DENVER, Sept. 17, 2001 – Xcel Energy today filed a request with the Colorado Public Utilities Commission for a $571 million reduction in the natural gas cost component of the company’s retail rates.
The gas cost adjustment (GCA) would slash the price that customers pay for natural gas by more than 40 percent starting in October.
“We know that last season’s sharp price increases for natural gas made life difficult for everyone in Colorado and we pledged to reduce prices as soon as we were able,” said Cynthia Evans, vice president of Xcel Energy in Colorado and Wyoming. “Today we have kept that commitment.”
With the commission’s approval, Xcel Energy will reduce the natural gas bill for a typical residential customer, based on average monthly use of 76 therms, by about 41 percent. This amounts to a savings of nearly $31 per month (see table below) or $372 per year. A typical business customer, using an average of 396 therms per month, will pay $161 less per month or $1,932 less per year, a cost reduction of 45 percent compared to current charges. One therm equals 100,000 British thermal units (Btus).
Absent the company’s fixed delivery rates, which include metering, billing and distribution costs, residential and commercial customers will pay $0.279 per therm for the natural gas commodity. This price is lower than the $0.691 per therm cost customers paid with last year’s series of dramatic price increases.
In 2000, increased demand from natural gas-fired electricity generators and consumers coping with unseasonably cold weather tightened supplies of natural gas nationwide. Tight supplies led to high prices across the country. Market prices that hovered around $2 per dekatherm in mid-1999 soared past $10 by the end of 2000. Because of this price escalation, Xcel Energy requested and the commission granted three separate GCAs – $117.1 million in July 2000, $126.3 million in October 2000, and $361.6 million in January of this year – that more than doubled the cost for natural gas delivered to customers from the previous heating season.
Evans noted that Xcel Energy earns no profit on the amount customers pay for the natural gas product. Prices paid by customers for natural gas reflect commodity and interstate transportation prices charged to the company by its suppliers. In other words, price increases or decreases for the commodity are passed on, dollar-for-dollar, to the Xcel Energy’s customers in Colorado.
“Greater production of natural gas and customer conservation have driven down market prices,” Evans said. “Additionally, we closely monitored the market and, when it benefited our customers, we purchased more natural gas at fixed rates. As a result we are able to not only pass along reduced prices to our customers but also decrease the cost volatility of natural gas.”
Evans cautioned that while market prices have fallen they could rise again.