Colorado PUC conditionally backs modified Xcel rate settlement; final order pending

The Colorado Public Utilities Commission conditionally supported a modified settlement Wednesday that would increase Public Service Company of Colorado’s electric base rates by $217.8 million, but the commission has not issued a final written order or established the effective date or customer impact.

The action was one of several separate proceedings before the commission. The Aug. 5 meeting record also covered 911 charges, Xcel’s residential heat-pump rate pilot, flexible-grid tariffs and utility-connection rules.

Xcel electric-rate settlement

In case 25AL-0494E, Public Service initially sought a $356 million annual base-rate increase. Commissioners conditionally supported a modified, non-unanimous settlement described during the meeting as a $217.8 million increase. They directed the company to submit revised revenue-requirement calculations and scheduled a technical conference for Aug. 17 before staff prepares a written order.

The PUC’s electric-rate-case page still listed a proposed $225 million increase and estimated that a typical residential customer would pay 5.86% more, or about $6.13 per month. That estimate predates the modifications, so the final residential impact remains unknown.

Commissioners and parties raised concerns about affordability, reliability, wildfire-related costs and planned transmission spending. The meeting record cited nearly $8 billion in projected transmission capital spending from 2026 through 2030. The commission directed more detailed project-level reporting in Public Service’s October 2026 transmission cost-adjustment filing, including budgets, actual costs and amounts assigned to adjustment mechanisms.

The proposed settlement included a $5 million one-time contribution to enhance the Energy Assistance Program and Percentage of Income Payment Program, outreach and protections against involuntary disconnection for customers referred through LEAP, Energy Outreach Colorado or the state assistance system, even if they were not yet enrolled. The commission also directed staff to study disconnections in disproportionately impacted communities and asked Public Service to file an application or advice letter by June 30, 2027, on a disconnection and bill-assistance pilot or related review.

Commissioners supported retaining a Pueblo Unit 3 performance framework that could impose penalties for poor availability. Moving certain Pueblo-related costs into future adjustment mechanisms did not establish that the costs were prudent; the record says prudence would be reviewed later. The commission also supported an early review of a dispatchable-capacity performance incentive mechanism, including unit-level spending, performance and incentive or penalty results.

Other proceedings

911 charges. Staff proposed a 16-cent monthly state surcharge per access connection, a $2.26 threshold for local emergency telephone charges requiring PUC approval, and a $2.43 charge on each prepaid-wireless retail transaction. The amounts are not final. Comments are due Aug. 28, responses Sept. 11, and the commission plans to issue an order by the statutory Oct. 1 deadline for amounts taking effect Jan. 1, 2027.

The state surcharge would appear on monthly telecommunications bills. Sellers would collect and remit the prepaid-wireless charge, Colorado Department of Revenue guidance says. Local governments seeking a charge above the proposed threshold would need commission approval.

Heat-pump pilot. The commission allowed Public Service to put a voluntary residential electric space-heating rate pilot into effect Aug. 1. It is for customers who use a heat pump as their primary heat source and is expected to include about 3,000 participants during the 2026-27 heating season.

The pilot pairs a higher seasonal service-and-facilities charge with a lower off-peak electric rate from October through May. Xcel says it will gather information about electricity use and system impacts before filing a permanent heat-pump rate on Aug. 1, 2027. Conservation Advocates and local-government groups raised concerns but did not seek to suspend the pilot or hold a hearing. The record does not establish customer savings, utility revenue changes or broader bill effects.

Flexible-grid tariffs. In a separate Xcel filing, the commission suspended proposed flexible-interconnection and flexible-energization tariffs that were set to take effect Aug. 1 and referred the case to an administrative law judge.

The proposals addressed distributed-energy projects and controllable loads that could not receive full service, or service on the requested schedule, because of distribution constraints or needed upgrades. Xcel proposed initially limiting each offering to one project per feeder. The Joint Solar Parties argued that the tariffs gave Xcel too much discretion over service availability, operating conditions and curtailment. The referral does not determine whether the tariffs will be approved, changed or rejected.

Utility-connection rules. The commission opened an administrative-law-judge-referred rulemaking to implement Senate Bill 24-218 and House Bill 26-1225. It covers distribution-system planning, energization timelines, interconnection, customer cost caps, third-party contractors, utility cost recovery and performance metrics for large utilities.

Meeting concepts included a 30-day average and 90-day maximum energization target, a potential $300-per-unit cap for affordable-housing upgrades, zero-cost caps for some residential electrification projects and rules allowing third-party contractors to perform interconnection studies. Those are concepts in a new rulemaking, not rules in force. Final costs, timelines and eligibility will depend on the rules and later utility filings, with the legislation and PUC materials emphasizing upgrades for income-qualified or disproportionately impacted communities.