By Grace Hood

If you found the instructions for petitioning Xcel's estimated $209-million rate increase complicated, wait until you try to understand how the energy carrier plans to use the money.

"[The pamphlet] says 'on or before 10 days before' May 15. It's very confusing, but it means May 5," says Michael Huttner, executive director of Progressnow.org, a group opposing the rate increase. "I got my flier on May 2. They said that in order to object to the increase, you have to object by Friday, May 5."

Thanks to a deadline extension, Xcel customers can now comment on the proposed increase until Friday, May 19. Huttner's organization, Progressnow.org, is taking advantage of the extension together with a coalition of three other nonprofit groups via their new website ExposeXcel.com. Until May 19, consumers can log on to ExposeXcel.com and issue grievances to the Public Utilities Commission.

If passed, the rate increase would go into effect on Jan. 1, 2007, and continue indefinitely. Raising an estimated $209 million in 2007, the majority of the money will reimburse Xcel for $1 billion in ground infrastructure costs, such as lines and transformers, built since 2002. Xcel plans to use roughly $24 million of its customers' money for financing associated with a proposed coal plant in Pueblo, called Comanche 3, which officials expect to be completed in 2009 or 2010.

"Xcel's proposed $209-million rate increase is a double outrage," says Dan Friedlander, executive director of Clean Energy Action, a member of ExposeXcel. "First, this proposed increase sits on top of already massive hikes in rates. Second, the $209 million is up-front payment for yesterday's technology—a polluting coal plant."

Of concern to ExposeXcel is whether the company will recoup much of the estimated $1.3 billion needed to build the plant from ratepayers before the plant is actually built.

"The truth of the matter is that if you call utilities places elsewhere they never front more than about 5 percent of the cost of a plant. There's been a couple of occasions where it's been about 10 or so," says Huttner. "What is really wrong about that—and why we believe that this recent proposed increase is nothing short of highway robbery—is [that] shareholders are going to reap all the profits from the coal plant, but they don't have to invest any of their own money or take any of the risk."

Xcel spokesman Tom Henley stresses that the $24 million will be used only for up-front financing costs. The remainder of the money will be collected from ratepayers "as the plant is being developed." Asked when ratepayers will see another rate hike associated with the new plant, Henley said there was no set date, but that it would be closer to the plant's completion in 2009 or 2010.

Despite Henley's assurances, ExposeXcel members are concerned about Xcel raising rates earlier than 2009 to recoup costs for Comanche 3. They point to a May 3 Denver Post article in which Mark Davidson, an attorney for Xcel, told the Post, "As soon as we finish this rate case, what I think will probably happen is the company will file another one. Instead of every four years, we're probably in a two-year rate-making cycle."

Davidson said that one of the biggest drivers in the rate hikes will be Xcel's recovery of funds on Comanche 3.

Does this mean that Xcel is backpedaling? Huttner thinks so.

"What they admitted last week was that this is the first of a series of hikes," he says. "So what you're going to see is right away, we owe $24 million to help break ground and start paying for the plant. In another month or two or three there's going to be a larger expense that's going to be a lot more than $24 million. Before now and 2010, it's going to be $1.4 billion."

In defense of the rate changes, Henley says that watchdog groups did not mention a $165-million rate decrease that went into effect on May 1, money that Xcel over-collected from rate payers due to price fluctuation in certain projected rates. Ratepayers will notice an estimated $2.50 decrease in their energy bills as a result.

"When we have a decrease, no one really argues about it," says Henley.

Because the plant will use coal, rather than renewable energies, Henley says Comanche 3 will save customers money due to consistent base load generation. Contrary to renewable energies like solar and wind power, the plant is always in operation, and therefore the costs are lower. Overall, Henley says that ratepayers only stand to benefit from the Comanche 3 plant and its financing plan.

"In this particular situation, if we're allowed to recover the plant as we go along, it actually ensures the financial health of the company, which means we can get financing at lower rates and pass those savings along to customers. The rates for power don't have to go up as significantly as if you were more of a credit risk. All the benefits flow to customers," he says.

Xcel will rely on creditors and other means for initial financing of the plant, Henley says. However, the company does plan to recoup the full amount from ratepayers—an estimated $1.3 billion.

"No business out there would make a $1.3 billion investment without getting some kind of recovery for costs. If you go to a Wal-Mart, it means that you increase the cost of the toilet paper for the food that they sell you. It's just that they have built-in prices, and they don't have to go in front of the Public Utilities Commission for those cost increases," he says.

But timing is everything, says Huttner.

"There's a fundamental difference there. Wal-Mart, if they want to open a new store in Colorado, in most cases the company has to raise the money as an investment," he says. "This takes on the risk of the shareholders. In this case, the only people that are taking the risk are all of us."

To issue a complaint against Xcel's rate increase, log on to www.ExposeXcel.com.

Respond: letters@boulderweekly.com