Xcel Energy customers in Texas will receive a one-time refund in January related to several months of lower costs for natural gas used to fuel area power plants, further extending the savings of a 9 percent bill reduction since 2017 that is also tied to less expensive fuel.
“Our customers are paying less for electricity than they did a year ago because of lower fuel costs, and that puts more dollars into their discretionary spending budgets, which is good for the regional economy,” said David Hudson, president, Xcel Energy - Texas.
Xcel Energy filed the refund proposal today at the Public Utility Commission of Texas. If approved, residential customers using 1,000 kilowatt-hours a month would receive a one-time credit of $11.76, according to a released statement. The refund will be based on the amount of electricity a customer uses in December, and could be spread over two months depending upon a customer’s billing cycle.
The expense of fuel used to generate electricity at area power plants is adjusted periodically through a fuel cost factor, and this expense accounts for about a third of a residential customer bill. Xcel Energy does not earn a profit on these pass-through charges. Hudson said the biggest variable has been the cost of natural gas, which makes up about 36 percent of the regional fuel mix. Residential prices have dropped by more than 9 percent over the last year, mostly because of lower natural gas expense. And after the last regulatory rate review was concluded in July, Xcel Energy left rates unchanged.
Xcel Energy’s business and industrial customers also will receive refunds. But this proposal does not impact customers of electric cooperatives and municipal utilities that purchase electricity on the wholesale market from Xcel Energy. Fuel costs for these customers are adjusted monthly and already account for the additional natural gas cost savings.
Hudson said the natural gas market has been notoriously volatile over the past decade, and fuel costs could rise again. Clean energy resources such as wind and solar have no associated fuel costs, a primary reason the company is working to add 1,230 additional megawatts of wind generation to the regional generating mix. Earlier in the year, Xcel Energy received regulatory approval in both Texas and New Mexico to build large wind farms near Plainview and Portales, New Mexico, in 2019 and 2020.
“These wind farms will further lower fuel costs even as we raise base rates to pay for them,” Hudson said. “But we expect overall billing increases to stay close to or under the rate of inflation over the next several years because of efficiencies we are building into the system.”