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e cooperatives are seeking $6.3 million, but Tom Walsh, CEO of Grand Valley Power, one of four co-ops, said in Senate testimony that the cost to Xcel Energy household and small business customers could be $90 million.

“You have a terrible situation where the motivations do not line up at all with the real-world risks,” Pearl Street’s Lin said.

For the past decade Colorado natural gas customers bene ted from low and stable Citygate natural gas prices of between $2 and $5 per thousand cubic feet of gas, according to EIA gures.

Gas from Colorado, Wyoming and Utah has been a bargain, selling at a discount to national prices, because there has been limited pipeline capacity to move it to other regions.

Between 2013 and 2020, rates for the Colorado Interstate Gas Company, a major source for the state, averaged 16 cents lower for a million British thermal units than the gas on the New York Mercantile Exchange, according to Mercator Energy data. at changed with Winter Storm Uri. Since then, the Colorado Citygate price has bounced up and down, but remained above preStorm Uri prices. is past winter California utilities added to the price woes with the Southern California Gas Index hitting as high as $47 for a million Btus in January. e market pressure pulled up Colorado Interstate prices as well, lifting them $3.60 higher than the NYMEX price.

Brief moments of financial pain may become more common at was a short-term spur to higher prices, but industry analysts say that such spikes may be increasingly common as a result of the growth of renewable generation, if natural gas is the backup, as well as severe swings in the weather. e plans, the bill said, could include techniques to reduce volatility such as hedging supplies, long-term contracts and storing more gas. Xcel Energy currently hedges about 20% of its needs. e risk in these approaches is that consumers could be stuck with higher prices when the market prices fall. It is a trade-o between a potentially higher price and certainty on costs, said Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary. e Colorado Public Utilities Commission, which regulates for-pro t utilities in the state, is directed to come up with a cost-sharing plan between customers and their utility when prices are high.

“Renewables can do a number on gas prices because there are periods where the weather is not cooperating,” said Clark Williams-Derry, an analyst with the Institute for Energy Economics and Financial Analysis, which is focused on the costs of transition from fossil fuels to cleaner energy.

Gas markets could also be roiled by climate change which will bring polar freezes in the winter, summer heat waves and drought, creating demand peaks. “ ere are complicated feedback loops now in the gas market,” Williams-Derry said.

Given the potential swings in demand, the availability of supply and whether there is adequate pipeline capacity to deliver gas will determine whether there are price spikes, Harpole said.

“It is going to happen in these high demand winter months more and more as more non-dispatchable generation is added,” Harpole said.

To deal with these swings, Senate Bill 291 requires utilities to come up with a gas management plan that includes a cap on the monthly charge to customers. When prices are above the cap utilities will be allowed to recover that money over ve years.

“ is makes sure that they have some skin in the game on these fuel costs,” Senate President Steven Fenberg, D-Boulder, a cosponsor of the bill, said in hearing testimony.

Part of that cost-sharing plan would be an incentive, or bonus, for a utility if they manage to keep gas costs down.

“We have an inherent incentive to purchase least cost gas, because it’s in the best interest of our customers,” Kenney said. “One could argue that you don’t need an incentive. But if there is a belief that we do need an incentive, then we want to work constructively with the commission to design it.” e bill also calls for a study to take a hard look at future natural gas infrastructure investments, does away with a subsidy for new natural gas home hookups and makes it easier to terminate gas service. e state has a target of cutting greenhouse gas emission 90% from 2005 levels by 2050 and it is promoting the switch from home heating and appliances powered by natural gas to those run on electricity, ideally generated from zero-emission sources such as wind and solar. e worry, Fickling said, is that as the customer base dwindles as the state moves to electri cation as part of its e ort to cut emission, gas infrastructure investments will no longer pay for themselves.

Kenney said the company is already set to propose a performance incentive mechanism for natural gas this spring as part of a gas cost adjustment case before the PUC.

Can Xcel meet its own goal of being zero emissions by 2050?

“What happens when investment outpaces sales?” she asked. “ at’s what we’ve seen in the last few years.”

Colorado planned to lease state land to Utah power company for a natural gas plant. en protests surfaced.

Senate Bill 291 calls for a study to “evaluate the risk that stranded or underutilized natural gas infrastructure investments pose.” e company does not break out gas revenue or pro ts by state, but based on the per-customer revenue provided in its annual report, the Colorado gas business generated about $800 million in earnings in 2022. e two plans will show how the utility can balance its gas business and emissions reductions, Kenney said, noting the company has its own 2050 zero-emission goal.

Xcel Energy is planning $2.5 billion in new natural gas investments in Colorado by 2027, according to an April investors’ presentation.

Xcel Energy sells electricity in eight states, but the bulk of its natural gas business is in Colorado, where 1.5 million, or 72%, of its natural gas customers live.

Xcel Energy must le a “clean heat plan” with the PUC by August to show how it will reduce emissions in its natural gas business and it also must le a gas infrastructure plan with the commission laying out its investment plans.

“Natural gas does remain part of that system and we believe in maintaining options for our customers on how they heat their homes and businesses,” Kenney said. “We think that it’s going to continue to be an important part of the energy mix into the future and we have an obligation and requirement to serve existing customers.” is story is from e Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support e Colorado Sun, visit coloradosun. com. e Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media