Home Local News Xcel asking for 7.5 percent rate increase

Xcel asking for 7.5 percent rate increase

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ROSWELL — Renewable energy generation and a $140 million transmission line between Hobbs and Carlsbad to meet the high-voltage demands of the oilfields may come at a cost for Xcel Energy customers as the utility on Monday officially requested hiking residential base rates an average of 7.5 percent.

Xcel filed a rate review Monday with the New Mexico Public Regulation Commission that the Minneapolis-based company says shows a significant amount of cost-effective capital improvements in clean energy and enhanced delivery systems.

Xcel said in a news release the proposed new rates would increase a typical residential bill of 1,000 kilowatt-hours per month by about 7.5 percent on average, or $7.83 more per month. The rate hike would not take effect until mid-2020.

The company said fuel costs make up 20% to 30% of a typical residential bill, and cover the costs of coal and natural gas used to fuel regional power plants.

Xcel said because customers have enjoyed lower fuel prices in the past two years, the proposed increase would be only 3.6 percent higher than the average residential rate in 2017.

“Investing in clean energy and improving the regional grid is much like purchasing fuel-efficient cars or a new energy-efficient air conditioner at home,” said David Hudson, president, Xcel Energy – New Mexico. “We pay more up front but see considerable gains from energy savings over time. This will help us stabilize rates by keeping future price increases within the range of inflation.”

Xcel is seeking a boost in annual revenue to recover the new investments in power generation, power lines and substations that support job growth and reliability in the eastern and southeastern parts of New Mexico.

Company officials, elected officials and others gathered at the North Loving Substation southeast of Carlsbad in October to dedicate a new 90-mile, $140 million Hobbs-China Draw line and related substation upgrades, which Xcel says has significantly improved the capacity and reliability of the system delivering power into southeastern New Mexico.

The 345-kilovolt transmission line is the first of several segments of the 260-mile interstate project between the oilfields of southeast New Mexico and a power hub north of Lubbock, Texas, called TUCO Substation, that is expected to be completed by mid-2020. Another line completed in 2014 connects TUCO with a major power hub near Woodward, Okla.

Last week, Xcel brought the new 478-megawatt Hale Wind Project on line near Plainview, Texas. Another large wind plant, the Sagamore Wind Project near Portales, is proposed to be completed in 2020.

Xcel said natural gas, currently the fuel source for about 50 percent of the region’s electricity, plays a large role in the company’s strategy to hold down price increases as it invests in the regional grid.

The company said an oversupply of natural gas related to a steep increase in oil drilling has brought natural gas prices down to historic lows, leading the company to rely more heavily on natural gas generation and invest in the transmission systems that can move greater supplies of lower-cost electricity into the region.

Xcel said wind energy, which makes up about 20 percent of the region’s electricity supply, has played and will continue to play a role in lowering fuel costs as well because generators are driven by the free and abundant wind.

The company said customers should continue to enjoy low fuel costs as more wind energy is brought onto the system and additional transmission lines are built to move clean energy to market.

Xcel said it has invested more than $1.6 billion in the regional power grid since 2017.

“Our investments in a more efficient and reliable energy grid are mostly paying for themselves in the savings they generate, and at the same time are playing a critical role in sustaining a large amount of economic growth in a regional economy that benefits all of New Mexico,” Hudson said.

Xcel’s rate review before the Public Regulation Commission is expected to take six to nine months.

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