AMARILLO, Texas – The following is a news release from Xcel Energy:
Lower costs for the natural gas Xcel Energy purchases to fuel area power plants, along with a greater reliance on clean wind energy, is leading Xcel Energy to reduce residential customer bills by 5 percent this summer.
Xcel Energy has filed an application with the Public Utility Commission of Texas to update the formula by which fuel charges are figured, and to lower the monthly fuel charge that is known as the fuel cost factor. If approved, customers will see lower bills July 1. Additionally, Xcel Energy is planning to submit a proposal for a one-month refund later this summer that will return at least $16 million to Texas customers to account for a significant reduction in natural gas prices this spring.
Natural gas fuels close to 50 percent of the region’s electricity production at area power plants, with wind energy accounting for about 20 percent. The remainder is derived from coal and a small amount of solar.
“Historically low natural gas prices and more energy from wind farms are making electricity cheaper for our customers,” said David Hudson, president, Xcel Energy – Texas. “And though we’ll soon need to account for the higher costs of improvements in our power generating and delivery systems, lower fuel costs and efficiencies generated by wind farms and grid improvements will help hold bills steady because fuel costs make up between 20 to 30 percent of an average residential bill.”
In recent years, Xcel Energy has invested hundreds of millions of dollars in making the regional grid more efficient and more cost effective. New high-voltage transmission lines that connect the region with the wider Southwest Power Pool electricity market have driven down wholesale power costs by enabling Xcel Energy to tap cheaper sources of power outside the region. The company is also nearing completion on the 478-megawatt Hale Wind Project near Plainview, Texas – a $700 million investment in the region’s clean energy future with no associated fuel costs.
“We are building cleaner, more efficient systems that generate and deliver electricity to a growing economy,” Hudson said. “There are upfront costs to build in these efficiencies, but the savings they generate are immediate and are key to stabilizing electricity costs now and in the future. And while prices inevitably rise over time, we expect electricity cost increases to stay at or near the rate of inflation going forward.”
Additional detail on fuel costs:
* The fuel cost factor recovers the cost of purchasing natural gas and coal to fuel area power plants. Energy purchases from other companies are also accounted for in the fuel cost factor. The fuel cost factor is based on a fuel cost formula that is updated every few years to reflect changes in how the company generates and purchases electricity. The fuel cost factor can be changed up to three times a year to reflect short-term market changes.
* Xcel Energy does not earn a profit on fuel costs – they are simply passed through dollar for dollar. Revenue collected from monthly fuel charges is kept in a fuel account, and if market conditions change, Xcel Energy refunds revenue collected in excess of the actual cost, or initiates temporary surcharges if not enough is being collected.
* Fuel costs for New Mexico residential, commercial and industrial customers, as well as for wholesale customers such as municipal systems and rural electric co-operatives, are adjusted monthly. The savings Texas customers will realize starting July 1 have already lowered bills for these customers.
About Xcel Energy
Xcel Energy (NASDAQ: XEL) provides the energy that powers millions of homes and businesses across eight Western and Midwestern states. Headquartered in Minneapolis, the company is an industry leader in responsibly reducing carbon emissions and producing and delivering clean energy solutions from a variety of renewable sources at competitive prices. For more information, visit xcelenergy.com or follow us on Twitter and Facebook.
(News release from Xcel Energy)