Four energy cooperatives in Colorado have filed a complaint before the Federal Energy Regulatory Commission alleging that Xcel Energy’s mismanagement practices led to significant losses for each of the cooperatives.
The complainants — Holy Cross Energy, CORE Electric Cooperative, Grand Valley Power and Yampa Valley Electric — “seek an order requiring Xcel to refund a substantial portion — at least $6.9 million — of the approximately $17.5 million in fuel cost charges it passed on to its wholesale customers in February 2021,” a media release from the cooperatives details.
Some readers may recall Winter Storm Uri, which hit the country on Feb. 12-17, 2021. The petitioners claim that “Xcel failed to obtain the natural gas resources that its own advance plan determined would be necessary to meet its February 2021 electric requirements.” The release goes on to explain that, “This failure left Xcel suddenly and unnecessarily dependent on natural gas purchases in a volatile and expensive energy market.”
Cindy Newsome of CORE explained to The Sopris Sun that it’s typical for Xcel to project its reserves ahead of time. Only, this time around, “they [Xcel] have not proven that they did their due diligence in terms of having the appropriate level of reserves according to our contractual agreement,” she stated.
Amber King, also with CORE, echoed her colleague, stating that Xcel’s planning was imprudent leading up to February 2021. This, coupled with Storm Uri, she argued, left Xcel dependent on a volatile energy market, the cost of which was passed on to its customers.
“The cooperatives found that there was not enough natural gas … for the month to begin with,” King stated. “Then, we had Storm Uri which made the energy needs exponential…”
At that point, King added, Xcel was faced with purchasing natural gas on the market at 10-times or more than what it would typically cost.
“The whole point of having those reserves is so they [Xcel] can tap into them when energy needs exceed the typical demand,” said Newsome. “Instead they went out to the market, passing that risk onto us, burdening us with the additional expense … and then, when they resold, we were not reimbursed for any of that.”
Upon a closer look, the cooperatives noticed that Xcel sold some of the excess fuel it ended up with. According to the complaint, those profits were shared with Xcel’s retail customers but not with its wholesale customers (which includes the four cooperatives).
The complaint wraps up with an assertion that Xcel was not fully transparent during the cooperatives’ investigation of the February 2021 charges. According to the cooperatives’ press release, Xcel “continues to withhold information critical to understanding the event.”
“This is some of our challenge … We are not getting access to the detailed information to be able to discern the nature and time of all of their transactions,” Newsome elaborated.
Holy Cross chimes in
Holy Cross serves roughly 45,000 locals within Garfield, Eagle and Pitkin counties. It utilizes multiple sources of energy, from solar to hydroelectricity. “The diversity of these power supply resources helped mitigate the impacts of relying on Xcel for our energy during Winter Storm Uri,” President and CEO Bryan Hannegan told The Sopris Sun.
The CEO further explained that Holy Cross has long-term power supply commitments through contracts with the Public Service Company of Colorado — a subsidiary of Xcel Energy.
According to Hannegan, the local energy cooperative paid Xcel an additional $2.5 million “in power supply costs as a direct result of Winter Storm Uri and the higher-cost natural gas purchased by Xcel during that time.”
He noted that the extra cost was incorporated into Holy Cross’ operating budget for the year, Therefore, “Holy Cross members saw no increase on their monthly bills.”
Xcel to respond
Replying to The Sopris Sun, Xcel delivered a statement claiming that the company did in fact uphold prudent purchasing practices before and during February 2021.
“Winter Storm Uri … was a massive storm impacting many states — including Colorado — causing the market to respond dramatically,” the statement reads. “Our gas purchasing practices before and during the storm were prudent, consistent with the law and our contractual obligations…”
The company’s spokesperson expressed disappointment that they could not come to a resolution with their wholesale customers, but added that they “remain hopeful we can find a resolution.”
Xcel intends to respond to the complaint “with a full description of the prudent measures we took to serve our customers during Winter Storm Uri.”