Xcel Energy has submitted plans to the Public Utility Commission of Texas for a seven percent increase to electricity bills in order to remain in compliance with the EPA.
The plans are a revised fuel cost factor that would add $6.30 to a typical winter residential bill of 1,000 kilowatt-hours, energy company Xcel Energy said Monday.
Xcel also said it seeks revision of the formula to calculate the factor. If the plans are approved, the added charges will mainly cover anticipated increases in the company's natural gas purchases. Those increases, according to Xcel, will happen when it cuts back on coal-fueled power generation in order to comply with the U.S. Environmental Protection Agency's (EPA) Cross-State Air Pollution Rule (CSAPR).
According to a news release, CSAPR requires electricity generators in Texas to reduce their emissions of nitrogen oxide and sulfur dioxide by as much as 50 percent starting Jan. 1, 2012. Xcel said the only realistic and short-term compliance option is to reduce its output of coal-fueled plants. Those plans emit more nitrogen oxide and sulfur dioxide than natural gas-fueled plants.
"We have a long track record of implementing reasonable, cost-effective emission control strategies, but we can't possibly retrofit our coal-fueled plants in time to meet the new requirements," Riley Hill, president and CEO of Xcel Energy Company Southwestern Public Service Company, said. "We'll have to shift the burden of our generating requirements to the higher-cost natural gas plants until new emission control technologies can be installed at our coal plants."
Hill said that because natural gas is more expensive than coal, the current formula to figure average fuel costs will be outdated after the new year.
Xcel Energy said customers are charged for the cost of fuel through a line-item charge. That charge is called the fuel cost factor. Additionally, Xcel said the fuel factor is changed as fuel costs rise and fall. The energy company said it does not profit from fuel charges.
Texas power companies, including Xcel Energy, were not included in the year-round emissions requirements until the EPA rule was issued this past summer. Xcel said it had already budgeted for new emission control but it anticipated having several years to make the changes. Because of the new ruling, Xcel Energy must comply by Jan. 1.
Xcel Energy will comply with the new rules but it also said it is challenging the EPA through a lawsuit that throws out CSAPR. The hope is that a more reasonable plan can be worked out.
"The outcome of the legal action probably won't be known until after the first of the year, so we have to be ready to comply by January," Hill said. "Today's fuel cost filing is part of that plan. If the EPA rule changes and the resulting higher fuel costs don't materialize, we will not implement the planned increase."
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