DENVER, April 29, 2002 — Under terms of a settlement agreement reached Friday, Xcel Energy and the parties contesting the company’s filed Incentive Cost Adjustment (ICA) increase have asked the Commission to allow Xcel Energy to increase electric rates related to the production and purchase of electricity by approximately 2.5 percent, for a three-year period beginning June 1, 2002.
For typical residential customers of electricity using 625 kilowatt hours a month, the increase will be $1.30 a month. Typical small business customers will see a monthly increase of $2.66, based on monthly usage of 1,265 kilowatt hours. The new electricity rate replaces a previously approved, 1.22 percent increase that took effect April 15, 2002.
The increase, which totals approximately $49 million a year, will be reflected as the Incentive Cost Adjustment, beginning June 1, 2002 and continuing through March 2005. The settlement agreement still must be approved by Commissioners at the Colorado Public Utilities Commission.
Parties to the settlement announced Friday include Xcel Energy, the Staff of the Colorado Public Utilities Commission, the state Office of Consumer Counsel and various others representing the utility company’s customers.
On March 1, 2002, Xcel Energy filed to increase electricity rates by $102 million, under the Incentive Cost Adjustment, to recover a portion of the costs associated with increased expenses for the acquisition of generation fuel — coal and natural gas — and purchased power.
Xcel Energy estimates that its additional costs for the production and purchase of power will be approximately $150 million more in 2002 than the company is allowed to collect under the current ICA rate. Unless the ICA rate is changed, these costs would have been collected beginning April 2003.
Xcel Energy was concerned that deferral of these costs to 2003 would result in undue hardship and potential steep increases for Xcel Energy customers in 2003. The other parties were concerned about Xcel Energy’s proposed rate increase in 2002. The proposed settlement agreement addresses both of these concerns by reducing both the 2002 and 2003 rate increases by spreading the ICA costs over a longer period.
Xcel Energy also will file a general electricity rate case next month; that rate case will address the costs of generation fuel and purchased power on a permanent basis beginning in January 2003.