Xcel

Jerry Kopel

By Jerry Kopel

6/15/06

In poker and in politics, perception means a great deal. But of course it depends on whose perception we are writing about.

The Denver Mayor's office and Xcel Energy corporation have reached agreement to continue a 20 year exclusive franchise to deliver gas and electricity to the city until December 31, 2026. The vote by registered Denverites will beheld at the August 8th primary election.

Xcel believes the voters will vote for the franchise. I don't know what the Mayor's office believes. We know Denver doesn't have the funds to start its own energy company. But Xcel's perception that voters have no choice might not be the same perception as the voters.

Here are some of the perceptions that Xcel may have to overcome:

Denverites who paid through the nose this past winter, and especially those who suffered power outages on Feb. 18th lasting from 30 minutes to four hours, are still angry and seeking revenge.
Xcel's quickness almost immediately to blame colder weather than normal , generator breakdown, and shortfall of gas supplies.
On May 17th, Xcel's CEO chairman Richard Kelly called the events a "miscalculation". He denied a wholesale supplier of power could have responded quickly enough. The supplier, Tri-State "said it could have run additional power plants if Xcel had requested" according to one Rocky Mountain News article and in another article "home heating bills, on average, rose 35 to 40 percent in Colorado during the peak winter months."
$14 million paid in 2006 to Wayne Brunetti, former Xcel chairman and chief executive.
A $200 -210 million rate increase sought by Xcel from electric power users which will cost the average residential user $78.24 more per year beginning Jan. 1, 2007.
Colorado's Public Utilities Commission (PUC) will likely take written documents on the Xcel rate increase proposal in June, but will not hold public hearings on the various changes sought by Xcel until September, AFTER the August election vote, and issue its opinion in December, which would be AFTER a possible November election.

Part of the Xcel rate hike proposal before the PUC, according to the RMN, would include a late charge. The 15 day time frame for payment begins when Xcel puts the bill in the mail, regardless of when it is delivered. The 15 day period ends when the customer's check has been delivered and posted by Xcel.

Colorado customers are already receiving "courtesy phone calls" from an Xcel recording, indicating "your payment has not been received" as early as three days after due. Our check had been sent to Xcel's Minneapolis office a day before it was due.

Mrs. K, a tiger on such issues, spoke to a service representative, a supervisor, and a "super" supervisor in order to obtain information on the new policy. The latter said the "courtesy calls" were new but blamed the Denver Post office for the delay. By the time Mrs. K spoke to the "super" supervisor, he found our check had been received.

If the PUC granted Xcel the right to post a late charge, it would begin as 1.5 percent on the month's bill. But if based as an annual charge on the same debt, it is 18 percent. Xcel claims an average $2 monthly late charge, but are you average?

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The franchise agreement worked out between the mayor's office and Xcel will provide additional benefits to the city. Along with larger payments there will be greater control without cost to the city over relocation of power poles, wires, etc.

However, additional franchise fee money to the city results from eliminating an exemption on the franchise fee's first $12.50 each for gas and electric users. It passes to the city through the conduit of Xcel. This amounts to $2 million annually in extra money from Xcel customers with an average cost increase of $9 per year.

There is nothing in the franchise agreement regarding use of the extra money, nor in the ordinances which take effect when the voters approve the franchise extension.

The present mayor has promised the money will be used to help pay gas and electricity costs for a low-income-assistance fund. Since it is not specified in the new franchise agreement that it will be paid out for such purposes, what happens under a subsequent mayor, or when an emergency budget need intervenes?

According to testimony at the city council public hearing, the agreement allows Denver to place controlled cameras on poles which "can be used to catch grafitti offenders in the act. " There are other major cities that do have such cameras installed.

The "20 years" in this franchise agreement is the ceiling, and not the floor. The mayor, according to one newspaper article, wanted a 10-year period, but didn't get it. The 20 year franchise bolsters the company's credibility in dealing with suppliers and investors.

If the August vote loses, another franchise election will be held in November. If the November vote fails, a separate bill passed will allow an election to be held again before April Ist, 2007.

In my opinion, ten words on the minds of voters will defeat the franchise at the August election: Xcel...power loss...rate hike...executive pay...monopoly...20 years.

Perhaps voters by venting their anger in August will allow a renegotiated franchise bill to pass in November.

(Jerry Kopel served 22 years in the Colorado House. )