Xcel Tries to Change Energy-Use Habits With Time of Use Rates

All Coloradans should have the option of Time of Use rates by 2025.
All Coloradans should have the option of Time of Use rates by 2025. American Public Power Association
As power bills keep going up, Xcel Energy has introduced a program that could help customers have more power over their energy usage. As of March 1, Time of Use rates will determine the amount that 310,000 of Xcel Energy’s 1.4 million Colorado customers pay each month.

Time of Use rates base prices for electricity on when customers use energy, with higher prices at times when people use more energy and lower prices when people use less. Colorado's system is divided into three rates. Off-Peak hours, before 1 p.m. and after 7 p.m. each day, cost users 9.9 cents per kilowatt hour. Mid-Peak hours, between 1 and 3 p.m., cost 13.6 cents per kilowatt hour in the winter and 18.9 cents per kilowatt hour in the summer. On-Peak hours, between 3 and 7 p.m., cost 17.3 cents per kilowatt hour in the winter and 27.9 cents per kilowatt hour in the summer.

Weekends and holidays count as Off-Peak times; winter rates run from October through May, and summer rates from June through September. According to Hollie Velasquez Horvath, regional vice president of state affairs and community relations for Xcel, summer rates are higher because of the large amount of energy it takes to run air conditioners.

“Air-conditioning is the biggest energy suck that our customers have,” she says.

Xcel had considered transitioning to Time of Use rates for several years — getting approval from the Colorado Public Utilities Commission in 2020 and conducting a two-year pilot project — before rolling out the actual program this month.

Velasquez Horvath says that the Time of Use program is part of the company’s goal of achieving an 87 percent reduction in carbon emissions in Colorado by 2030, and to stop using coal by 2034. But given how people currently use energy, it's difficult to integrate renewable energy sources like wind and solar, she notes: Wind energy is usually generated overnight, and the most solar energy is generated between 11 a.m. and 3 p.m. But most customer demand comes after that.

“They get home from work, they're plugging in their electric vehicle, they're cooking dinner, they're doing laundry,” Velasquez Horvath explains. “In the summertime, that's when they're running the air-conditioning. Time of Use is to say, ‘Hey, customers, we would really love for you to think about how you use your energy, and plug your electric vehicles in at night or wait until after 8 p.m. or 7 p.m. to do that. Use your dishwasher after 8 p.m., not right after you eat dinner.”

As it is, the company has to rely on expensive, non-renewable energy during peak demand. “We need our customers' help in changing the way that they use energy so that we're not planning for that huge peak hour at 6 p.m., where we end up using more natural gas and more coal to deliver that reliable energy,” she says. People usually use a little over 6,000 megawatts of energy during the 6 p.m. hour, which is the highest hour for energy use. But during other hours, people use between one-third and two-thirds of that amount.

The 310,000 Coloradans who became the first Time of Use customers are those who've already received new meters from Xcel. The company plans to give all customers new meters by 2025. The next group eligible for Time of Use rates, which mainly includes parts of metro Denver south of Interstate 70, will switch over on October 1, 2022, and will include anyone who receives a new meter between January and June 2022.

Along with enabling Time of Use rates, the new meters are automated and can be read remotely. They also collect more information, including tracking energy use in fifteen-minute increments, and will eventually notify Xcel about outages, improving response time.

Customers can opt out of the program and continue with a seasonal flat rate, though Velasquez Horvath says she hopes people will approach Time of Use rates with an open mind and a willingness to save power, if not money. Bills are likely to remain relatively constant with current prices, she acknowledges; in the two-year pilot, bills either stayed the same or were slightly lower than they are with the seasonal flat rates Xcel uses now.

But those rates could be changing. Xcel is asking the Colorado Public Utilities Commission if it can raise rates for natural gas by $188.6 million over three years and electricity by $182 million in April. Those raises would permanently increase the average consumer’s monthly bill by over $7 a month once the changes take full effect, Velasquez Horvath says.

The company is also seeking approval from the PUC to temporarily raise electricity and natural gas rates by $550 million to recover costs from a snowstorm in February 2021. That would increase rates from April 2022 until September 2024, causing an extra $1.49 on electricity bills and $5.59 on gas bills for the average customer until October 2024.

“The electricity rate case that we have in front of the commission right now is requesting cost recovery for things that we have been doing over the last several years to provide reliable and safe service to our customers,” Velasquez Horvath says, pointing to a wind farm and improved fire mitigation technology along with the new smart meters. If customers use power more efficiently with Time of Use, it could cut down on the additional infrastructure Xcel needs to build.

These changes come as Coloradans are struggling with rising energy bills. So far this year, the Colorado Low-income Energy Assistance Program has served over 10,000 more people than last year, according to Theresa Cullen, LEAP program manager. At this point in 2021, 67,000 households were enrolled in the program; this year, 78,000 have enrolled. Any household that comes in at under 60 percent of the state's median income qualifies for the help.

"The rising costs of energy, and the rising cost of every single solitary thing that people are facing, especially when you're on a limited income and you have to go to the grocery store and you have to put gasoline in your's more and more difficult to make your dollar stretch," Cullen notes. "And that is another factor causing people to need our help."

For LEAP members, natural gas prices are up about 34 percent over last year, electricity prices up to 50 percent more and propane up 57 percent. "It's substantial," Cullen says. "It's staggering for people." LEAP received extra funds this year from the American Rescue Plan Act, a federal pandemic recovery measure; that money has allowed the program to help people pay down past-due charges along with current bills.

And she doesn't see Xcel's Time of Use rates helping her program's members with those bills. "I totally understand why they're doing it, but it's not necessarily always in the best interest of the people we serve," Cullen says. "People who are on oxygen don't get to choose that they're going to shut their oxygen off until ten o'clock, when the rates go down."
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Catie Cheshire is a staff writer at Westword. After getting her undergraduate degree at Regis University, she went to Arizona State University for a master's degree. She missed everything about Denver -- from the less-intense sun to the food, the scenery and even the bus system. Now she's reunited with Denver and writing news for Westword.
Contact: Catie Cheshire