record breaking rise in temperatures across Texas and the nation, many are also seeing a rise in utility costs. Xcel Energy explains the differences in Amarillo pricing compared to other parts of the state, as well as some ways individuals can help save costs while staying cool this summer.
According to Wes Reeves, Senior Media Relations Representative for Xcel Energy of Texas and New Mexico, monthly bills for Xcel Energy users consist of two major charges. One is the energy charges, which pays for capital improvements, and second charge is called a "fuel cost factor," which is the cost for fuel such as coal and natural gas that the company purchases to run the power plants in the region. The fuel cost factor also collects from purchases that the company makes from other companies for electricity that is sold to customers. According to Reeves, this part of the monthly billing cost has become very volatile in the past few years and has affected pricing since its initial rise in 2020.
"It dropped in 2019 to 2020 and began to rise in mid to late 2020 and since has almost tripled in terms of the cost of natural gas that we pay. ... So, natural gas has been a big driver of cost with electricity bills, especially in the last year as the cost of natural gas has risen," Reeves said.
According to the company, these costs are temporary charges to adjust for the rise in fuel costs. Other temporary charges added to regional bills include delayed cost from Winter Storm Yuri, which took place February 2021.
Reeves also stated that other states such as New Mexico allow for monthly rate adjustments, whereas Texas only allows rate adjustments approximately three times a year, resulting in residual pricing adjustments and surcharges.
"Between these two things, it has affected local bills. Electricity this summer is more expensive than last summer for our customers, and this is seen not only across the state of Texas, but across the nation," Reeves said. "We have at least two surcharges that are on the bills now that were not there last summer, just to collect for fuel. The good news is that these surcharges are temporary and will expire at certain times to give customers some relief."
In the last five years, the residential cost in 2017 was 10.2 cents per kilowatt-hour (kWh). In 2020, Xcel Energy saw a 9.7 cent drop from the 2017 cost, only to see it rise again to the 2021 average, with 11.9 cents per kWh.
According to Reeves, although the fluctuations are occurring due to the rise in natural gas prices, the 2022 summer pricing is only slighter higher than 2021's numbers. This is due to the fact that the company had a rate surcharge expire earlier in the year that has allowed for the cost to its customers to even out in preparation for the summer months.
In comparison to the Electric Reliability Council of Texas (ERCOT), Xcel Energy is required to create enough power to reach the peak demand, as well as a reserve on top of the maximum power needed. This allows the company to have more room to make adjustments in power needed for each area per day, resulting in a difference in pricing and power conservation strategies.
"The way we are regulated, here you are paying the same rate all summer. We have winter rates and summer rates, and they are, for the most part, going to be the same. For example, if there was a week where the temperatures were particularly high resulting in more power usage, that won't fluctuate much from the basic rate that you will see all summer, unlike some other providers who don't have access to the reserves we do," Reeves said.
Xcel Energy has also included some tips and steps that individuals can follow to conserve energy this summer, such as adjusting your thermostat, replacing dirty air filters and closing window blinds. Another option is to provide shade to your A/C unit.
Editor's note: Other local utility companies were unavailable Tuesday to give a comment by press time about summer rates and usage increases; look online at amarillo.com and in print editions later this week for related stories on this topic.
This article originally appeared on Amarillo Globe-News: Rise in temperatures leads to rise in electricity and cost: Xcel Energy explains these changes
