Filing materials related to this proposal will be available here. You can also follow the proceedings and access electronic filings at the Colorado Department of Regulatory Agencies (external link). Search for Proceeding No. 21AL-0159E.
Customers who take advantage of energy efficiency measures will reduce their usage, lower bills and help the environment. Your bill is still based on the amount of electricity you use. So whenever you can manage your energy use and reduce electricity, you have opportunities to save.
Our Energy Saving Tips (external link) are loaded with ideas, tools, online resources and helpful videos, organized by topic.
Utilities such as Xcel Energy recover most of their fixed costs through energy charges, and therefore have a financial incentive to maintain or increase energy sales to recover these costs. Decoupling helps break the link between a utility’s energy sales and the revenue collected from its customers. Although Xcel Energy has always been committed to promoting energy efficiency, implementing decoupling helps align a utility company with customer energy savings goals by allowing for reasonable cost recovery while maintaining customer rewards for using less electricity through energy conservation efforts.
Revenue decoupling helps to align Xcel Energy’s economic interests with our customers’ shared goal of increased conservation and energy efficiency. Decoupling removes Xcel Energy’s disincentive towards reaching efficiency and conservation goals. The company was required to implement the pilot program based on a CPUC decision (external link) (Proceeding No. 19AL-0268E, Decision No. C20-0096).
Revenue decoupling helps remove the link between the amount of electricity sold to a customer and the revenues collected from that customer through base rates. This pilot program allows Xcel Energy to make up for any shortfall or return any surplus of non-variable base rate revenue to customers with either a credit or surcharge on bills.
Customers who are on our Residential Demand-Time Differentiated Rates Pilot and small business customers will see adjustments on their bills over a 12-month period (throughout the year beginning June 1).
All other residential customers will see an adjustment on bills during the four summer months of the year (in June, July, August and September) through 2025. All affected customers may see true-up adjustments for prior years occurring through 2027.
The decoupling program is a four-year pilot that began April 1, 2020 and ends on December 31, 2023; Revenue Decoupling Adjustment refunds or surcharges will occur through May 31, 2025, but due to true-ups the RDA may be on customer bills through May 31, 2027.
After the 2020 implementation period, the RDA calculation has a total refund of $9,578,975 to Residential customers and a surcharge to collect an additional $3,404,695 from Small Commercial customers. The effect of the RDA on average Residential electric bills is a decrease of $1.87 per month or 2.09%. The effect of the RDA on average Small Commercial electric bills is an increase of $2.55 per month or 1.98%.
The CPUC determines and approves, in a rate case, a baseline revenue amount for us, based on expected usage.
We track each month the actual usage vs. expected, approved usage for the customers included in the decoupling pilot. We then calculate the difference between actual usage and expected usage and the impact on utility revenue at the end of a 12-month period.
If actual usage is higher than expected, revenues will exceed Xcel Energy’s authorized revenue level. Therefore, customers will receive a credit for the revenue surplus up to a cap of 3% of forecasted base rate revenue.
On the other hand, if actual usage is lower than expected, approved revenues will be less than Xcel Energy’s authorized revenue level and a surcharge will be applied to bills up to the 3% base rate cap. However, customers can still save on their bills from lower than expected usage.
The rate adjustment is subject to a symmetrical 3% cap of the forecasted base rate revenue during the applicable recovery period. Amounts exceeding the cap that are not recovered or returned through the current year’s adjustment are deferred for up to two years and may be passed through a future year’s Revenue Decoupling Adjustment, as set forth in the company’s tariff.
On an individual basis, customers can still lower their bills by reducing their energy consumption. Reductions in energy consumption will directly reduce their fuel costs, since fuel costs are not part of the decoupling adjustment.
Customers are also encouraged to participate in our energy efficiency and conservation programs (external link) where they can receive rebates on appliances and energy conservation measures, credits on electric bills, free appliances such as showerheads, and lower energy bills.
Energy companies like us recover most of our fixed costs through energy use charges. This requires energy companies to maintain or increase sales levels to recover their fixed costs. Revenue decoupling creates a win-win strategy for both energy companies and their customers by breaking the link between electricity sales and revenue.
We are committed to promoting energy efficiency. Decoupling helps align the company’s fixed cost recovery requirements with energy savings goals.
With traditional utility rate making, sales drop any time a customer uses less electricity. Decoupling solves this paradox by breaking the link between energy sales and recovery of our fixed costs.
In that manner, decoupling removes the motivation to sell more electricity and allows the company to further promote energy efficiency and conservation, while also maintaining revenue necessary to provide safe and reliable power.
With decoupling, instead of linking energy profits to the amount of power sold, profits are linked to the number of customers served. A system of periodic “true ups” or price adjustments reconcile actual revenues to the level regulators determine to be fair and reasonable. The adjustment will result in either a credit or surcharge on customer bills depending on the average use per customer.
Xcel Energy - Colorado has proposed a revenue decoupling adjustment for electric residential and small commercial customers. Large commercial and industrial customers would see no changes from their current price plan. We are requesting Commission approval of the decoupling proposal and the methodology used to calculate the adjustment.
• If average energy use per customer falls, the company would be allowed to recoup its lost revenue. If average energy use per customer increases, the company would refund the excess to customers.
• The proposed methodology accounts for changes in weather normalized usage, so severe weather impacts would not be a factor in the calculations.
• Based on forecasts, we expect this will amount to an approximate 2 percent increase on average residential customers’ bills.
• The proposed initial term is five years (from 2017-2021).
• Revenue decoupling helps deliver more options our customers want—even if it means we encourage them to use less of our product.
• With decoupling, energy companies are better able to support increased energy saving offerings, such as distributed generation (like private solar), rate design changes (such as the time-of-use rates), energy efficiency and conversation tools, products and services.
• Because decoupling redefines allowed revenue between rate cases, it can also help limit the frequency of rate cases, lower ratemaking costs and decrease the size of requested rate increases.
We’re sorry, this content is specific to the state of Colorado. Learn about Utility Revenue Decoupling in your state.
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