Xcel gas bills drop almost 12% for the rest of 2024 as wholesale prices remain low

A combination of growing natural gas production and mild weather, leading to a buildup of stored reserves, will help lower monthly bills for Xcel Energy residential and small commercial customers by as much as 12% for the last quarter of 2024, according to the company.

The drop in bills for the fourth quarter of 2024 is compared to the same period in 2023 and is outlined in the company’s quarterly energy adjustment filed with the Colorado Public Utility Commission.

The average monthly residential gas bill is projected to drop 10.5%, or $9.15, to about $77.67. The average monthly bill for small business will drop 11.8%, or $42.04, to $314.

Xcel Energy files an Energy Cost Adjustment for electricity and natural gas with the PUC each quarter, passing any fuel cost increases or decreases directly to its customers. If the commission accepts the change it will cover the last three months of the year.

The electricity adjustment for the fourth quarter resulted in a 13 cent drop for residential customers to an average monthly bill of $93.45 and a 91 cent increase for small commercial customers to $124.35.

The most controversial pass through came in a special proceeding in 2022 when the PUC approved $500 million in fuel costs for the 2021 winter cold snap, dubbed Winter Storm Uri, that led to sharp spike in natural gas prices.

That added an average of $5.67, or 11%,  to residential natural gas bills for 30 months, and a 2% increase, or $1.43, in average electricity bills.

Markets, however, can run in both directions. Natural gas production has steadily increased to 3.1 trillion cubic feet in June 2024 from 2.8 trillion cubic feet in June 2021, according U.S. Energy Information Administration data.

Production has been stable for the last few months, but more temperate weather reduced demand.

Natural gas spot prices at the Henry Hub, a major distribution point in Erath, Louisiana, have remained flat hovering around $2 for a million British thermal units, or MMBtu, since February.

“With relatively flat production and reduced natural gas consumption because of a seasonal decrease in demand from the electric power sector, we expect the Henry Hub natural gas spot price to stay close to $2.00/MMBtu the next couple of months and remain below $3.00/MMBtu through the end of 2024,” the Energy Information Administration said.

Xcel Energy has a rate case pending before the PUC for a $171 million increase in base rates, which would permanently raise residential bills by an estimated 7.4% or nearly $5.

Xcel is proposing that the rates go into effect in February 2025 when the Storm Uri surcharge expires so that the net effect on bills would be a 2.5% increase.

More than 700 public comments have been filed with the PUC in opposition to the permanent rate increase, according to the Colorado Office of the Utility Consumer Advocate.