Members of the Grand Valley Power cooperative will pay more on their monthly bills over the next year to cover a nearly $2.4 million charge from a wholesale electrical supplier.

Based in Grand Junction, Grand Valley Power serves more than 18,000 members in Western Colorado. Residential customers will see an average $7.81 increase in their monthly electric bills.

Xcel Energy charged a $2.37 million fuel cost adjustment on its wholesale power bill to Grand Valley Power as a result of a winter storm that affected the central United States in mid-February and triggered higher prices for the natural gas utilities burn to generate electricity. Prices were 100 times higher than normal when Xcel Energy purchased natural gas to meet customer demand.

“The fuel cost adjustment, or FCA, that Xcel tacked onto our wholesale power bill for February was 20 times higher than the largest such adjustment ever billed,” said Tom Walch, chief executive officer of Grand Valley Power. “It doubles the power bill for the month, and it would have been difficult for many consumers to pay all at once. To help our consumers, we will spread this cost over the next 12 months.”

On March 1, Xcel Energy notified GVP to expect significantly higher fuel costs because of the storm, Walch said. 

“Unfortunately, during the cold snap Xcel gave us no indication that we would suffer any adverse impacts due to their management of gas procurement. Our power supply was never curtailed, and we never received any messages advising us to encourage our consumers to conserve energy usage because of tightening power or fuel supplies,” he said.

 Under its contract with Grand Valley Power, Xcel typically recovers its costs based upon formula rates and fuel cost adjustments. 

Grand Valley Power in turn passes Xcel power costs on to its consumers without markup.

 As a regulated utility, Xcel has the right to ask consumers to pay extra fuel costs. Xcel initially planned to charge the average retail customer in Colorado $264 over the next two years to cover its Presidents Day weekend fuel bill. Xcel agreed not to use fuel cost riders for its retail customers. Instead, it will participate in proceedings at the Colorado Public Utilities Commission to ask for approval to pass those costs through to retail customers. 

 The Grand Valley Power contract with Xcel Energy doesn’t fall under the jurisdiction of the CPUC, however. Instead, it is regulated by the Federal Energy Regulatory Commission.

“Grand Valley Power’s management team has joined with representatives of other Xcel wholesale customers to investigate and analyze the circumstances giving rise to this February FCA fiasco,” Walsh said. “We are doing everything in our power to reduce the financial impact that will be felt by all Grand Valley Power members. Going forward, everyone on the Grand Valley Power team understands that our members expect and deserve a reliable, affordable source of electric energy. If we can’t get that out of our relationship with Xcel, we will look seriously at other alternatives.”