DENVER — With 1.5 million natural gas customers, Xcel Energy dominates the market in Colorado.
Xcel is not the only utility company in the state, though.
Residents of Erie, Frederick, Dacono and Castle Rock have Black Hills Energy as their utility company. And those customers are not feeling the same high bill pain as Xcel customers.
“The energy bill that I’ve incurred through Black Hills Energy has not increased nearly as much as it has with Xcel,” said Castle Rock customer Mike Stefanski. “Why is there such a big discrepancy?”
It is not that Stefanski is complaining, he just wants to know why his bill in Castle Rock with Black Hills has not seen the same double or tripling in price as Xcel customers saw.
His bill that covered three weeks of January and eight days of February showed that Stefanski used the same amount of gas – 90 therms – as he did the year prior.
“Maybe Black Hills is a little smarter in how they acquire their natural gas?” Stefanski said.
"Gas purchasing is not an easy equation, there is no single answer,” said Black Hills Energy Vice President Nick Wagner during Tuesday’s legislative hearing at the Select Committee on Rising Utility Rates.
Wagner explained how Black Hills hired a consultant to review how the company purchased gas.
"There are some things we did change because of that. We increased some of our baseload contracts that were helpful this winter,” Wagner said.
What does it mean to increase baseload contracts?
The simplest explanation is that baseload is the minimum amount of natural gas you need for your customers in a given month based on historical usage. Increasing baseload means buying more in advance on the assumption that it will get used in the winter. If it is a warm winter or the price of natural gas in the winter is lower, it is a bad decision, but in this case, it worked out for Black Hills.
How much Black Hills customers pay for natural gas depends on where they are in the state.
There are different regions with different natural gas costs.
In Castle Rock, Stefanski is in the Central region.
In Oct. 2022, Stefanski paid 81% more for natural gas than he did in Oct. 2021. Xcel customers paid 88% more.
In Nov. 2022, Stefanski paid 18% more for natural gas than in Nov. 2021. Xcel customers were still paying 88% more.
Last month, Stefanki and customer in the Central region of Black Hills Energy paid 4% less for natural gas than in Feb. 2022. At the same time, Xcel customers paid 22% more than in Feb. 2022.
In the North/Southwest region, which includes Larimer and Weld Counties, Black Hills customers paid 64% more in Oct. 2022 compared to Oct. 2021. It was 8% more for Nov. 2022 compared to Nov. 2021. And last month, those customers paid 3% more than Feb. 2022.
Stefanski laughed off when he was asked if he would rather have an Xcel bill.
“No, that’s OK,” Stefanski laughed.
Atmos customers, which includes Greeley, Evans and Durango, paid 82% more for natural gas from Oct. 2022 through Feb. 2023 compared to Oct. 2021 through Feb. 2022.
Why the difference? There is no one answer.
It deals with the timing of gas purchases, how companies buy the natural gas; how much is a contract at a locked in price ahead of time, how much is purchased monthly and how much is bought daily. A lot of that is confidential.
Though, as of today, Xcel customers are paying less for natural gas than Black Hills customers pay. If you take a February bill for an Xcel customer and compare it to a February bill for a Black Hills customer, the price of the natural gas is slightly less for an Xcel customer.
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