Yampa Valley Electric Association joins Colorado providers in lawsuit against Xcel
Yampa Valley Electric Association, an Xcel Energy wholesale customer, is one of four Colorado electric co-ops that filed a complaint against the state’s largest energy provider, Wednesday, Jan. 4.
YVEA, Core Electric Cooperative, Grand Valley Power, and Holy Cross Energy asked federal regulators for an order requiring Xcel to refund $6.9 million of the $17.5 million it charged wholesale customers following a weather event in February 2021. The four co-ops provide power to 570,000 Coloradans.
“We see this lawsuit as driving the future in which Xcel will operate regarding wholesale consumers,“ said Steve Johnson, CEO of YVEA. ”We had already seen this change with the pricing updates we received from Xcel when natural gas prices increased during the December storm that affected Montana, Wyoming, and Colorado. YVEA’s goal is to serve our membership the best way we can, and we view this filing with (the Federal Energy Regulatory Commission) as one of the avenues we can take.”
The problem originated from the aftermath of Winter Storm Uri that terrorized the middle of the country, causing higher demands for electricity and even disabling Texas’ gas production.
The four Colorado co-ops claim in the federal complaint that Xcel shifted natural gas supplies to reserves as opposed to using them to make electricity, going against the company’s own monthly supply plan.
One thousand cubic meters of gas shot up to $200 with a starting base of $3 that winter. Documents obtained from Xcel Energy show the company redirecting 120 million cubic feet of gas per day between Feb. 13 and Feb. 17 from generation supplies to meet its reserve requirement.
This alleged mishandling of natural gas supplies resulted in the purchase of more spot market gas for Xcel Energy.
The price of this expensive spot market gas fell on residential customers in Colorado, racking up a bill of about $500 million. Originally coming in at around $509 million, the Colorado Utilities Public Commission knocked $8 million off the amount the company could recover by issuing a penalty.
The co-ops have hit some roadblocks in the lawsuit already.
“One specific example of Xcel’s withholding information impeding our process is not seeing two of Xcel’s baseload contracts. We need this information to assess if even more damages apply,” Johnson said. “The wholesale cooperatives spent more than a year trying to get information about how Xcel handled the February 2021 event. Even though cooperatives had a right to investigate fuel costs, Xcel made this process difficult and time-consuming.”
What if the lawsuit is won and the four co-ops get the $6.9 million?
“YVEA will use our portion of the $6.9 million to help offset the negative financial impacts of the storm to the cooperative and cover the legal costs associated with this process,” Johnson said.
This does not change the fact that Coloradans will see the $500 million bill take form in their electricity and gas bills over the next 30 months with the residential electricity monthly cost rising 2% and gas 11%. Still, Xcel Energy hopes to increase gas rates by $188 million over the next three years.
Despite this, the state of Colorado upholds an agreement with Xcel’s Clean Energy Plan which aims to reach an 85% GHG pollution reduction by the year 2030.
“Our gas purchasing practices before and during the storm were prudent, consistent with the law and our contractual obligations and ensured continued energy service for all customers – wholesale and retail – during the unprecedented storm,” Xcel energy said in a statement released on Wednesday.
Kit Geary is the county, public safety and education reporter. To reach her, call 970-871-4229 or email her at kgeary@SteamboatPilot.com.
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