Last week I wrote about the costs and consequences of underrating natural gas infrastructure, which are currently most pronounced in New England this winter in the form of exorbitant bills and inadequate supply.
But it turns out Colorado, while being in better shape than our northeastern counterparts, is not immune to the disruptions roiling the global gas market, despite being a major gas state.
As a result, steep rate hikes are set to arrive just in time for the winter months in which Coloradans are most reliant on the fuel to stay warm.
According to the Colorado Sun:
Come this Christmas, Xcel Energy gas customers will get an unwelcome present from the utility — an approximately 54% increase in their monthly bills compared to Christmas past.
The hike in the average December bill to $177 from $115 in 2021 is being driven by a string of rate increases, which in turn has been spurred by higher natural gas prices, according to the Colorado Office of the Utility Consumer Advocate.
Supply disruptions of the fuel stemming from sanctions levied in reaction to the Russian invasion of Ukraine have left Europe in a precarious situation heading into the winter with dangerously low reserves of LNG.
As a result, many European countries are scrambling to replace that lost supply with imports from US LNG producers, making competition for any reserve margins of the fuel steep and the price high.
Indeed, the US benchmark Henry Hub gas price is the highest its been in nearly 15 years. In Colorado, that has translated to residential gas prices at their highest level since the onset of the shale boom.
With demand for U.S. LNG expected to be red-hot for the foreseeable future, combined with financial and political constraints on expanding supply, domestic gas customers will be feeling the pinch this winter.
In Colorado, that means rate hikes from the increased cost of the fuel but also on top of a litany of other Xcel-specific rate hikes. The Sun documents the latest spree at the PUC:
On Sept. 20, the Colorado Public Utilities Commission approved another cost-adjustment rate increase — equal to 4.62%, or $6, when compared to the third quarter of 2021.
That, however, follows quarterly commodity adjustment increases of 12% and 6.8%, the UCA said.
On top of that, in June the PUC approved an 11% increase, equal to $5.67 on the average bill, to cover the soaring costs of natural gas during a winter cold snap in 2021, when the price of natural gas briefly shot up 300% to $190 per 1 million BTUs.
Xcel is also seeking an $188 million increase in its base natural gas rates from the PUC, which over three years would add another $8.14 to the average residential bill.
All of that translates into what will be an expensive winter, even if the weather cooperates. If our winter is colder than usual, as some have already predicted, the resulting high bills could be enough to break the bank for many Colorado residents. After all, gas heats the homes of roughly 70 percent of the state.