DENVER — Jack Hailey knows the challenges of being a small business owner. 

He said he bought an office building in Denver in 1995. He opened up his own video business, which faded away when high-definition movies took over. 

He then started renting the 6,000-square foot building out to different companies in 2005. 

Then Hailey decided it was time to sell the building. The next steps seemed normal: He found a buyer. They entered negotiations last year. The new buyer asked to see Hailey's utility bills to get a sense of what they would add up to every month. 

That's when Hailey learned a lesson he wish he did back in the 1990s. When Xcel Energy handed over a year's worth of bills, Hailey said an employee there noticed he was paying too much. 

"We're talking a lot of money," Hailey said. 

The issue circles around one rule that Xcel and the Colorado Public Utilities agreed to. The Colorado PUC is responsible for oversight of public utilities in the state. 

The terms dictate that if a business hits 25 kW at least one month out of the year, the business automatically starts paying at a higher rate for 12 months.  

After the one-year period, if the business is using less than 25 kW the owner, or someone who is authorized, is responsible for connecting with Xcel to adjust to a lower rate.

Colo. PUC No.8 Electric Sheet R11 states:

CHOICE OF RATES

The rate schedules are on file and available at the Principle Office of the Company and the Company's website. Applicant shall elect under which rate schedule service shall be supplied subject to the terms and conditions of the individual rate schedule. When there are two (2) or more rate schedules applicable to any class of service Company will, upon request of applicant, explain the conditions, character of installation or use of service governing the several rate schedules and assist in the selection of the rate schedule most suitable for applicant's requirements. Applicant, however, shall be responsible for the final selection of said rate schedule, and Company assumes no liability therefore.

This rate change only impacts commercial buildings not residential. 

In an email, Xcel spokeswoman Michelle Aguayo said when the new rate goes into effect, the business receives a letter telling them and how and when they can reach out to adjust their rates. 

Xcel also routinely sends out a breakdown of rates to customers as well. 

However, Hailey said he didn't know that and admits he wishes he was paying more attention.

"I didn't honestly pay that much attention," Hailey said. "I saw the bill - it seems to be somewhat like the previous bill." 

He reached out to the Public Utilities Commission that did put in an inquiry. 

He received the final report on Dec. 13 that said in part Xcel energy reads their meters every month and that Hailey's company, "hit 25 kW at least one month for every 12 month period from the 1990s until August 9, 2005. After hitting 25 kW, the customer must stay on the Secondary General rate for 12 months." 

There were several times Hailey could have reached out to adjust the rates including in August of 2006. 

However, because Hailey didn't know he could do that, he continued to pay at a higher rate. Xcel didn't adjust the rate until he reached out in October when he realized he had the power to change what he pays.

"I think the last bill was in the 300s, versus the six or seven hundred (dollars)," Hailey said. 

In an email, Terry Bote with the PUC confirmed Hailey filed an informal complaint and wrote:

"Per our process, the complaint was referred to the company for a response. Once a response was received, PUC staff reviewed Xcel's response and determined it was in compliance with the company's tariff. The customer was provided a copy of the company's response and the informal complaint was closed."

Bote also explained why the high rate sticks around for a year. 

"Per Xcel's approved tariff, a customer whose demand for a month exceeds 25 kilowatts is placed on the Secondary General (SG) rate for a minimum of 12 months. It is the customer's responsibility to request a rate schedule change at the end of the 12-month period. The utility has no way of predicting if a customer's usage will drop, and the customer remains on the SG rate until they request a change. SG customers generally have a higher level of sophistication with their utility bills and take on more of the onus of monitoring what their rates should be. Because the company complied with its tariff, no refund is required."

With that decision, Hailey decided to share what happened in the hopes other business owners will learn from what happened to him. 

Xcel said customers can also contact their Business Solutions Center to help manage their energy use, including rebates, energy audits and renewable energy programs.