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Should Xcel Energy be worried about high cost of electricity? Competition?

Conventional wisdom would believe that Investor Owned Utilities (IOUs) such as Xcel Energy would have lower electric rates than Rural Electric Associations (REAs) and Municipally Owned Utilities (MOUs) because IOUs have the advantage of population density that allows for maximization of capital investment.

But that is not the case as the Colorado Association of Municipal Utilities (CAMU) reports. According to CAMU’s most recent utility bill comparison survey from January 2012:

Average residential bill/cost of 700 KWh

MOU: $83.63

REA:  $92.98

IOU:  $96.92

Average small commercial bill/cost of 2,000 KWh + 10KW

MOU:  $224

REA:  $241

IOU:  $262

Average large commercial bill/cost of 45,000 KWh + 130KW

MOU: $4,613

REA:  $4,769

IOU:  $4,926

Average industrial bill/cost of 1,900,000 KWh + 3,000KW

MOU: $148,000

REA:  $140,000

IOU:  $155,000

These figures beg a couple of questions to which I don’t have definitive answers but do have very strong suspicions:

  • Would the IOUs’ bills have compared more favorably before the 30 percent renewable mandate and before the Public Utilities Commission moved away from a least cost principle?
  • Is Colorado’s largest IOU Xcel Energy worried that REAs and MOUs provide electricity at lower costs? If not, it should be. As electric rates continue to rise, businesses looking to reduce their costs may move out of Xcel service areas and into an area served by an REA or MOU. It already produces surplus electricity as it is.