Colorado Springs Utilities customers are feeling the shock of back-to-back energy cost adjustments, which have caused bills to soar as cold weather sets in.
But rate relief could come as soon as Feb. 1, a Utilities official tells the Indy.
The rate shock stems from the expectation that two rate changes — one enacted last spring after natural gas prices soared during the mid-February deep freeze and another imposed in November due to rising gas costs — would raise the typical residential bill by 24.5 percent.
But that figure, cited by Utilities, was based on static usage of electricity, gas, water and wastewater throughout the year and didn’t take into account seasonal changes.
Assuming no change in consumption throughout the year, Utilities said the typical residential bill would go up from $232 before the two rate increases, to $289.
But when the Indy pressed for a comparison based on forecasted increases in gas usage in colder months, the typical residential bill rose to $332. That surge represents a 43 percent increase.
“The cumulative impact of the spring increase, followed by the November increase, is driving the larger bills in December and January, when we typically see the highest use of natural gas for heating,” Utilities spokesperson Danielle Nieves explains in an email. “Most of us likely didn’t see the full impact on our bills from the spring increase until this last month.”
If there’s good news, it’s the possibility the Utilities Board, comprised of City Council, could lower the energy cost adjustment as soon as Feb. 1. A software change coming in the next 12 months should make bills more predictable from one month to the next.
Springs Utilities passes fuel costs directly to customers, so when energy markets fluctuate due to supply and demand shifts, those changes are applied to customers’ bills.
When the severe winter storm hit Texas and surrounding states last February, natural gas prices skyrocketed, and Springs Utilities was hit with more than $100 million in extra fuel costs. Utilities passed those charges on to customers’ bills with a rate increase that was to last a year, effective in April 2021.
On Nov. 15, another rate increase was imposed when gas prices again surged.
Since then, customers have posted complaints on social media that in some cases their bills have doubled.
Besides failing to adjust the forecasted impact of those increases on higher usage during winter months, utility bills can include more than 30 days’ usage because meter readings, conducted remotely, only occur on specific days. That means some billings might contain a few days more or less service than a previous month.
Brian Fergen, Utilities’ billing and revenue manager, says Utilities is aware of this issue and plans a $6 million technology upgrade to allow for more consistent readings. “It’s a significant lift on our part and we’re looking at what we can do,” he says in an interview.
But first, Utilities will check in with ratepayers via focus groups and surveys to better understand customers’ needs. If bills are sent every 30 days, that would gradually change the due dates, because not every month has 30 days.
Fergen notes customers can ask for portions of bills to be spread over future billings to mitigate the increases, or sign up for budget billing, which averages bills throughout the year.
“We want to do something that works within their budget,” he says.
As for future rates, the rate hike imposed in April will be discontinued this spring and the November hike will be reviewed soon.
A new analysis of fuel costs and rates, with a recommended rate decrease, will be presented to the Utilities Board on Jan. 19 and Council on Jan. 25 for approval, effective Feb. 1, Nieves says.
She says it’s too soon to know the size of the decrease, however.
Meantime, ratepayers can seek help from Project Cope, a Springs Utilities program (projectcopecs.org), or LEAP, a federal program (cdhs.colorado.gov/leap), which provides a one-time supplement to help pay utility bills.
“As of November 30, 2021, we have provided $1,053,231 in Project COPE utilities assistance to 1,766 households,” says Utilities spokesperson Natalie Watts via email.