On September 28, the Colorado Public Utilities Commission (PUC) issued its final decision in Xcel Energy’s natural gas rate case. The PUC bragged that it was “saving ratepayers 35% percent [sic] from the initially requested total” of $190 million Xcel asked for. Still, typical natural gas bills will increase 8.6 percent for residential customers and 9.2 percent for small businesses.
The decision caps Xcel’s gas investments, diverts customer money into trusts for retiring natural gas, and raises the price of new hookups. The PUC justified it because Xcel’s gas utility is “a declining sales business.” If that is to be the case, it is chiefly due to Colorado’s state policies, not consumer preference.
The PUC implemented Clean Heat targets designed to crack down on natural gas in December 2025, requiring gas utilities to reduce greenhouse gas emissions by 41 percent compared to 2015 levels by 2035, expanding the existing 22 percent by 2030 target set in statute. The PUC has telegraphed that it expects the state’s 2050 net-zero goals correspond to a 100 percent GHG reduction mandate for the gas system, though it has (oh-so-generously) postponed setting formal targets beyond 2035 until 2032.
The logic is simple, if warped: If the PUC reads state law to mean that natural gas will be booted out the door in Colorado by 2050, then why let Xcel invest in natural gas? It acted on that logic in June 2026, when it rejected most of Xcel’s $567 million forward-looking gas infrastructure project plan, saying that Xcel failed to account for the Clean Heat Plan and the policy-driven shift of customers from natural gas to electric heating and cooling.
In this natural gas rate case, Xcel promised to hold a stakeholder workshop in 2027 to hash out a performance incentive tied to how much Xcel spends. The PUC skipped right over the stakeholder input phase — who needs that? Beginning in 2028, the PUC will penalize Xcel if its gas spending is more than 5 percent above what it spent in 2024, or reward if it is 5 percent below that, with no adjustment for inflation. Because that 2024 baseline will never rise to account for inflation, Xcel will have to maintain the system for less and less each year.
While the PUC can recognize that repairing and maintaining pipelines are “required safety investments,” and “a very significant rate driver,” its favored solution is securitization. Securitization pays for repairs with bonds that are charged to customers in their bills, instead of Xcel investing its own capital and earning a return. The PUC says that the goal is to “ensure that ratepayers are paying the lowest cost possible for these required safety investments,” and securitized spending won’t count against the 2024-based spending cap.
But cheaper financing isn’t the whole story. Securitization puts the risk on customers, rather than shareholders, because the charge on bills will go up until bondholders are paid. That is even more likely in a natural gas system that, by the PUC’s own admission, they hope will shrink; as customers leave, costs will rise for customers that stay. Securitization is used usually for assets being retired or one-time storm damage costs — which demonstrates exactly what the PUC thinks of natural gas for homes.
Not only are customers paying for natural gas, but they’re also paying for costs to retire natural gas. Xcel already sets aside $15 million a year for a decommissioning trust, and the PUC ordered another $15 million per year, collected by writing off gas assets faster, into a second trust. That’s about $30 million a year from customers put toward dismantling systems they still want and use.
Customers will be walloped particularly hard for new gas connections. New gas customers already pay Xcel for the cost of extending a line to their home. But starting after June 30, 2027, new residential gas customers will owe a $1,000 connection fee, on top of that existing charge — which the PUC just made bigger. Now, new customers will have to pay the estimate up front, then a “true-up” bill for the actual cost once it’s built, plus a fee for the initial study and potentially even the cost of upstream mains and regulators. It’s hard to imagine a better-designed system to discourage customers from choosing natural gas.
The PUC also will detach Xcel’s fixed-cost revenue from its gas sales on January 1, 2027, in a policy called decoupling. Because customers will be using less gas, as “aligned with conservation and electrification efforts,” like the Clean Heat Plan, Xcel still needs to protect its revenue stream. Customers who are still using natural gas will cover the difference in revenues through surcharges of up to 3.5 percent a year. The PUC admits that this moves risk onto ratepayers, and those households that can’t afford a heat pump are the ones who can’t leave.
All of this adds up to Colorado’s gas system being managed toward retirement on a policy-driven timeline with Xcel’s revenue protected, and gas customers being forced off the system or else paying exorbitant costs to remain. It’s no wonder that Amendment 82 on the ballot seeks to protect consumers’ right to buy natural gas for cooking or heating, and distributors and utilities’ rights to sell it. When regulators are making a fuel choice more expensive every year by design, it’s no surprise some voters want to protect their options in the state constitution.