Winter storm effects passed onto YVEA customers’ bills as ‘cost adjustment’
When February winter storms caught utility operators in the Southwest unprepared, and bills later spiked, longtime Steamboat Springs resident John Morrone said he was laughing while thinking Coloradans were safe from the power mismanagement mess. Morrone said he’s not laughing anymore.
Morrone is one of approximately 21,000 Yampa Valley Electric Association co-op member-owners who are feeling the financial effects of additional charges on electric bills due to harsh winter temperatures and resulting supply-and-demand power industry challenges.
On May electricity bills, YVEA members will see a line item titled “February Xcel Power Cost Adjustment,” which will be charged to members across seven months. The cost is being passed down from wholesale power supplier Xcel Energy-Colorado, which has operations in eight states including Texas.
“What those suppliers charge us is what we pass on to members in their monthly bills. Sometimes, this is in the form of savings and, unfortunately, this time it is in the form of a price increase,” the YVEA website notes.
YVEA co-op officials said the extra power charge from Xcel was “roughly $6.4 million more than what we budget for February,” and “this bill alone represents 30% of what we budget annually for our purchased power.”
The specific amounts YVEA residential and business consumers will be assessed is based on kilowatt usage listed on bills received in March — shown as “KWH used” — multiplied by 0.1172. For example, an older, small home in Routt County that utilizes all electric power would encounter an extra charge of more than $31 per month, or approximately $222 total additional charges.
Routt County will pay an additional $20,456, according to Steve Faulkner, county facilities manager. Steamboat Springs City Manager Gary Suiter said the city will pay an extra $82,131, considering the city also powers street lighting and the wastewater treatment plant.
YVEA Public Relations Specialist Carly Davidson said the cost recovery billing partially started on electric bills mailed in March with a fee of one cent multiplied by kilowatt hours used.
“When we found out about the larger than normal bill, we wanted to begin the recovery process immediately to lessen the impact on our members,” Davidson said.
“Regarding the Xcel Power Cost Adjustment, I think the best we can do is ask YVEA to be more aggressive in their dealings with Xcel and the PUC,” Suiter noted in a May 4 report to City Council. “It appears YVEA is advocating for policies and regulations through the PUC in an attempt to keep this from happening again. Bottom line, there appears to be very little recourse, and it looks as if we will be stuck paying for this.”
In a March 23 letter to YVEA, Xcel Energy-Colorado President Alice Jackson explained the complicating factors, including intense cold in Colorado around Presidents Day weekend, that led to the cost increase. The letter from Jackson is posted on the YVEA website.
“Decreases in supply availability due to freezing of well-heads in the Southwest, in combination with the substantial increase in demand for natural gas and electricity, caused a dramatic short-term increase in natural gas prices,” Jackson said. “Despite our planning and mitigation, we were still subject to natural gas market volatility just like any other gas buyer.” The existing YVEA long-term power-purchase agreement with Xcel begin in 1992, Davidson said, noting that YVEA purchased 95% of its power in 2020 from Xcel.
Xcel Energy Media Relations Representative Michelle Aguayo said the Xcel contract with YVEA, which is filed with the Federal Energy Regulatory Commission, ends in April of 2042 but includes “provisions for early termination.”
“Our contract does allow for this power cost adjustment, up or down. We have returned money to our membership the last two years as a result of these adjustments. In 2019 and 2020, we returned over $2.2 million to our members, which appeared as a credit on their bills. What happened in February with power markets was unprecedented,” Davidson said.
A few other Colorado co-ops that buy power from Xcel also are facing unexpected extra bills. Grand Valley Power in Grand Junction posted a website statement that included, “Consumers will be hit hard financially due to Xcel Energy’s imposition of outrageously high fuel cost adjustment charges.” Holy Cross Energy headquartered in Glenwood Springs chose not to pass costs on to its members.
Davidson said YVEA leadership decided to spread the extra costs to consumers across seven months in order to recoup funds by the end of 2021 as the co-op secured a low interest 1.2% line of credit to cover the Xcel bill. A postcard about the power cost adjustment sent to members in mid-April generated multiple calls to YVEA from members asking to learn the cost of their bill increase. Larger power users in the community with many electric meters, such as school districts and municipalities received, YVEA notification letters listing exact costs.
Davidson encouraged consumers in financial need to contact the YVEA member service department for options, such as longer payment plans or possible funding from local assistance agencies.
To reach Suzie Romig, call 970-367-1950 or email sromig@SteamboatPilot.com.
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Kathy Diemer, owner of Johnny B. Goods Diner in downtown Steamboat Springs, said she and other business owners are “terrified.”